Finally, someone is hitting the right tone on Europe’s energy crisis.
On July 14th, as France was celebrating Bastille Day, President Emmanuel Macron accused Vladimir Putin of weaponizing energy supplies to punish Europe for assisting Ukraine. He argued that Russia would likely cut off gas supplies entirely, putting France and the rest of the bloc through a very tough winter. In his most severe warning yet, Macron urged mobilization, appealing to government agencies, companies and households to reduce energy consumption. The goal: sobriété énergétique, or collective energy savings.
The message is long overdue.
Europe may be in the grips of a heat wave, but we are racing against the clock to cut new energy deals and fill up gas storage ahead of the colder months. Governments have a responsibility to inform the public about the severity of the situation — which Deutsche Bank predicts could be a winter of gas rationing, raising the prospects of recession. If policy makers want public support for uncomfortable measures, such as temporary shutdowns of business activity to save essential activities, which may be necessary in a worst-case scenario, they need to be prepping people clearly now.
In his address, Macron put the blame squarely on Putin, not on sanctions or the actions of the Ukrainian government. Had Russia not invaded a sovereign country, the thinking goes, we would not be debating how to save energy to this extent in France and Europe. This may seem obvious, but it will be easy to forget as the months go by and high energy bills and broader price pressures become entrenched. The French president said he expects the war to drag on into a long conflict and suggested Russia is waging a hybrid war on allies by targeting everything from gas to food.
Although the situation is bleak, Macron managed to be somewhat upbeat in his delivery. He argued that bringing down energy consumption and improving efficiency provided a joint response to the two biggest challenges facing the continent: the war in Ukraine and the climate crisis. The pitch may seem forced, but it gives his plan a sense of larger purpose. There is no denying Europe is paying a heavy price for its massive dependence on Russia, but there is room for optimism over the medium-term. Russia is no longer a credible or welcomed energy partner for the European Union, energy diversification away from Russia is inevitable under Putin, and change is happening much faster than anticipated.
The Bastille Day interview is one of those events in France that still gathers a big audience around the television. Macron used it wisely in announcing that his government will soon introduce energy-savings targets for public agencies, big companies and citizens. The campaign for sobriété énergétique has now made its way to the mass media, with ministers repeating the term on the radio, news shows and newspapers. If it works, it could serve as a road map for other European countries.
Transparency will be key to get the public on board if the worst-case scenario manifests, and European governments are forced to ration energy. Setting clear targets is a good start, as it makes clear what will be required from consumers big and small. But if people feel government and industry are not taking the effort seriously, they will hardly be interested in cutting back on energy themselves.
According to the French Ministry for the Energy Transition, government bodies will be briefed on practical steps to reduce consumption, from lowering air conditioning to dimming lights after work. As for companies, it a trickier balance. The French Finance Ministry concedes there are some sectors that will have to take priority. Nonetheless, Macron made it clear he expects big companies to join in the effort one way or another to reduce the country’s total energy consumption by 10% within two years.
These fundamental changes for consumers and industry require major political goodwill — and that is certainly lacking in Europe. Macron himself faces a volatile domestic scenario after losing his majority in the National Assembly. Meanwhile, Germany, which fears a Lehman Brothers moment in the energy market as supply runs tight and prices jump, is waking up to decades of botched energy policy. With utility Uniper SE burning through cash and already drawing gas from storage in July, Berlin may soon find itself asking for support in securing supplies. In Italy, where gas supplies are also key for its heavily industrialized north, the future of Prime Minister Mario Draghi is uncertain.
Goodwill starts with being honest with the public, and Macron has shown the right instincts by presenting the issues without sugarcoating them. This crisis requires a narrative that matches the magnitude and complexity of the challenges Europe is facing. The sooner governments and households start applying some sobriété énergétique, the better prepared we will be. It’s either that or a rude awakening in the cold of the winter.
Bloomberg
