Europe’s Energy Crisis

Is North America Next?
Written by Robert Hoshowsky

Natural gas shortages and skyrocketing electricity prices across much of Europe are forcing homeowners, local businesses, and major manufacturers to cut hours, reduce output, or go out of business entirely. How will North Americans handle blackouts and rising power prices?

At many of Germany and France’s historic Christmas markets, revellers felt something was decidedly less festive than in previous years.

Fragrant evergreens had fewer multi-coloured lights. Huge artificial ice rinks, a standard of outdoor seasonal festivals for decades, were closed in some cases or replaced with ice-free roller rinks. And stay-up-late partying crowds found that decorated streets, stalls, bars, and restaurants shut down early. The holiday season was not the same.

In a post on his LinkedIn page and in remarks to the press, Martin Cohen, Deputy Mayor of the French City of Tours and responsible for energy and the environment, said that the reason for substituting the popular man-made ice rink with roller skating was the cost of electricity.

Just a few years earlier, in 2020, the price tag for keeping the ice rink going was 15,000 Euros (USD 16,300); after shrinking the rink’s size the following year, the figure dropped to 7,500 Euros, some USD 8,150. Although less expensive, the decision was made to eliminate the ice risk entirely for 2022.

To some, the Deputy Mayor of Tours seemed more like The Grinch than Santa Claus when he insisted that there was no sense keeping the artificial ice frozen “just to maintain a sense of Christmas,” adding that the magical vision of the holidays—massive trees adorned with thousands of lights, and twinkling displays—was a thing of the past, and it was time that “some elements have to evolve.”

The price of war
For a nation already on high alert and fearing power shortages during the coldest months, Cohen’s views, shared by many other European politicians, were met with everything from grudging acceptance to outrage. This was Christmas after all, and families felt they deserved merriment.

Slowly emerging from the doom and gloom of COVID, Europeans faced economic uncertainty over Russia’s unprovoked war on Ukraine. Now, after years of pandemic-related closures and job losses, the realities of not having enough gas to keep furnaces going added to the misery.

Along with France and Germany—the latter of which, by some estimates, received about 55 percent of its natural gas from Russia before the attacks on Ukraine—the United Kingdom is facing another hurdle: the price of power. Already struggling with fewer customers and not enough staff, many UK pubs and other businesses fighting to survive in a post-pandemic climate are now dealing with unaffordable electricity bills.

Newspapers and TV stations broadcast that businesses would be paying a staggering four times more for power than they’d paid in 2020. For many pub owners, the challenge meant covering some or all of the increase themselves, charging much more for a pint and risking alienating customers, or padlocking the door and declaring bankruptcy.

For Germany, the combination of rising fuel prices and limited natural gas supplies continues to take a brutal toll. Limited natural gas supply and the standoff over closing the Nord Stream 1 pipeline from Russia are impacting homeowners and businesses alike. Especially hard-hit are the country’s manufacturers. Long dependent on unlimited sources of energy, a lack of natural gas and price spikes have seen paper companies—who consume massive amounts of natural gas during the drying process—forced to close shop or transition.

One of the oldest, Hakle, began the process of self-administrating insolvency last year and began exploring the use of waste coffee grounds to keep production afloat. Others, such as the Engelbert Schlechtrimen family bakery in Cologne, Germany, were forced to close forever. Surviving The Great Depression, World War II, and countless recessions over 90 years, the owners said they simply could not afford to keep the ovens on any longer.

Energy insecurity
In the past few years, terms like “food insecurity” and “energy insecurity” have been making the rounds for good reasons: people are worried not only about their future but about the present in the United States and Canada. Inflation rates are spiking, along with higher prices for everything from gas to groceries, leading many to question how and where they’re spending their money.

And while protecting the environment remains a critical issue, some are questioning the cost and timing of imposing carbon taxes during a recession.

While some dispute the capital “R” word, choosing instead to qualify our present predicament as a lower-case “moderate recession,” there is no doubt that North America is in murky financial waters. With the Bank of Canada recently raising interest rates by 25 basis points to 4.50 percent—coming after seven consecutive rate hikes in 2022—and with the U.S. Federal Reserve likely to follow suit, people are scared.

For many forced to cash in their savings, borrow from the banks, or rack up credit card debt to pay for groceries and utility bills, goals of early retirement are evaporating. As if that wasn’t enough, utility prices are increasing. The Ontario Energy Board (OEB) recently approved changes to Enbridge Gas rates, with the customer charge increased to $23.98 a month. Add to that the Federal Carbon Charge of 9.79 cents per cubic metre, which increases annually each April. Multinational pipeline and energy provider Enbridge minced no words in stating clearly: “All of the money collected for this charge goes to the government.”

For homeowners, businesses, and manufacturers across Canada, the timing of these increases could not possibly be worse. In Someone Tell Trudeau: Energy is now about security, a recent opinion piece in the Financial Post, the author said that energy security has replaced climate change. “The world is not going back to the kumbaya days of the Kyoto and Paris climate accords,” wrote Ted Morton, Alberta’s former finance and energy minister.

The crunch is coming?
In Europe, the high price of gas has driven many countries into a recession and economists are wondering how soon it will be before North America feels the crunch. In a report issued last year, the Royal Bank of Canada predicted the country will face an energy shortage as soon as 2026, “and must decide between various energy sources, including eliminating gas altogether from the grid,” according to RBC Capital Markets.

The big question is: how can Canada’s federal government balance the country’s energy needs with its climate strategies and ensure citizens and businesses don’t go broke in the process?

In June 2021, The Canadian Net-Zero Emissions Accountability Act became law, and “enshrines in legislation Canada’s commitment to achieve net-zero emissions by 2050,” according to the Federal Government. Stating that tree planting, carbon capture, and other technologies are the way to go and are “essential to keeping the world safe and liveable for our kids and grandkids,” many beleaguered Canadians are wondering how, exactly, these measures will result in a stronger economy.

Another issue is the Great White North’s climate. Canada is a country of extremes, damnably cold in winter and bloody hot in the summer. While many grew up without central air conditioning, it is now de rigueur for year-round comfort in households, offices, and factories.

Heating and air conditioning require a lot of power, and Canada’s energy consumption is expected to increase 50 percent in just the next decade. That’s a lot of energy for a country with an aging grid. In Ontario alone, more than 600,000 customers were without power during the ice storm of 2013, which also affected much of the northeastern United States for weeks.

Rising power prices and energy shortages across North America may be inevitable; their true impacts, and how renewables and other alternatives might be able to fill the gaps, remains to be seen.



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