High power prices are putting the continent’s economy at risk
Illustration: The Economist
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G ermany’s share of the North Sea resembles the head of a seagull. At just 41,000 square kilometres it is about 5% the size of Britain’s. Germany plans to squeeze 70 GW- worth of wind turbines into this small area by 2045, but it is running into an unusual problem: that many turbines would slow down the wind and reduce the electricity harvest by 37%. It is a tale of Europe’s limited energy potential, and the hazards of trying to find national solutions to a European problem.
The war in Iran and the closure of the Strait of Hormuz are highlighting Europe’s energy shortage. Natural-gas prices in Europe have climbed back above €50 (11. Combined with higher petrol prices, that could trigger a new bout of inflation. At a European Council summit starting on March 19th, as The Economist went to press, leaders were due to debate what lessons to apply from the previous price jump in 2022, when Russia, Europe’s main gas supplier at the time, invaded Ukraine.
Ursula von der Leyen, the head of the European Commission, wrote to country leaders ahead of the meeting that Europe had spent an additional €6bn on fossil fuel imports since the start of March, “the price we pay for our dependency”. Some want to go back to old ways. Bart De Wever, Belgium’s prime minister, said on March 15th that the European Union needed to “normalise relations with Russia and regain access to cheap energy”. Other leaders quickly rebuffed him. But they agree that Europe’s energy system is too expensive.
The immediate concern is to contain price increases. Inflation has fallen from its peak of 11% in 2022 to about 2% in most of the EU. A prolonged war could raise it to 4% or more, according to estimates by Oxford Economics, a research firm. That could eat into real pay, which has just recovered from the previous shock.
Some governments have already started to intervene. In Austria petrol stations are now allowed to raise prices only three times a week, and Germany is mulling a similar approach. TotalEnergies, a French oil and gas firm, has frozen the price at its stations in France until the end of the month. Windfall taxes on excess profits, which many countries implemented in 2022, are back on the table in Italy. Several countries are considering tax relief.
Chart: The Economist
The gas shock is particularly worrying for energy-intensive businesses. Metals, chemicals and other basic industrial sectors are still large in Europe, especially in Germany. In its basic chemicals sector, energy costs made up 42% of value added in 2023, up from 28% in 2021, due to higher gas prices. Competition is fierce from China, where a price index for chemicals fell by 36% over the past three years. It could be risky for Europe to give up making basic chemicals, as the loss of rare-earths refining to China has demonstrated.
Policymakers are considering various options to lower prices. The first is changing how the electricity market works. Under the current set-up, the last power plant needed to meet demand sets the price. In Italy, a critic of the system, gas-fired plants set the price in 89% of hours so far in 2026, calculates Ember, a think-tank. In Spain it was 15%. So far in March Italy’s average power price was €142 per MW h, whereas in Spain it was €59.
But the debate is unlikely to lead to major reforms of the market-based system. Nor should it. Energy experts mostly agree that the varying prices send crucial signals when power is dear, rewarding generators who produce at that time and creating strong incentives to invest in more capacity. Changing the basics of the market would create costly uncertainty among investors. Indeed, Spain’s success is an example of the market working: it built more renewables and diversified its sources of electricity, lowering the price.
The main issue in Europe is ballooning system costs, including the cost of improving the grid. These already make up around 20% of household bills. “We are transforming the system from variable fuel costs to largely fixed costs,” says Christoph Maurer of Consentec, a consultancy. To make the renewables-based system work, the EU must invest €1.4trn in its grid infrastructure by 2040, according to its own estimates. Every player, including consumers and industries, is trying to shunt the cost onto someone else, Mr Maurer says.
The shift also requires connecting different parts of Europe’s grid, so that peaks in demand and gaps in generation can be balanced across borders. A recent study shows that this could save about 500 GW of costly backup capacity for when renewable sources produce little. But the commission’s proposed grid package from December 2025, which suggested more centralised planning, is facing opposition from countries less dependent on gas that are reluctant to share—France with its nuclear power, Sweden with its hydropower.
The final controversial issue is Europe’s emissions trading system (ETS), which puts a price on carbon. It is under fire from countries desperate to lower energy costs. The carbon price, currently about €66 per tonne, adds about €25 to the price of a gas-powered MW h. Giorgia Meloni, Italy’s prime minister, has called for suspending the system while geopolitical tensions prevail. Even Friedrich Merz, the German chancellor, has mulled changing it to accommodate industry. After eight countries, Spain among them, sent the commission a strongly worded letter defending the ETS, it will probably prevail. But its system of allocating free emission permits to energy-intensive industries, which had been scheduled to be phased out by 2034, could instead be extended.
Europe will have to learn to live with higher energy costs. But there are ways to reduce them without slowing down the North Sea winds. ■
논증 분석
유형: diagnosis
핵심 주장
이란 전쟁으로 촉발된 에너지 가격 급등은 Europe의 구조적 에너지 취약성을 드러내며, 단기 가격 억제책보다 시장 구조 개혁과 그리드 투자 등 근본적 해법이 필요하다.
논리구조
- 전제: Strait of Hormuz 봉쇄로 Europe의 천연가스 가격이 MWh당 €50 이상으로 급등한 반면, 미국은 약 $11 수준으로 격차가 극심하다.
- 진단: Oxford Economics에 따르면 장기화된 전쟁은 현재 약 2%인 EU 인플레이션을 4% 이상으로 끌어올려 막 회복된 실질임금을 다시 잠식할 수 있다.
- 진단: 에너지 집약 산업, 특히 Germany의 기초화학 분야는 2021년 28%에서 2023년 42%로 에너지 비용 비중이 급증했으며, 중국의 화학제품 가격지수가 3년간 36% 하락한 것과 대비되어 경쟁력 위기에 처해 있다.
- 논거: 각국 정부는 주유소 가격 인상 횟수 제한(Austria), 가격 동결(TotalEnergies, France), 횡재세 재도입(Italy) 등 단기 가격 억제 조치를 검토 중이나 이는 임시방편에 불과하다.
- 반론: Bart De Wever Belgium 총리는 Russia와의 관계 정상화를 통한 저가 에너지 복귀를 주장했으나 다른 지도자들에게 즉각 반박당했다.
- 진단: 전력 시장 구조 문제로, Italy에서는 2026년 전체 시간의 89%에서 가스발전소가 한계가격을 결정해 평균 전력가격이 MWh당 €142인 반면, 재생에너지를 적극 확충한 Spain은 €59에 불과하다.
- 처방: 전문가들은 시장 기반 가격 신호 체계의 근본 개혁은 투자 불확실성을 초래하므로 지양해야 하며, Spain의 사례처럼 재생에너지 확충과 전원 다양화가 올바른 방향임을 강조한다.
- 진단: Europe의 진짜 문제는 가계 전기요금의 약 20%를 차지하는 그리드 비용 등 시스템 고정비용의 폭증이며, EU는 2040년까지 그리드 인프라에 €1.4조를 투자해야 한다.
- 처방: Europe 전역의 그리드를 연계하면 약 500GW의 값비싼 백업 용량을 절감할 수 있으나, 원자력(France)·수력(Sweden) 등 가스 의존도가 낮은 국가들이 European Commission의 중앙집중식 계획안에 반대하고 있다.
- 반론: Giorgia Meloni와 Friedrich Merz는 지정학적 위기를 이유로 탄소가격제(ETS, 현재 톤당 약 €66)의 중단·수정을 요구하고 있으나, 8개국이 ETS 수호 서한을 발송해 제도는 유지될 가능성이 높다.
- 결론: 에너지 집약 산업에 대한 무상 배출권 할당 조기 폐지(2034년 예정)는 연장될 수 있으며, Europe은 높은 에너지 비용과 공존하는 방법을 찾아야 한다.
결론
Europe은 단기 가격 개입이나 ETS 폐기 같은 후퇴 대신, 재생에너지 확충·그리드 연계·시장 신호 유지라는 구조적 해법을 통해 에너지 비용을 낮춰야 한다.
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