Announced by the markets, it now reaches the bills of households and small businesses. The international increase in energy prices that began in the summer from 1 October will be in the electricity bill, +29.8%, and methane, +14.4% – Il Sole 24 Ore 28 September 2021 by Jacopo Giliberto –
Over the past year, the price of electricity in Italy and Europe has risen considerably. This is due both to the rise in the prices of raw materials such as gas and oil-derived fuels, from which more than half of the electricity produced in Italy is generated in total, and to the increase in costs for energy-producing companies.
The phenomenon is widespread across Europe with a sharp rise in electricity prices:
in Germany, writes Bloomberg, it has risen 60 per cent since the beginning of the year, while in Spain, where prices have doubled in the last two years, the government (which had promised to cut these costs) has had to cut energy taxes. In the UK, on the other hand, the authorities have increased the ceiling on the prices that electricity and gas suppliers can charge.
The increase in energy prices observed over the past year is mainly due to two factors.
The first factor is the increase in the prices of the raw materials from which electricity is produced: oil and gas.
Since April 2020, the price of oil – from which more than a quarter of the energy consumed in Europe is generated – has increased by 200%. In other words, it now costs three times what it did a year and a half ago: the price of Brent, the crude oil extracted from the North Sea, has risen in the same timeframe from $24 to $73 per barrel.
A similar increase was seen in the price of natural gas, the first source of energy in Italy, where it is used to generate about 40 per cent of electricity. In the second quarter of 2021 alone, its price rose by 30% compared to the previous quarter, partly due to a decrease in imported flows from Russia.
The second factor is the rising prices of carbon dioxide (CO2) emission permits traded on the European Emission Trading System (ETS): a market similar to the stock exchange, where companies trade permits to emit CO2.
The permits are issued by European authorities in a limited number, so those who want to emit/pollute more than their quota allows must buy additional permits on the market from more virtuous companies.
This system was introduced in 2005 to limit the emission of greenhouse gases by European companies, and ensures that those who pollute more transfer money to those who pollute less, incentivising the transition to renewable sources.
Since the beginning of the year, the price of a permit to emit one tonne of CO2 on the ETS has risen from
€ 3.70 → to € 56.00, increasing the costs of energy companies, which in turn passed them on to consumers.
As the number of permits is reduced every year, it is concrete that this price will tend to rise quickly: it is estimated that it could reach €85 by 2030.