Because the price of electricity and gas bills is rising

Because the price of electricity and gas bills is rising
Because the price of electricity and gas bills is rising

On 13 September, the minister for ecological transition Roberto Cingolani declared during a CGIL conference in Genoa that in the next quarter the price of electricity and gas will increase by 40 percent.

The announcement created a certain alarm in the government, because the official data of the Energy Authority (Arera) were only to be released on 1 October. The causes of the rise are mainly attributable to a sharp rise in the international price of gas, which covers 24.6 per cent of Europe’s energy needs, against 39.2 per cent for Italy. Renewable energies, on the other hand, still weigh too little: about 15.4 percent in Europe, and 19 percent in Italy.

The last winter season characterized by cold temperatures caused an increase in the demand for gas, which continued to rise even in the summer with the resumption of economic activities. The offer failed to maintain the same pace, especially following the decline in fuel deliveries to Europe by Russia and Norway, and the capacity of China, which has just exited the phase of lockdown, to grab big loads of gas.

The quota system
Among the reasons for the increase in bill costs, there is also the increase in the prices of CO2 emission permits, the Ets (Emission trading scheme), ie the permits that companies pay to “be able to pollute”.

The Ets system, established by the European Union in 2005, assigns CO2 emission quotas to companies every year. Once this ceiling is exceeded, companies must purchase CO2 quotas from other companies to avoid incurring penalties. The more the demand for “clean quotas” increases – as a result of stricter European directives on emissions – the more their price rises.

The vice-president of the European Commission Frans Timmermans at the plenary of the European Parliament on 14 September explained however that “the fluctuation of the price of gas is responsible for at least 80 percent of the increase in bills”, while only “the remaining 20 percent” it would be attributable to the increase in Ets certificates determined by the ecological transition process.

Among the proposals being studied by the government there is the possibility of mitigating the increase in the price of bills by shifting part of the system charges, or costs not directly linked to energy consumption by the consumer, to general taxation. This measure, however, would end up weighing on taxpayers again, through other taxes. “The calculation method” of energy bills must be rewritten, “we are doing it in these hours”, said Minister Cingolani on 16 September.

A different solution, already attempted in July 2021, would be to resell the CO2 emission allowances by auction, half of the proceeds of which are currently destined to cover the public debt.

These are partial banks that are unable to curb the sharp fluctuation in energy prices within the free market.

European attempts
The most aggressive solution was attempted by Spain, where, however, the cost of energy has risen out of control. The Spanish council of ministers last September 14 approved a package of measures worth four billion euros with which the tax on electricity is reduced from 5.1 per cent to 0.5 per cent. The Spanish government has also decided to tax hydroelectric and nuclear power producers. These sectors are not affected by the rise in costs incurred by the producers of thermoelectric energy whose power plants are fueled by gas and coal, and benefit from huge extraordinary profits given by the increases in energy prices. The government therefore plans to use the proceeds of the new taxes to reduce the bills of citizens and businesses.

In France, instead, there was talk of a voucher to support the fragile families most affected by the increases, but different taxation hypotheses are also being evaluated.

However, many analysts continue to say they are concerned: “The real problem is that there are no international and national structures to regulate this continuous rise and fall in prices. Spain has made a first attempt in this direction, but it runs counter to the choices made by EU countries ”, commented Giuliano Garavini, an expert in energy policies at the University of Roma Tre.

Curated by Madi Ferrucci

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