A TRIPLE SHOCK: GEOSTRATEGIC,

ENERGY AND INFLATIONARY

A GLOBAL ECONOMY WEAKENED

BY THE WAR IN UKRAINE

The economic recovery following the

gradual end of the Covid-19 pandemic

was accompanied by massive stimulus

packages. This situation caused a

bottleneck in supply chains and a surge

in the price of commodities, including

energy. Russia’s invasion of Ukraine in

February 2022 exacerbated these price

pressures because of the severe supply

disruptions it caused, especially for the

raw materials produced by these two

countries. Stoked by this unprecedented

energy crisis, global inflation (8.8%

(1)

)

has led to a tightening of monetary

policy in most major economies

and a slowdown in global growth.

EXCEPTIONAL EUROPEAN MEASURES

The significant European exposure to

Russian gas (40% of consumption in

2021) caused gas prices – and therefore

electricity prices – to soar. This was

exacerbated by the reduced availability

of the nuclear fleet in France and the

unfavorable hydrological conditions.

Europe therefore had to find short-term

alternatives to maintain security of

supply. This resulted in an increase in

LNG imports – up by 45 billion m

3

from

2021

(2)

– and led to more than 90%

(2)

of gas storage being filled. It has also

resulted in many countries temporarily

restarting their coalfired power plants

European governments have taken

steps to protect the purchasing

power of businesses and consumers

with energy vouchers price shields

a reduction in VAT and even a

windfall tax

The European Commission has also

introduced a temporary electricity price

cap of 180MWh on the revenue of

The robust economic recovery linked to the end of the pandemic in 2021, together with Russia’s

invasion of Ukraine, have created an unprecedented global energy and inflationary shock.

These crises underscore the need to accelerate the energy transition amid new challenges.

ELECTRICITY SPOT PRICE* IN FRANCE IN 2022 (€ / MWh)

800

600

300

700

Jan.April August Feb.May Sept.March July June Oct.Nov.Dec.

500

400

200

100

0

Average 2021 France Spot Average 2020 France

* baseload power

price day-ahead

1 Source IMF

2 World Energy Outlook 2022 International Energy Agency p 91

producers of renewable and nuclear

energy (so-called “inframarginal”

producers) to partially finance these

measures. Member States were allowed

some freedom in implementing this

decision.

In Belgium, for example, a cap of

€130 / MWh was introduced from

August 1, 2022 until June 30, 2023.

In France, the 2023 Finance Act

provides for the introduction of a cap

on all electricity production exposed

to market prices over a retroactive

and extended period In Italy the

government has already adopted an

extraordinary solidarity contribution

for companies in the energy sector

Despite this support some energy

intensive companies have been

forced to scale back or even cease

their operations

“With the 2022

REPowerEU

plan,

the European Union aims to

reduce its energy dependence on

Russia through energy savings,

green energy production and

diversification of supplies.”

08 - OUR AMBITION

Engie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated ReportEngie - 2023 Integrated Report
Powered by Fluidbook