By Sharon Udasin
Gernot Wagner, a climate economist at Columbia Business School, said that what makes things so difficult right now is the conflicting needs to cut both demand and prices.
“Higher gas and electricity prices, after all, lower demand,” Wagner told The Hill in an email.
Ordinarily, he explained, markets are set up in such a way that decreased supplies of gas or electricity lead to higher prices — sending signals that consumers need to slash demand and suppliers need to ramp up production.
“These are not ordinary times, which calls for extraordinary measures,” Wagner said, noting that relying on such signals won’t be sufficient at the moment.
Direct price interventions, he continued, are meant to reduce the burden on both consumers and businesses.
“What’s striking is how late these interventions are coming,” Wagner said, suggesting officials should have taken energy-saving steps like asking consumers to work from home for a few weeks during the remainder of the winter heating season.
“Where were the efforts to decouple electricity from gas prices in the spring, when it was clear that Putin was using energy — and especially gas — as a weapon?” Wagner asked.
“Better late than never,” he said.
In: “EU official unveils proposals to address energy crisis amid Ukraine war” by Sharon Udasin, The Hill (14 September 2022).