The writer is prime minister of Poland
Russia’s brutal attack on Ukraine has cast a shadow over the dreams shared by hundreds of millions of Europeans of building a secure and prosperous future based on sustainable and equitable development. Regaining stability and achieving decent living conditions for the people of Europe now requires abandoning some important assumptions, especially where energy policy is concerned.
Simply put, we are witnessing the formation of a new energy order in both Europe and the wider world. And in this new order we must be able to balance many different interests.
We wanted low-cost raw materials, freedom from dictatorship, clean energy and socially inclusive economic growth. But after the Russian invasion of Ukraine, we have instead increasingly expensive raw materials, dependence on a criminal regime for them, instability and rising energy poverty. Inflation in general, and the sharp rise in the price of energy in particular, are the direct results of Russian aggression.
Until recently, the EU’s energy policy was concerned solely with climate change. Today, other member states agree with Poland, which has long emphasised the need to diversify energy sources, build up gas reserves and wean ourselves off Russian fossil fuels. In addition to climate protection, the energy security of countries is now paramount. This is a message I have conveyed to other EU leaders on behalf of all Poles and Europeans concerned about their future.
The energy sector must be understood in a wider context and the issue of security must take priority. Poland recognises the importance of fighting climate change. However, we must do everything possible to ensure that the virus of neo-imperialism does not develop in our own backyard. Left unchecked, it will threaten our entire continent.
Vladimir Putin’s energy blackmail and the war in Ukraine are already contributing to a significant increase in electricity prices, and a significant increase in inflation. Europe has a very important lesson to learn. It must drastically reduce the costs of CO₂ emission allowances, which are a decisive factor in energy prices and which have risen considerably in recent years. Five years ago, the cost of emitting a tonne of carbon dioxide was well below €10. Currently it stands at between €80-€100. Such high costs make it difficult for manufacturing companies to invest in the development of new green technologies, such as renewable energy or hydrogen.
Rather than stimulating the development of green energy, the current Emissions Trading System (ETS) drives inflation and threatens to send millions of citizens into fuel poverty. That is why the Polish government has long called for changes that will block artificial increases in energy prices driven by financial speculators. At several European Council summits, I have argued that we must put an end to such speculation. This pressure has paid off. Today it looks as if our proposals will be implemented.
But this is only a first step. It is not enough to exclude financial institutions from trading in the EU ETS. The ETS must be stabilised at a much lower level. We must introduce a mechanism to stabilise its price permanently, thereby making it far easier to plan new investments.
The next step is to revise plans to extend the ETS to other sectors of the economy. This is already a big move and yet, in the difficult conditions in which we currently find ourselves, we must do even more. The Polish proposal is to freeze the price of CO₂ emission allowances at €30 for at least one year, with the possibility of extending it for two.
If we allow a sharp rise in the price of services, we would be adding fuel to the inflationary fire. In the midst of an energy crisis this could lead to the impoverishment of entire social groups, exacerbating feelings of unrest.
The EU has to acknowledge that if it does not take a step in the right direction, it may compromise its energy policy completely. The green transition cannot come at the cost of basic security. And if the situation forces us to do so, then we must not hesitate to return temporarily to traditional sources of energy. Even if a short-term return to coal means postponing our ambitious climate goals, it may be a necessary condition of maintaining a strong European community capable of resisting Russia and supporting Ukraine.
A philosopher once wrote that a chain is only as strong as its weakest link. The current geopolitical situation should prompt us to strengthen every weakness in our energy system. Only in this way will we successfully overcome today’s difficulties and realise the promise of a better tomorrow.
Source: Financial Times
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