Veronika Grimm holds the Chair in Economic Theory at Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU). The power markets are one focal point of her paintings. She has been a member of the German Council of Economic Experts since April 2020. We requested the financial professional 3 questions.
Professor Grimm, you’ve gotten expressed the view that it could be imaginable to do with out Russian gasoline at quick understand. How would that be completed?
Within the framework of the sanctions imposed in keeping with the Russian battle of aggression in opposition to Ukraine, Europe will have to paintings against briefly and comprehensively decreasing its bills to Russia for power imports. Thanks to the newest worth rises, Russia receives kind of 20 billion euros per thirty days from the EU. Russia may simply reply to any makes an attempt through the EU to prevent those cost flows through halting its deliveries of power resources. It is subsequently vital to arrange for this situation through assessing the industrial penalties and analysing tactics to maintain the location. Economists have explored those problems in a large number of research, one in all which I used to be concerned with. Our conclusion was once that it could be a problem and would lead to an important financial stoop. If a supply ban may no longer be have shyed away from for causes of safety coverage, then again, it could be manageable.
One function of Germany’s G7 presidency is: “Strong alliances for a sustainable planet”. Will the present tendencies no longer result in new dependencies?
That is certainly one thing one will have to attempt to steer clear of. The transition to local weather neutrality generates doable for diversifying our power imports: world wide, there are way more international locations with very good stipulations for renewable energies than the ones with to be had resources of fossil energies. We can download hydrogen and artificial fuels from them. That provides upward thrust to new chances. When it involves assets that will probably be vital someday, we want to make sure that no dependencies emerge, despite the fact that we’re already fairly past due in doing this in some instances. We even have to seem intently at our industry relationships. However, one of the crucial largest demanding situations of the approaching years will probably be that fossil fuels will develop into dearer if we wish to be impartial of Russia. This will pose a risk to our competitiveness in some respects.
Will the power transition now be given a spice up?
I’m hoping so. When fossil power resources are pricey, it’s continuously value switching extra briefly to renewables. In different phrases, renewables create a chance for decreasing power prices. Reliable framework stipulations will want to be installed position to cause the immense private-sector investments vital for the transition and to hastily amplify the infrastructure required to move electrical energy and hydrogen. In this context, accelerating making plans, approval and implementation processes will probably be of essential significance.
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