Can Europe avoid the energy bill apocalypse?

Good night from a sweltering London

European governments proceed to seek for methods of weaning themselves off Russian energy earlier than big will increase in energy payments hit households over the subsequent few months.

The newest push got here with German chancellor Olaf Scholtz’s backing for a brand new gasoline pipeline linking Spain and Portugal to central Europe by way of France. The proposal, backed right now by Madrid and Lisbon, could possibly be prepared inside 9 months, based on Spanish energy and surroundings minister Teresa Ribera.

In the meantime, based on Portuguese prime minister António Costa, the port of Sines on his nation’s south-west coast could possibly be used as a hub to ship liquefied pure gasoline into Europe. LNG is turning into more and more necessary as Russian gasoline dwindles, however Europe faces sturdy competitors from Asia to lock in provides for the winter months.

The EU has recognized the lack of different pipelines as a key impediment in beefing up the bloc’s energy infrastructure. Berlin is already below severe stress after Russia minimize flows by way of Nord Stream 1, the key connector with Europe, which is at present working at simply 20 per cent capability. German households are bracing for a surge in heating payments this winter as the shortfall pushes up costs and complicates the nation’s efforts to fill its gasoline storage amenities.

A spread of presidency measures to sort out the surge in energy costs are in operation throughout Europe, from value caps to tax cuts, windfall taxes and subsidies.

Low rainfall can also be complicating issues. Norway this week mentioned it might curb electrical energy exports to Europe if water ranges for its hydropower vegetation remained low, denting hopes it may come to its neighbours’ rescue. And in Germany, low ranges on the Rhine are including to enterprise worries: inland waterways could solely account for about 6 per cent of German transport volumes however are used to ship 30 per cent of coal, crude oil and pure gasoline.

In the UK, forecasts for family energy payments proceed to escalate, fuelling a deepening price of dwelling disaster. The newest, from consultancy Auxilione, suggests the common may high £5,000 subsequent yr, following a steep rise in wholesale gasoline costs.

Ministers are assembly energy firm chiefs to debate attainable treatments, whereas additionally drawing up plans to fight the menace of outages this winter. On the constructive facet, a standard entrance towards Russia’s energy squeeze has improved fractious relations between the UK and the EU.

The IMF final week instructed European nations go on elevated energy prices to customers to encourage energy saving and the shift to greener energy, albeit with focused assist for poorer households which might be disproportionately affected by the will increase.

Meanwhile, the International Energy Agency mentioned western sanctions had solely had a “limited impact” on Russian oil output. Although exports have fallen to Europe, the US, Japan and Korea, the routing of flows to nations corresponding to India, China and Turkey has mitigated the nation’s losses.

The IEA additionally lifted forecasts for oil demand because of its elevated use for energy technology in Europe and the Middle East as gasoline turns into too costly.

Amid the gloom there are some crumbs of consolation for customers. US petrol costs have dipped under $4 a gallon for the first time since Russia’s invasion of Ukraine. The pattern can also be being replicated in Europe, reviews our Energy Source e-newsletter: EU drivers are paying 9 per cent lower than in June and British drivers 8 per cent.

Latest information

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Need to know: the economic system

New UK GDP figures this morning confirmed the economic system shrank 0.1 per cent in the second quarter, following development of 0.7 per cent in the first three months of the yr, as households minimize spending and falling Covid circumstances and testing depressed well being output. The nation additionally reported its worst trade deficit since data started.

Latest for the UK and Europe

Drought was formally declared throughout components of England, as the UK suffers its driest summer season for 50 years, with rainfall, river flows, soil moisture, groundwater and reservoir ranges all a lot decrease than regular.

Industrial manufacturing in the eurozone elevated for the third month in a row, elevating hopes that provide chain issues could also be easing. The June rise of two.4 per cent on the earlier yr was properly forward of the 0.8 per cent forecast by economists.

The German economic system, specifically its industrial sector, has been hit exhausting by surging inflation, provide chain points and faltering international demand. Growth in what was historically Europe’s powerhouse has stagnated, with the IMF slashing its 2023 forecasts. On high of this, extreme drought alongside the Rhine poses a large menace to enterprise.

Global newest

Fed official Mary Daly advised the FT it was too quickly to “declare victory” towards inflation regardless of Wednesday’s encouraging CPI report. She did nevertheless sign assist for the Fed to sluggish the tempo of its rate of interest will increase.

Columbia’s first leftist authorities in fashionable instances is focusing on the rich and the nation’s commodities exports in a serious tax reform. The measures purpose to boost a further $5.8bn subsequent yr or 1.7 per cent of GDP.

Argentina raised rates of interest to 69.5 per cent as inflation leapt 7.4 per cent in July from the earlier month, marking an annual improve of 71 per cent.

Need to know: enterprise

The head of SMIC, China’s high chipmaker, mentioned geopolitical tensions had been creating panic in an trade already beset by excessive inflation and a gradual downturn in demand.

US west coast editor Richard Waters says the use of information is shifting to the forefront of regulators’ antitrust considerations. Lina Khan, chair of the US Federal Trade Commission, has emphasised the must act extra aggressively towards vertical integration — offers that mix corporations in numerous components of a price chain, corresponding to Amazon’s buy of iRobot.

Pandemic-related migration to Florida has led Miami to turn into the new growth city for company legal professionals.

Beijing’s zero-Covid coverage and weak client confidence has battered China’s second-hand market for luxurious items corresponding to high-end watches and purses.

One high-end trade positively not on the rocks — until you prefer it served that method — is Scotch whisky. The spirit has proved surprisingly resilient contemplating the headwinds of Brexit modifications in trade guidelines, provide chain issues and surging inflation. The variety of Scottish distilleries is at its highest since the second world conflict.

Steady progress is being made on driverless vehicles, writes innovation editor John Thornhill, however the lack of public acceptability and authorized certainty may but show the trade’s largest roadblock.

Carmakers are additionally going through challenges of their drive in the direction of an electrical future. China has monopolised provides of supplies for electrical batteries whereas the price of those who stay on the market is hovering. Chinese firm CATL right now introduced a €7.3bn battery plant in Hungary, confirming its standing as the world’s largest automobile battery producer.

Science spherical up

North Korea declared “victory” over Covid-19, simply three months after first admitting to an outbreak of the virus, with a complete demise toll of simply 74. Experts are sceptical, given the lack of mass testing, whereas some counsel it might have extra to do with eager to revive trade with China.

The Omicron variant continues to trigger havoc in components of the world. Tibetan cities had been locked down after experiencing their first Covid outbreak in two years. Lockdowns have additionally affected widespread Chinese vacationer locations corresponding to Hainan.

There was nevertheless optimism in Hong Kong, which this week shortened its lodge quarantine for worldwide arrivals to a few days.

The EU medicine regulator mentioned it might await trial information earlier than approving vaccines designed to sort out the authentic coronavirus and the Omicron variant. The choice contrasts with the US, which is planning to approve the jabs earlier than information on their efficacy are launched.

BioNTech and Pfizer are beginning medical trials for vaccines focusing on the BA.4 and BA.5 variants of Omicron. BioNTech reported decrease gross sales and earnings than anticipated in the second quarter after the EU renegotiated its Covid vaccine contract amid a glut of photographs. Pfizer can also be testing a vaccine for Lyme illness.

Novavax additionally pointed to decrease demand for jabs because it slashed its 2022 income forecast. People in wealthy nations have turn into extra reluctant to take repeated booster photographs, whereas vaccine hesitancy continues to be a think about poorer nations.

Health authorities are more and more targeted on the menace from monkeypox. Vaccines are briefly provide throughout Europe, and in the UK may run out this month.

Another potential hazard is poliovirus, which has been detected in London sewage, prompting the rollout of a vaccine booster to youngsters in the metropolis aged one to 9.

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Some excellent news…

Columnist Sarah O’Connor picks out a cheering nugget from some new official statistics. Compared with pre-pandemic instances, Britons are spending extra time socialising, stress-free and maintaining match and fewer time commuting. Long could it proceed.