Page 36 - bne IntelliNews monthly magazine October 2024

36 I Cover story bne October 2024
of over 2.1 births needed to keep the population stable.
Unsurprisingly the demographics in Ukraine are a catastrophe: Ukraine has the highest mortality rate and lowest fertility rate in the world – three deaths for every birth – according to the CIA factbook.
China is also suffering from a low fertility rate thanks to its previous “one child” policy, but Russia has seen its fertility rate increase in recent years from 1.4 to the current 1.83 thanks to Putin’s babies, the Kremlin’s highly successful natal support reforms that Putin introduced in his first term in office. As detailed in bne IntelliNews’ latest despair index (the sum of poverty, unemployment and inflation), Russia currently has its lowest level of despair since 1991 despite the strains of war, and is well ahead of most of Europe.
Permanent increase in energy costs
Rising energy prices are the obverse side of the coin to the rising food prices that have been permanently changed but the polycrisis. The cost of power in Europe spiked 20-fold in in 2022 but has since fallen back. But it has not fallen back to where it was in 2021.
High energy costs are a serious problem for Europe, but not for the self-sufficient US and Russia. The end of cheap
Major economies fertility rates, births per women
France 1.9
Germany 1.5
Italy 1.24
Spain 1.16
EU Average 1.46
Russian gas supplies, particularly to Germany, has caused a permanent change to the structure of Europe’s energy market and power prices remain double what they were pre-war.
“The price differential vis-à-vis the US is primarily driven by Europe’s lack of natural resources, as well as by Europe’s limited collective bargaining power despite being the world’s largest buyer of natural gas,” says Draghi. “However, the gap is also caused by fundamental issues with the EU’s energy market. Infrastructure investment is slow and suboptimal, both for renewables and grids. Market rules prevent industries and households from capturing the full benefits of clean energy in their bills. Financial and behavioural aspects of
experienced a decrease in 2023, aided by government measures. The UK also saw steep rises during this period.
While prices moderated in 2023, high volatility persisted, particularly in
the day-ahead and intraday markets. Negative prices (where electricity
prices fall below zero) have occurred frequently, reflecting supply-demand imbalances, especially during periods of excess renewable energy production.
In countries where natural gas is
a primary source for electricity generation, the wholesale electricity prices used by industry also surged,
with some industries seeing wholesale electricity prices jump by 300% to 500% by the end of 2022 in certain countries.
“The price differential vis-à-vis the US is primarily driven by Europe’s lack of natural resources, as well as by Europe’s limited collective bargaining power despite being the world’s largest buyer of natural gas”
Country
Fertility Rate (2024)
UK
1.6
derivative markets have driven higher price volatility. Higher energy taxation than other parts of the world adds a tax wedge to prices.”
To highlight the increased energy uncertainty, Europe may see a large 66-78mn cubic metres a day shortfall
– equivalent to a third of the UK’s consumption – this winter after Norway announced unscheduled pipeline maintenance work on September 26, coupled with Armed Forces of Ukraine (AFU) advances in Russia’s Kursk region near the Sudzha gas pumping station and disruptions to global LNG supplies due to hurricane Helene in Mexico.
In 2023, Germany consistently had the highest household electricity prices in the EU, reaching €0.40/kWh. Nuclear- powered France, on the other hand, maintained lower prices but saw a significant increase due to the energy crisis. Spain saw a large rise in 2022 but
To mitigate the effect of rising energy costs on industries, many governments introduced subsidies, price caps and financial support, but that has not shielded industry entirely from the price hikes.
Wholesale electricity prices in 2023 began to stabilise but remained elevated compared to pre-2020 levels, particularly in Europe and Asia. Businesses in the
UK currently pay the most for wholesale power, whereas Germany is somewhere in the middle of the range. In the US and some other regions, prices for industrial power remained lower due to a more diversified energy mix and access to domestic energy resources like shale gas. Industrial power costs in Europe are anticipated to remain volatile in 2024.
Germany’s industrial sector is highly energy-intensive, with demand patterns that can shift rapidly, so as industry recovered in 2023 it putting further
United States 1.84
Russia
1.83
China 1.5
Source: World Population Review, Our World in Data, CIA
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