In his alarming report on the state of European economies, former ECB President Mario Draghi strongly criticizes the functioning of the European electricity market. To reform it, he suggests in particular “decorrelating the price of renewable and nuclear energy from the higher and more volatile prices of fossil fuels” by developing long-term contracts. Other, more structural solutions are also on the table.
The challenge is existential. Left behind by the United States and China in economic competition, the French and Europeans risk seeing their standard of living seriously deteriorate in the years to come. This drop is partly linked to the high cost of energy. Electricity prices are two to three times higher on the Old Continent than across the Atlantic, which penalizes businesses and puts pressure on consumers’ bills.
“These gaps are mainly explained by the lack of natural resources on our continent but also by fundamental problems linked to our common energy market”observes Mario Draghi, author of a recent alarming report on the state of European economies. The former president of the European Central Bank (ECB) regrets that this market is “dominated by particular interests and financial rents”. To remedy this, federalist Mario Draghi proposes in particular to “decouple remuneration for renewable energies and nuclear power from production from fossil fuels”. This proposal arouses hostility from certain electricity suppliers.
