EU Energy Policy, as Planned, Spells Deindustrialization
Half a Million Jobs at Risk in Italy. According to the Italian Association of Small and Medium-Sized Enterprises (CGIA), half a million jobs will be lost in Italy in the first half of 2022, as energy-intensive industries are forced to shut down production due to high energy costs. That figure represents some 30% of all the jobs in sectors such as paper, metal, metal mechanics, thermomechanical, plastic, glass and floor tiles.
The increase in costs, according to the CGIA, is due to “the purchase of CO₂ allowances (whose price has quadrupled in the last months and is affecting energy costs by at least 40%)” and to the fact that the price of natural gas has gone up sixfold compared to the first months of 2021. The CGIA does not say it, but the price of CO₂ allowances is driven by derivatives speculation on the EU ETS market (Emissions Trading System — cf. SAS 1/22, 49/21).
France Faces an “Absolute Emergency”. On Jan. 7, French Finance Minister Bruno Le Maire warned that if no solution is rapidly found, “the French people will see an increase of between 35% and 40% in their electricity bills… It is an absolute emergency because the explosion in electricity prices is not sustainable for households or for businesses.” He further pointed to the riots that had just erupted in Kazakhstan due to the skyrocketing of gas prices, saying it is “politically dangerous”. This issue is particularly hot right now, as France faces presidential elections in just over ten weeks, and Emmanual Macron‘s popularity has sunk.
As a result of the surge in energy prices, the only remaining zinc refinery in France, Nyrstar, was forced to shut down production on Jan. 2 for a two-month period. From €40 a few years ago, the average price of a MWh over the day shot up to to over €400 before Christmas, with hourly peaks of over €600. That makes an increase in cost of ten times. The head of the CGT Metallurgy trade union for the region said he fears the contagion will spread to all sectors.