European gas prices are double the price they were at the same time last year and incredibly c.15 times higher than they were in 2020. Only one year ago, Europe was heavily reliant on Russian natural gas, the International Energy Agency reported that natural gas imported from Russia via pipeline accounted for 45% of the European Union’s gas imports and almost 40% of total gas consumption. But with the conflict in Ukraine, this supply stopped abruptly.
This crisis may be impacting the volume of relocations and business travel, as well as remote work and housing policies, as companies restructure operations and governments impose mandates.
With a clear and urgent need, European states are working to decouple their energy from Russia by saving up its natural gas reserves and investing in renewable energy sources.
To date, the mild temperatures in the end of 2022 have helped ensure a reserve of supplies, but now with an extremely cold January, the International Energy Agency is warning Europe of a similar energy crisis next winter if measures don’t improve. EU plans show an intention to drop gas consumption by 15% by March 2023.
European Businesses Cutting Energy Use
Energy-heavy businesses across Europe are preparing themselves for the worst. Predictions are outlining potential deindustrialisation of parts of Europe, with companies being forced to move manufacturing and production to countries with cheaper energy.
There are some worrying trends occurring with no signs of the conflict abating, for example, the EU’s primary aluminium output was halved over the last year, and the Association of German Chambers of Commerce found that more than 25% of businesses in the chemicals sector and 16% in the auto sector said they were being forced to cut production.
Particularly at risk is the global auto industry, coupled with massive supply chain issues post covid, the energy-intensive industry will have to be making tough decisions when it comes to its future. And with most automotive parts coming from Europe, shortages will be felt on a global scale.
While this particular crisis has not yet occurred, European governments are monitoring the situation and drawing up plans to see how they could intervene in the coming months.
Business leaders across Europe are also being driven to investigate techniques that could cut their energy use both temporarily and permanently. French car company Renault is changing its car paint shop processes and technology which currently accounts for up to 40% of its gas demands. Other companies are reducing their energy consumption by turning down their thermostats, turning off machines, or even stopping production completely on weekends.
EU Residents Are Being Asked to Conserve Energy
The buck doesn’t stop with European businesses. EU residents will also have to change their energy habits. Germany and France have asked already requested that residents lower heating in their homes, unplug appliances, and to even only use electronics during off-peak hours.
The Finnish government has rolled out an energy-saving program called “Down a Degree” encouraging its citizens to share saunas and turn down the thermostat during sessions, use public transit for commuting, and take stairs over elevators and escalators when possible to cut energy for 95% of households.
The French government is planning to cap heating at 19 degrees, as well as implementing a rule that public employees must drive under a new speed limit of 110 kilometers an hour, in order to conserve petrol. Other initiatives include dimming the The Eiffel tower’s lights earlier at night and shutting off illuminated advertisements in Central Paris between the hours of 1 a.m. and 6 a.m. One may argue that these measures should be part and parcel of running a modern city instead of urgent measures..
Travel may also be changing in the coming months. French Government officials have been asked to travel by train (as opposed to air travel) for all government-related trips that take under four hours to reach their destination.
Hotels have yet to be affected, but if gas reserves run thin hotels may be asked to cap heating and turn off their lights at midnight.
While these recommendations for energy cuts to residents are so far voluntary, the future is less certain.
So, What Does This Mean for the Global Mobility Industry?
With so many contributing factors it’s tricky to draw conclusions in the current climate. Although, the energy crisis in Europe serious connotations on the global mobility industry in the coming years.
With potential energy cuts and curfews hitting hotels, air travel, and electricity, we could see business travel both to and within Europe rapidly decline. Corporate relocations and may be reassessed as higher utility expenses and housing values occur. Whilst remote or flexible work opportunities may increase as companies seek to reduce energy-related expenses for commercial and office real estate.
Whatever the impacts of the looming energy crisis, it will facilitate change across so many areas of life across Europe and potentially further afield.