Global Economic Observer (Dec 2021)
European Green Deal and Energy Crisis in EU
Abstract
European Green Deal was adopted in December 2010, before the outbreak of Covid-19 pandemic in Europe and is an extremely ambitious project of EU with a strong impact on energy sector and environment. However European Green Deal was preceded by other two major projects, that of energy market liberalization and that of Energy Union, both having important effects on energy market structure and evolution. The five energy packages induced a transition from vertically integrated national energy systems, functioning as natural monopolies, usually in public ownership, to liberalized energy systems dependent on the situation of imperfect markets, but designed to produce high profits for some players and high costs for most citizens and consuming companies. In 2020 and 2021 some important strategies, (action) plans and other initiatives were adopted under the auspices of European Green Deal and on the 14 July 2021 was also adopted the Communication “Fit for 55” and other 17 documents. The European Commission has proposed revising important directives such as the Directive on Energy Taxation and Emissions Trading Scheme (EU-ETS), which will have a significant impact on the energy sector and market. Given this European context, our paper will analyze, through a qualitative analysis based on a synthesis of the most recently adopted European regulations, how the Green Deal enforcement may have a potential impact on energy crisis from EU. It is worth mentioning that in 2021 the supply crisis affecting natural gas and electricity markets in Europe and leading to high price increases was caused by quick economic recovery but also by rapid abandon of fossil fuels and nuclear energy in favor of renewable energies, as recommended by Green Deal objectives. In our paper we will also highlight that the model of the natural gas market liberalization has changed the market rules and the nature of supply contracts, creating some difficulties on the supply side. This article also presents the impact of EC Communication on Energy Prices (adopted in October 2021) a, highlighting how the European regulation aims to tackle the exceptional rise in global energy prices, providing a “toolbox” that the EU and its Member States can use to address the immediate impact of current prices increases, and further strengthen resilience against future shocks. We will also discuss the impact of energy liberalization process on Romania given the fact that although this country was badly affected by the energy liberalization process resumed in 2021 and also by energy crisis will continue to develop renewable energy capacities which will increase moderately in the current decade, especially wind and photovoltaic ones.
