What is the Cost of Europe’s Energy Crisis?
Europe is scrambling to cut its reliance on Russian fossil fuels.
As European gas prices soar eight times their 10-year average, countries are introducing policies to curb the impact of rising prices on households and businesses. These include everything from the cost of living subsidies to wholesale price regulation. Overall, funding for such initiatives has reached $276 billion as of August.
With the continent thrown into uncertainty, the above chart shows allocated funding by country in response to the energy crisis.
The Energy Crisis, In Numbers
Using data from Bruegel, the below table reflects spending on national policies, regulation, and subsidies in response to the energy crisis for select European countries between September 2021 and July 2022. All figures in U.S. dollars.
|Country||Allocated Funding||Percentage of GDP||Household Energy Spending,
|🇨🇿 Czech Republic||$5.9B||2.5%||16.1%|
Source: Bruegel, IMF. Euro and pound sterling exchange rates to U.S. dollar as of August 25, 2022.
Germany is spending over $60 billion to combat rising energy prices. Key measures include a $300 one-off energy allowance for workers, in addition to $147 million in funding for low-income families. Still, energy costs are forecasted to increase by an additional $500 this year for households.
In Italy, workers and pensioners will receive a $200 cost of living bonus. Additional measures, such as tax credits for industries with high energy usage were introduced, including a $800 million fund for the automotive sector.
With energy bills predicted to increase three-fold over the winter, households in the U.K. will receive a $477 subsidy in the winter to help cover electricity costs.
Meanwhile, many Eastern European countries—whose households spend a higher percentage of their income on energy costs— are spending more on the energy crisis as a percentage of GDP. Greece is spending the highest, at 3.7% of GDP.
Energy crisis spending is also extending to massive utility bailouts.
Uniper, a German utility firm, received $15 billion in support, with the government acquiring a 30% stake in the company. It is one of the largest bailouts in the country’s history. Since the initial bailout, Uniper has requested an additional $4 billion in funding.
Not only that, Wien Energie, Austria’s largest energy company, received a €2 billion line of credit as electricity prices have skyrocketed.
Is this the tip of the iceberg? To offset the impact of high gas prices, European ministers are discussing even more tools throughout September in response to a threatening energy crisis.
To reign in the impact of high gas prices on the price of power, European leaders are considering a price ceiling on Russian gas imports and temporary price caps on gas used for generating electricity, among others.
Price caps on renewables and nuclear were also suggested.
Given the depth of the situation, the chief executive of Shell said that the energy crisis in Europe would extend beyond this winter, if not for several years.
Visualizing the Scale of Global Fossil Fuel Production
How much oil, coal, and natural gas do we extract each year? See the scale of annual fossil fuel production in perspective.
The Scale of Global Fossil Fuel Production
Fossil fuels have been our predominant source of energy for over a century, and the world still extracts and consumes a colossal amount of coal, oil, and gas every year.
This infographic visualizes the volume of global fossil fuel production in 2021 using data from BP’s Statistical Review of World Energy.
The Facts on Fossil Fuels
In 2021, the world produced around 8 billion tonnes of coal, 4 billion tonnes of oil, and over 4 trillion cubic meters of natural gas.
Most of the coal is used to generate electricity for our homes and offices and has a key role in steel production. Similarly, natural gas is a large source of electricity and heat for industries and buildings. Oil is primarily used by the transportation sector, in addition to petrochemical manufacturing, heating, and other end uses.
Here’s a full breakdown of coal, oil, and gas production by country in 2021.
If all the coal produced in 2021 were arranged in a cube, it would measure 2,141 meters (2.1km) on each side—more than 2.5 times the height of the world’s tallest building.
China produced 50% or more than four billion tonnes of the world’s coal in 2021. It’s also the largest consumer of coal, accounting for 54% of coal consumption in 2021.
|Rank||Country||2021 Coal Production|
|% of Total|
|#7||🇿🇦 South Africa||234.5||3%|
India is both the second largest producer and consumer of coal. Meanwhile, Indonesia is the world’s largest coal exporter, followed by Australia.
In the West, U.S. coal production was down 47% as compared to 2011 levels, and the descent is likely to continue with the clean energy transition.
In 2021, the United States, Russia, and Saudi Arabia were the three largest crude oil producers, respectively.
|Rank||Country||2021 Oil Production |
|% of Total|
|#3||🇸🇦 Saudi Arabia||515.0||12%|
OPEC countries, including Saudi Arabia, made up the largest share of production at 35% or 1.5 billion tonnes of oil.
U.S. oil production has seen significant growth since 2010. In 2021, the U.S. extracted 711 million tonnes of oil, more than double the 333 million tonnes produced in 2010.
Natural Gas Production
The world produced 4,036 billion cubic meters of natural gas in 2021. The above graphic converts that into an equivalent of seven billion cubic meters of liquefied natural gas (LNG) to visualize it on the same scale as oil and gas.
Here are the top 10 producers of natural gas in 2021:
|Rank||Country||2021 Natural Gas Production |
|% of Total|
|#8||🇸🇦 Saudi Arabia||117.3||3%|
The U.S. was the largest producer, with Texas and Pennsylvania accounting for 47% of its gas production. The U.S. electric power and industrial sectors account for around one-third of domestic natural gas consumption.
Russia, the next-largest producer, was the biggest exporter of gas in 2021. It exported an estimated 210 billion cubic meters of natural gas via pipelines to Europe and China. Around 80% of Russian natural gas comes from operations in the Arctic region.
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