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High energy costs are forcing factories across Europe to stop production

Europe's Energy Shortage



The rising cost of energy is forcing factories throughout Europe to close. July saw the greatest drop in production of industrial units in Europe in the past two years and the current situation is in crisis. Governments across Europe have earmarked nearly 500 billion euros to combat the rising cost of energy. Germany, for example, has made its utility company national Uniper in an attempt to manage costs.



Europe's energy security crisis



Europe's energy security crisis is a significant issue which affects the entire continent. Despite abundant natural gas, coal and Uranium resources, the continent is currently dependent on foreign energy sources to meet its energy requirements. Additionally, anti-nuclear and anti-fossil fuel policies have hindered European production of energy.


There are many ways to tackle Europe's energy security crisis. One option is to create conditions in the market that favor the production of energy. This is a better solution than taxing the profits of energy businesses. Europe is currently undergoing massive reforms of the energy market. Although it might not be the most efficient option, it is the most economical and efficient method to cut energy costs and boost energy security.


The European Union will need to deal with the deep differences among member states regarding nuclear energy. The European Union could reduce its dependence on Russian energy sources and use nuclear power to meet its goals for climate change. A lot of people in Central and Eastern Europe, however, disagree with the German government's anti-nuclear policies. In addition, the United States' nuclear power sector could be able to recapture the market share it lost to Rosatom due to its pro-nuclear energy position.



Issues that arise from its dependence on Russian fossil fuels



Germany has recently stopped an unpopular gas pipeline project which was scheduled to increase Russian gas deliveries to Germany. Despite these developments, Europe remains heavily dependent on Russian gas and oil. The European Union plans to become more self sufficient in this area. The week following, the European Commission is expected to make public its plans to become energy independent.


The EU must diversify its energy portfolio, and rid itself of Russian natural gas. Its energy policy is more progressive than the United States' and other big powers'. Also, it is focused on global community rather than national parochialism. Its policies are consistent with global climate change as well as the need to gradually transition off hydrocarbons and renewable energy sources.


Although Russia and the EU have a common energy cost however, the EU is still dependent on Russian energy for a significant portion of its energy requirements. Most of Russia's gas is shipped through Eastern Europe via Soviet-era pipelines. Moscow is trying to build new pipelines however it will only be able to supply a tiny fraction of Europe's energy demands.



Solutions to the Crisis



There are many possible solutions to the European energy crisis. The government has taken a variety of approaches to the problem, ranging from offering fuel subsidies and reductions in consumption taxes to passing on increased wholesale prices to the industry. The solutions will not be successful without the involvement of businesses. It may be politically appealing, but it could affect the incentives consumers are given to save energy.


The first step to solving Europe's energy crisis is to identify the root of the problem. The issue is that the EU has yet to address its root causes for the issue. Russia is being blamed by European authorities for reducing the pipelines for gas. In turn, the continent has suffered from spiked electricity prices and gas shortages. Numerous countries have increased their usage of coal and oil to compensate for the cost.


Another option is to explore an alternative to a diverse natural gas source. European nations depend heavily on natural gas from Russia. The price of natural gas has increased tenfold since 2000. Furthermore, demand for gas is not elastic, which means that an increase in supply will not result in any reduction in consumer demand.


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