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 enormous will increase in vitality payments hit households over the subsequent few months.

The most recent push got here with German chancellor Olaf Scholtz’s backing for a new gas pipeline linking Spain and Portugal to central Europe through France. The proposal, backed as we speak by Madrid and Lisbon, might be prepared inside 9 months, in response to Spanish vitality and atmosphere minister Teresa Ribera.

Within the meantime, in response to Portuguese prime minister António Costa, the port of Sines on his nation’s south-west coast might be used as a hub to ship liquefied pure fuel into Europe. LNG is changing into more and more vital as Russian fuel dwindles, however Europe faces strong competition from Asia to lock in provides for the winter months.

The EU has recognized the shortage of other pipelines as a key impediment in beefing up the bloc’s vitality infrastructure. Berlin is already beneath severe stress after Russia minimize flows by means of Nord Stream 1, the important thing connector with Europe, which is at present operating at simply 20 per cent capability. German households are bracing for a surge in heating payments this winter because the shortfall pushes up costs and complicates the nation’s efforts to fill its fuel storage amenities.

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

Low rainfall can be complicating issues. Norway this week stated it could curb electrical energy exports to Europe if water ranges for its hydropower vegetation remained low, denting hopes it might come to its neighbours’ rescue. And in Germany, low levels 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 fuel.

Within the UK, forecasts for household energy bills proceed to escalate, fuelling a deepening cost of living crisis. The most recent, from consultancy Auxilione, suggests the typical might high £5,000 subsequent yr, following a steep rise in wholesale fuel costs.

Ministers are assembly power company chiefs to debate doable treatments, whereas additionally drawing up plans to fight the threat of outages this winter. On the constructive aspect, a standard entrance towards Russia’s vitality squeeze has improved fractious relations between the UK and the EU.

The IMF final week advised European international locations cross on elevated vitality prices to shoppers to encourage vitality saving and the shift to greener energy, albeit with focused assist for poorer households which are disproportionately affected by the will increase.

In the meantime, the Worldwide Vitality Company stated western sanctions had solely had a “restricted influence” on Russian oil output. Though exports have fallen to Europe, the US, Japan and Korea, the routing of flows to international locations comparable 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 era in Europe and the Center East as fuel turns into too costly.

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

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Have to know: the financial system

New UK GDP figures this morning confirmed the financial system shrank 0.1 per cent within the second quarter, following progress of 0.7 per cent within the first three months of the yr, as households minimize spending and falling Covid instances and testing depressed well being output. The nation additionally reported its worst commerce deficit since information started.

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Drought was formally declared throughout elements of England, because the UK suffers its driest summer season for 50 years, with rainfall, river flows, soil moisture, groundwater and reservoir ranges all much lower than normal.

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

The German financial system, specifically its industrial sector, has been hit exhausting by surging inflation, provide chain points and faltering world demand. Progress 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 an enormous threat to business.

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Fed official Mary Daly instructed the FT it was too quickly to “declare victory” against inflation regardless of Wednesday’s encouraging CPI report. She did nonetheless sign help for the Fed to gradual the tempo of its rate of interest will increase.

Columbia’s first leftist authorities in trendy instances is concentrating on the rich and the nation’s commodities exports in a major tax reform. The measures purpose to lift an extra $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.

Have to know: enterprise

The top of SMIC, China’s high chipmaker, stated geopolitical tensions have 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 usage of information is transferring to the forefront of regulators’ antitrust concerns. Lina Khan, chair of the US Federal Commerce Fee, has emphasised the necessity to act extra aggressively towards vertical integration — offers that mix corporations in numerous elements of a price chain, comparable to Amazon’s buy of iRobot.

Pandemic-related migration to Florida has led Miami to turn into the brand new growth city for corporate lawyers.

Beijing’s zero-Covid coverage and weak shopper confidence has battered China’s second-hand marketplace for luxurious items comparable to high-end watches and handbags.

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

Regular progress is being made on driverless automobiles, writes innovation editor John Thornhill, however the lack of public acceptability and authorized certainty might but show the trade’s biggest roadblock.

Carmakers are additionally dealing with challenges of their drive in direction of an electrical future. China has monopolised supplies of supplies for electrical batteries whereas the price of people who stay in the marketplace is hovering. Chinese language firm CATL as we speak introduced a €7.3bn battery plant in Hungary, confirming its standing because 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 dying toll of simply 74. Consultants are sceptical, given the shortage of mass testing, whereas some counsel it might have extra to do with desirous to revive commerce with China.

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

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

The EU medicine regulator stated it could await trial data earlier than approving vaccines designed to sort out the unique 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 scientific trials for vaccines concentrating on the BA.4 and BA.5 variants of Omicron. BioNTech reported decrease gross sales and earnings than anticipated within the second quarter after the EU renegotiated its Covid vaccine contract amid a glut of pictures. Pfizer can be testing a vaccine for Lyme disease.

Novavax additionally pointed to decrease demand for jabs because it slashed its 2022 revenue forecast. Folks in wealthy international locations have turn into extra reluctant to take repeated booster pictures, whereas vaccine hesitancy remains to be a consider poorer nations.

Well being authorities are more and more centered on the menace from monkeypox. Vaccines are briefly provide throughout Europe, and within the UK might run out this month.

One other potential hazard is poliovirus, which has been detected in London sewage, prompting the rollout of a vaccine booster to kids within 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. In contrast with pre-pandemic instances, Britons are spending extra time socialising, stress-free and protecting match and fewer time commuting. Lengthy could it proceed.