Rusty Williams elected UTC chairman of the board

California Electricity Prices are surging across PG&E, SCE, and SDG&E territories, driven by fixed grid costs, wildfire mitigation, CARE subsidies, and Net Energy Metering, burdening low-income renters and increasing statewide utility debt, CPUC reports show.

Key Points

High rates driven by fixed grid costs and policies, burdening low-income customers across PG&E, SCE, and SDG&E.

✅ Fixed costs: transmission, distribution, wildfire mitigation

✅ Solar NEM shifts grid costs onto remaining ratepayers

✅ CPUC, CARE, LIHEAP aim to relieve rising utility debt

California's electricity prices are among the highest in the country, new research says, and those costs are falling disproportionately on a customer base that's already struggling to pay their bills.

PG&E customers pay about 80 percent more per kilowatt-hour than the national average, according to a study by the energy institute at UC Berkeley's Haas Business School with the nonprofit think tank Next 10. The study analyzed the rates of the state's three largest investor-owned utilities and found that Southern California Edison charged 45 percent more than the national average, while San Diego Gas & Electric charged double. Even low-income residents enrolled in the California Alternate Rates for Energy program paid more than the average American.

"California's retail prices are out of line with utilities across the country," said UC Berkeley assistant professor and study co-author Meredith Fowlie, citing Hawaii and some New England states among the outliers with even higher rates. "And they're increasing, as regulators face calls for action across the state."

So why are prices so high?
One reason is that California's size and geography inflate the "fixed" costs of operating its electric system, even as the state considers revamping electricity rates to clean the grid in parallel, which include maintenance, generation, transmission, and distribution as well as public programs like CARE and wildfire mitigation, according to the study. Those costs don't change based on how much electricity residents consume, yet between 66 and 77 percent of Californians' electricity bills are used to offset the costs of those programs, the study found.

These are legitimate expenses, Fowlie said. However, because lower-income residents use only moderately less electricity than higher income households, they end up with a disproportionate share of the burden, according to the study. And while the bills of older, wealthier Californians continue to decrease as they adopt cost-efficient alternatives like the state's Net Energy Metering solar program and the resulting solar power cost shift dynamic, costs will keep rising for a shrinking customer base composed mostly of low- and middle-income renters who still use electricity as their main energy source.

"When households adopt solar, they're not paying their fair share," Fowlie said. While solar users generate power that decreases their bills, they still rely on the state's electric grid for much of their power consumption - without paying for its fixed costs like others do.

"As this continues it's going to make electricity even more unaffordable," said F. Noel Perry, founder of Next 10, which funds nonpartisan research on the economy and environment.

PG&E this month raised its electricity rates 3.7 percent, amounting to a $5.01 a month increase for the average residential customer, who now pays $138.85 a month for electricity. It was the second increase this year, as regulators consider major changes to electric bills statewide, said Mark Toney, executive director of The Utility Reform Network, who noted that higher rates are particularly difficult for those who have lost their jobs in the pandemic. The California Public Utilities Commission last year approved a PG&E plan for more incremental increases through Dec. 31, 2022.

PG&E spokesperson Kristi Jourdan said in an email statement that the company was committed to keeping prices as low as possible as the state weighs income-based flat-fee utility bills proposals, and that although some programs are meant to be subsidized through rates, "in other cases, given that some customers have greater access to energy alternatives, the remaining customers - often those with limited means - are left paying unintended subsidies."

The costs quickly became overwhelming for Fretea Sylver, who rents a small house in Castro Valley and lost much of her work as the owner of a small woodwork business early in the pandemic. "They're little tiny changes but they accumulate. You turn around and you're like wait a second, why is my bill $20 more?," Sylver said. "And you have to pay it, no matter what."

Many more are unable to pay. Between February and December of last year, Californians accumulated more than $650 million in late payments from their utility providers, according to an analysis by the CPUC. In 2019, utility debt fell $71,646,869 from the prior year.

Sylver, who was on unemployment for 10 months last year, accumulated over $600 in unpaid PG&E bills. "We sort of went into a bit of debt, having to use credit cards and loans to sustain what we had to pay for. We're trying to catch up," Sylver said. The family received some help from the federal Low-Income Home Energy Assistance Program, which provides up to $1,000 to those who are late on their utility bills.

The study identified improvements to make California's power grid more equitable, such as income-based fixed electricity charges for the grid's cost that are based on income. Republican state senators this week called on the state to use federal relief money to forgive the billions Californians owe in utility debt, even as some lawmakers move to overturn income-based utility charges amid ongoing debate. Californians are currently protected by a statewide moratorium on disconnection for nonpayment of electricity bills through June 30. The CPUC this month began taking public input on the issue of how to grant some relief to those who have fallen behind on their utility bills.

This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.

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TotalEnergies VSB Acquisition accelerates renewable energy growth, expanding wind and solar portfolios across Germany and Europe, advancing decarbonization, net-zero targets, and the energy transition through a US$1.65 billion strategic clean power investment.

Key Points

A US$1.65B deal: TotalEnergies acquires VSB to scale wind and solar in Europe and advance net-zero goals.

✅ US$1.65B purchase expands wind and solar pipeline

✅ Strengthens presence in Germany and wider Europe

✅ Advances net-zero, energy transition objectives

In a major move to expand its renewable energy portfolio, French energy giant TotalEnergies has announced its decision to acquire German renewable energy developer VSB for US$1.65 billion. This acquisition represents a significant step in TotalEnergies' strategy to accelerate its transition from fossil fuels to greener energy sources, aligning with the global push towards sustainability and carbon reduction, as reflected in Europe's green surge across key markets.

Strengthening TotalEnergies’ Renewable Energy Portfolio

TotalEnergies has long been one of the largest players in the global energy market, historically known for its oil and gas operations. However, in recent years, the company has made a concerted effort to diversify its portfolio and shift its focus toward renewable energy. The purchase of VSB, a leading developer of wind and solar energy projects, occurs amid rising European wind investment trends and is a clear reflection of TotalEnergies' commitment to this green energy transition.

VSB, based in Dresden, Germany, specializes in the development, construction, and operation of renewable energy projects, particularly wind and solar power. The company has a significant presence in Europe, with a growing portfolio of projects in countries like Germany, where clean energy accounts for 50% of electricity today, Poland, and the Czech Republic. The acquisition will allow TotalEnergies to bolster its renewable energy capacity, particularly in the wind and solar sectors, which are key components of its long-term sustainability goals.

By acquiring VSB, TotalEnergies is not only increasing its renewable energy output but also gaining access to a highly experienced team with a proven track record in energy project development. This move is expected to expedite TotalEnergies’ renewable energy ambitions, enabling the company to build on VSB’s strong market presence and established partnerships across Europe.

VSB’s Strategic Role in the Energy Transition

VSB’s expertise in the renewable energy sector makes it a valuable addition to TotalEnergies' green energy strategy. The company has been at the forefront of the energy transition in Europe, particularly in wind energy development, as offshore wind is set to become a $1 trillion business over the coming decades. Over the years, VSB has completed numerous large-scale wind projects, including both onshore and offshore installations.

The acquisition also positions TotalEnergies to better compete in the rapidly growing European renewable energy market, including the UK, where offshore wind is powering up alongside strong demand due to increased governmental focus on achieving net-zero emissions by 2050. Germany, in particular, has set ambitious renewable energy targets as part of its Energiewende initiative, which aims to reduce the country’s carbon emissions and increase the share of renewables in its energy mix. By acquiring VSB, TotalEnergies is not only enhancing its capabilities in Germany but also gaining a foothold in other European markets where VSB has operations.

With Europe increasingly shifting toward wind and solar power as part of its decarbonization efforts, including emerging solutions like offshore green hydrogen that complement wind buildouts, VSB’s track record of developing large-scale, sustainable energy projects provides TotalEnergies with a strong competitive edge. The acquisition will further TotalEnergies' position as a leader in the renewable energy space, especially in wind and solar power generation.

Financial and Market Implications

The US$1.65 billion deal marks TotalEnergies' largest renewable energy acquisition in recent years and underscores the growing importance of green energy investments within the company’s broader business strategy. TotalEnergies plans to use this acquisition to scale up its renewable energy assets and move closer to its target of achieving net-zero emissions by 2050. The deal also positions TotalEnergies to capitalize on the expected growth of renewable energy across Europe, particularly in countries with aggressive renewable energy targets and incentives.

The transaction is also expected to boost TotalEnergies’ presence in the global renewable energy market. As the world increasingly turns to wind, solar, and other sustainable energy sources, TotalEnergies is positioning itself to be a major player in the global energy transition. The acquisition of VSB complements TotalEnergies' previous investments in renewable energy and further aligns its portfolio with international sustainability trends.

From a financial standpoint, TotalEnergies’ purchase of VSB reflects the growing trend of large energy companies investing heavily in renewable energy. With wind and solar power becoming more economically competitive with fossil fuels, this investment is seen as a prudent long-term strategy, one that is likely to yield strong returns as demand for clean energy continues to rise.

Looking Ahead: TotalEnergies' Green Transition

TotalEnergies' acquisition of VSB is part of the company’s broader strategy to diversify its energy offerings and shift away from its traditional reliance on oil and gas. The company has already made significant strides in renewable energy, with investments in solar, wind, and battery storage projects across the globe, as developments like France's largest battery storage platform underline this momentum. The VSB acquisition will only accelerate these efforts, positioning TotalEnergies as one of the foremost leaders in the clean energy revolution.

By 2030, TotalEnergies plans to allocate more than 25% of its total capital expenditure to renewable energies and electricity. The company has already set ambitious goals to reduce its carbon footprint and shift its business model to align with the global drive toward sustainability. The integration of VSB into TotalEnergies’ portfolio signals a firm commitment to these goals, ensuring the company remains at the forefront of the energy transition.

In conclusion, TotalEnergies’ purchase of VSB for US$1.65 billion marks a significant milestone in the company’s renewable energy journey. By acquiring a company with deep expertise in wind and solar power development, TotalEnergies is taking decisive steps to strengthen its position in the renewable energy market and further its ambitions of achieving net-zero emissions by 2050. This acquisition will not only enhance the company’s growth prospects but also contribute to the ongoing global shift toward clean, sustainable energy sources.

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Doug Ford's Hydro One firing vow targets CEO pay, the utility's board, and privatization, amid Ontario politics over electricity rates, governance, and control, raising questions about legal tools, contracts, and impacts on customers and taxpayers.

Key Points

Ford vows to oust Hydro One's CEO and board to curb pay and signal rate restraint, subject to legal and governance limits.

✅ Province lacks direct control post-privatization

✅ Possible board removals to influence executive pay

✅ Impact on rates, contracts, and shareholders unclear

Ontario PC Leader Doug Ford is vowing to fire the head of Hydro One, and its entire board if he's elected premier in June.

Ford made the announcement, calling President and CEO Mayo Schmidt, Premier "Kathleen Wynne's $6-Million dollar man," referring to his yearly salary and bonuses, which now add up to $6.2 million.

"This board and this CEO are laughing themselves to the bank," Ford said.

However, it's unclear how Ford would do that since the province does not control the company anymore.

"We don't have the ability to go out and say we are firing the CEO at Hydro One," PC energy critic Todd Smith said while speaking to reporters after Ford's remarks.

#google#

However, he said "we do have tools at our disposal in the tool box. The unfortunate thing is that Kathleen Wynne and the Liberals have just let those tools sit there for the last couple of years and [have] not taken action on things like this."

Smith declined to provide details about what those tools are, but suggested Ford would have the right to fire Hydro's board.

He said that would send a message "that we're not going to accept these salaries."

Smith says the Ontario gov still has the right to fire Hydro One board. What about their contracts? Pay them out? Smith says they don't know the details of people's contacts

We will not engage in politics,' Hydro One says

A Hydro One spokesperson said the amount customers pay to compensate the CEO's salary is the same as before privatization — two cents on each monthly bill.

"We will not engage in politics, however our customers deserve the facts," said the email statement to CBC Toronto.

"Nearly 80 per cent of the total executive compensation package is paid for by shareholders."

Ontario NDP MPP Peter Tabuns says Ford is pro-privatization, and that won't help those struggling with high hydro bills. (Michelle Siu/The Canadian Press)

Peter Tabuns, the NDP's energy critic, said his government would aim to retake public control of Hydro One to cap CEO pay and control the CEO's "outrageous salary."

But while he shares Ford's goal of cutting Schmidt's pay, Tabuns blasted what he believes would be the PC leader's approach.

"Doug Ford has no idea how to reign [sic] in the soaring hydro bills that Ontario families are facing — in fact, if his threats of further privatization include hydro, he'll drive bills and executive salaries ever higher," he said in an email statement.

The only plan we've heard from Doug Ford so far is firing people and laying off people.- Glenn Thibeault, Energy Minister

​Tabuns says his party would aim to cut hydro bills by 30 per cent.

Meanwhile, Liberal Energy Minister Glenn Thibeault said Ford's plan will do nothing to address the actual issue of keeping hydro rates low, comparing his statement Thursday to the rhetoric and actions of U.S. President Donald Trump.

"The only plan we've heard from Doug Ford so far is firing people and laying off people," Thibeault said.

"What I'm seeing a very strong prevalence to is the person running the White House. He's been doing a lot of firing as well and that's not been working out so well for them."

Wynne government has taken steps to cut hydro bills, including legislation to lower electricity rates in Ontario.

Hydro prices have shot up in recent years prompting criticism from across Ontario. Wynne made the controversial move of privatizing part of the utility beginning in 2015.

By Oct. 2017, the Ontario Liberal government's "Fair Hydro Plan" had brought down the average household electricity bill by a 25% rate cut from the peak it hit in the summer of 2016. The Wynne government has also committed to keep rate increases below inflation for the next four years, but admits bills will rise significantly in the decade that follows as a recovery rate could drive costs higher.

Ford blasted the government's moves during a Toronto news conference, echoing calls to scrap the Fair Hydro Plan and review other options.

"The party's over with the tax payer's money, we're going to start respecting the tax payers," Ford said, repeatedly saying the money spent on Hydro One salaries is "morally indefensible."

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WA $600 Electricity Credit supports households with power bills as a budget stimulus, delivering an automatic rebate via Synergy and Horizon, funded by the Bell Group settlement to aid COVID-19 recovery and local spending.

Key Points

A one-off $600 power bill credit for all Synergy and Horizon residential accounts, funded by the Bell Group settlement.

✅ Automatic, not means-tested; applied to Synergy and Horizon accounts.

✅ Can offset upcoming bills or carry forward to future statements.

✅ Funded by Bell Group payout; aims to ease cost-of-living pressures.

Washington Premier Mark McGowan has announced more than a million households will receive a $600 electricity credit on their electricity account before their next bill.

The $650 million measure will form part of Thursday's pre-election state budget, similar to legislation to lower electricity rates in other jurisdictions, which has been delayed since May because of the pandemic and will help deflect criticism by the opposition that Labor hasn't done enough to stimulate WA's economy.

Mr McGowan made the announcement on Sunday while visiting a family in the electorate of Bicton.

"Here in WA, our state is in the best possible position as we continue our strong recovery from COVID-19, but times are still tough for many West Australians, and there is always more work to do," he said.

"[The credit] will mean WA families have a bit of extra money available in the lead up to Christmas.

"But I have a request, if this credit means you can spend some extra money, use it to support our local WA businesses."

The electricity bill credit will be automatically applied to every Synergy or Horizon residential account from Sunday, echoing moves such as reconnections for nonpayment by Hydro One in Canada.

It can be applied to future bills and will not be means tested.

"The $600 credit is fully funded through the recent Bell Group settlement, for the losses incurred in the Bell Group collapse in the early 1990s," Mr McGowan said.

"It made sense that these funds go straight back to Western Australians."

In September, the liquidator for the Bell Group and its finance arm distributed funds to its five major creditors, including $670 million to the WA government. The payment marked the close of the 30-year battle to recover taxpayer funds squandered during the WA Inc era of state politics.

The payout is the result of litigation stemming from the 1988 partnership between then Labor government and entrepreneur Alan Bond in acquiring major interests in Robert Holmes à Court’s failing Bell Group, following the 1987 stock market crash.

WA shadow minister for cost of living, Tony Krsticevic, said the $600 credit was returning money back into West Australian's pockets from "WA Labor's darkest days".

“This is taxpayers’ money out of a levy which was brought in to pay for Labor’s scandalous WA Inc losses of $450 million in the 1980s,” he said.

“This money should be returned to West Australians.

“WA families are in desperate need of it because they are struggling under cost of living increases of $850 every year since 2017 under WA Labor, amid concerns elsewhere that an electricity recovery rate could lead to higher hydro bills.

“But they need more than just a one-off payment. These $850 cost of living increases are an on-going burden.”

Prior to the onset of the coronavirus pandemic, the opposition believed it was gaining traction by attacking the government's increases to fees and charges in its first three budgets, and by urging an electricity market overhaul to favor consumers.

Last year, Labor increased household fees and charges by $127.77, which came on top of increases over the prior two budgets, as other jurisdictions faced hydro rate increases of around 3 per cent.

According the state's annual report on its finances released in September, the $2.6 billion budget surplus forecast in the at the end of 2019 had been reduced by $920 million to $1.7 billion despite the impact of the coronavirus.

But total public sector net debt was at $35.4 billion, down from the $36.1 billion revision at the end of 2019 in the mid-year review.

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Africa Energy Access Funding faces disbursement bottlenecks as SDG 7 goals demand investment in decentralized solar, minigrids, and rural electrification; COVID-19 pressures donors, requiring faster approvals, standardized documentation, and stronger project preparation and due diligence.

Key Points

Financing to expand Africa's electrification, advancing SDG 7 via disbursement to decentralized solar and minigrids.

✅ Accelerates investment for SDG 7 and rural electrification

✅ Prioritizes decentralized solar, minigrids, and utilities

✅ Speeds approvals, standard docs, and project preparation

The time frame from final funding approval to disbursement can be the most painful part of any financing process, and the access-to-electricity sector is not spared.

Amid the global spread of the coronavirus over the last few weeks, there have been several funding pledges to promote access to electricity in Africa. In March, the African Development Bank and other partners committed $160 million for the Facility for Energy Inclusion to boost electricity connectivity in Africa through small-scale solar systems and minigrids. Similarly, the Export-Import Bank of the United States allocated $91.5 million for rural electrification in Senegal.

Rockefeller chief wants to redefine 'energy poverty'

Rajiv Shah, president of The Rockefeller Foundation, believes that SDG 7 on energy access lacks ambition. He hopes to drive an effort to redefine it.

Currently, funding is not being adequately deployed to help achieve universal access to energy. The International Energy Agency’s “Africa Energy Outlook 2019” report estimated that an almost fourfold increase in current annual access-to-electricity investments — approximately $120 billion a year over the next 20 years — is required to provide universal access to electricity for the 530 million people in Africa that still lack it.

While decentralized renewable energy across communities, particularly solar, has been instrumental in serving the hardest-to-reach populations, tracking done by Sustainable Energy for All — in the 20 countries with about 80% of those living without access to sustainable energy — suggests that decentralized solar received only 1.2% of the total electricity funding.

The spread of COVID-19 is contributing significantly to Africa’s electricity challenges across the region, creating a surge in the demand for energy from the very important health facilities, an exponential increase in daytime demand as a result of most people staying and working indoors, and a rise from some food processing companies that have scaled up their business operations to help safeguard food security, among others. Thankfully — and rightly so — access-to-electricity providers are increasingly being recognized as “essential service” providers amid the lockdowns across cities.

To start tackling Africa’s electricity challenges more effectively, “funding-ready” energy providers must be able to access and fulfill the required conditions to draw down on the already pledged funding. What qualifies as “funding readiness” is open to argument, but having a clear, commercially viable business and revenue model that is suitable for the target market is imperative.

Developing the skills required to navigate the due-diligence process and put together relevant project documents is critical and sometimes challenging for companies without prior experience. Typically, the final form of all project-related agreements is a prerequisite for the final funding approval.

In addition, having the right internal structures in place — for example, controls to prevent revenue leakage, an experienced management team, a credible board of directors, and meeting relevant regulatory requirements such as obtaining permits and licenses — are also important indicators of funding readiness.

1. Support for project preparation. Programs — such as the Private Financing Advisory Network and GET.invest’s COVID-19 window — that provide business coaching to energy project developers are key to helping surmount these hurdles and to increasing the chances of these projects securing funding or investment. Donor funding and technical-assistance facilities should target such programs.

2. Project development funds. Equity for project development is crucial but difficult to attract. Special funds to meet this need are essential, such as the $760,000 for the development of small-scale renewable energy projects across sub-Saharan Africa recently approved by the African Development Bank-managed Sustainable Energy Fund for Africa.

3. Standardized investment documentation. Even when funding-ready energy project developers have secured investors, delays in fulfilling the typical preconditions to draw down funds have been a major concern. This is a good time for investors to strengthen their technical assistance by supporting the standardization of approval documents and funding agreements across the energy sector to fast-track the disbursement of funds.

4. Bundled investment approvals and more frequent approval sessions. While we implement mechanisms to hasten the drawdown of already pledged funding, there is no better time to accelerate decision-making for new access-to-electricity funding to ensure we are better prepared to weather the next storm. Donors and investors should review their processes to be more flexible and allow for more frequent meetings of investment committees and boards to approve transactions. Transaction reviews and approvals can also be conducted for bundled projects to reduce transaction costs.

5. Strengthened local capacity. African countries must also commit to strengthening the local manufacturing and technical capacity for access-to-electricity components through fiscal incentives such as extended tax holidays, value-added-tax exemptions, accelerated capital allowances, and increased investment allowances.

The ongoing pandemic and resulting impacts due to lack of electricity have further shown the need to increase the pace of implementation of access-to-electricity projects. We know that some of the required capital exists, and much more is needed to achieve Sustainable Development Goal 7 — about access to affordable and clean energy for all — by 2030.

It is time to accelerate our support for access-to-electricity companies and equip them to draw down on pledged funding, while calling on donors and investors to speed up their funding processes to ensure the electricity gets to those most in need.

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German Energy Price Brakes harness price signals in a market-based policy, cutting gas consumption, preserving industrial output, and supporting CO2 reduction, showcasing Germany's resilience and adaptation while protecting households and businesses across Europe.

Key Points

Fixed-amount subsidies preserving price signals to curb gas use, shield consumers, and sustain industrial output.

✅ Maintains incentives via market-based price signals

✅ Cuts gas consumption without distorting EU markets

✅ Protects households and industry while curbing CO2

German industry and society are once again proving much more resilient and adaptable than certain people feared. Horror scenarios of a dangerous energy rationing or a massive slump in our economy have often been bandied about. But we are nowhere near that. With a challenging year just behind us, this is good news — not only for Germany, but also for Europe, where France-Germany energy cooperation has strengthened solidarity.

Companies and households reacted swiftly to the sharp increases in energy prices, in line with momentum in the global energy transition seen across markets. They installed more efficient heating or production facilities, switched to alternatives and imported intermediate products. The results are encouraging: German households and businesses have reduced gas consumption significantly, despite recent cold weather. From the start of the war in Ukraine to mid-December industrial gas consumption in Germany was (temperature-adjusted) around 20 per cent lower than the average level for the preceding three years. Even if some firms have cut back production, especially in energy-intensive sectors, industrial output as a whole has only fallen by about 1 per cent since the start of 2022. Added to this, in a survey released by the Ifo institute in November, over a third of German companies saw the potential to reduce gas consumption further without endangering output.

Instead of imposing excessive laws and regulations, we have relied on price signals and the prudence of market participants to create the right incentives and reduce gas consumption, as falling costs like record-low solar power prices continue to reinforce those signals across sectors.

We will follow this approach in coming months, when energy savings will remain important, even as the EU electricity outlook anticipates sharply higher demand by 2050. Our latest relief measures will not distort price signals. To this end, the Bundestag approved gas and electricity price brakes in its final session in 2022. They are designed to function without any intervention in markets or prices. This system will pay out a fixed amount relative to previous years’ consumption and the current difference to a reference price — regardless of current consumption.

Energy price brakes are the main component of Germany’s “protective shield”, which makes up to €200bn available for measures in 2022 to 2024. Seen in relation to the German economy’s size, its past heavy reliance on Russian energy imports and the fact that the measures will expire in 2024, these are balanced and expedient mechanisms. In contrast to instruments used in other countries, our new arrangements will not affect the price formation process driven by supply and demand, or on incentives to save gas. Companies and households will continue to save the full market price when they reduce consumption by a unit of gas or electricity. In this way, the price brakes also avoid the creation of additional demand for gas at the expense of consumers in other European countries, even as Europe’s Big Oil turning electric signals broader structural shifts in energy markets. No one need fear that competition will be distorted or that gas will be bought up. Indeed, a recent IMF working paper on cushioning the impact of high energy prices on households explicitly praises the German energy price brakes.

Current developments confirm the effectiveness of a market-based approach — and show that we should also rely on price signals when it comes to reducing CO₂ emissions, as suggested by IEA CO2 trends in recent years. Last year, households and companies had only a few weeks to adapt, yet we have already seen a strong response. The effect of CO₂ prices can be even stronger, as adaptation is possible over a much longer time and they additionally affect expectations and long-term decisions. Regulatory interventions and subsidy schemes, even if well targeted, cannot compete with market co-ordination and incentives that support individual decision-making and promote innovation.

Europe and Germany can weather this crisis without a collapse in industrial production. We also have an opportunity to deal efficiently with the move to climate neutrality, aligned with Germany’s hydrogen strategy for imported low-carbon fuels. In both cases, we should have confidence in price signals as well as in the power of people and business to innovate and adapt.

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