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Simone Tagliapietra and Georg Zachmann

Articles by Simone Tagliapietra and Georg Zachmann

The only quick-fix to Europe’s energy price crisis is saving energy

October 7, 2021

The only thing Europe can quickly do to prevent a potentially difficult winter is to actively promote energy conservation in both the residential and industrial sectors.

This piece was originally published in Euractiv.

Faced with spiralling energy prices, European governments are trying to shield vulnerable households and small businesses with tax cuts, price caps or rebates.
These temporary government interventions are designed to protect the most vulnerable households from the energy price spikes and ensure that the ongoing economic recovery is not derailed by the shock.
However, should the supply crisis continue to worsen or winter temperatures dip lower than usual, then the problem will not be one of consumers paying high prices but inadequacy of energy supply. If, as a consequence

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Letter: The lesson Europe should learn from the gas crisis

October 5, 2021

The Sound of Economics Live: Unboxing the State of the Union 2021
In this Sound of Economics Live episode, we look at the State of the Union address delivered by Ursula von der Leyen, President of the European Commission.

Speakers: Grégory Claeys, Maria Demertzis, Alicia García-Herrero and Giuseppe Porcaro
Topic: European Macroeconomics & Governance
Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Date: September 15, 2021

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Is Europe’s gas and electricity price surge a one-off?

September 13, 2021

Surging natural gas prices in Europe, driven by rising demand and tight supply, are pushing up electricity prices; to prevent volatility, governments need to commit more clearly to a low-carbon future.

The authors gratefully acknowledge the support of Giovanni Sgaravatti for the preparation of the charts included in this blogpost.

Since January 2021, natural gas prices have soared by more than 170% in Europe (Figure 1), sparking concerns about the potential macroeconomic implications.
Both demand and supply factors have contributed to a tightening of the European gas market.
European gas demand is increasing in residential heating, industry and power generation. Higher demand for residential heating due to a cold winter and widespread remote working pushed up overall European gas demand

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Europe’s Green Deal must reach beyond its borders

February 4, 2020

A European Climate and Sustainable Development Bank could become the external investment arm of the European Green DealUrsula von der Leyen has made climate change a top priority for the European Commission, proposing a European Green Deal that would make Europe climate neutral by 2050.This is good for Europe and for the world.It is good for Europe because deep decarbonisation represents a historic occasion to revitalise Europe’s economy and provide purpose and meaning to the common project.It is good for the world because it shows that pursuing climate neutrality by 2050 is not only technically and economically possible, but also politically rewarding. This is of paramount importance, as early deployment of low carbon technologies is key to making them globally competitive with high

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What the “gilets jaunes” movement tells us about environment and climate policies

November 30, 2018

Simone Tagliapietra and Georg Zachmann write on the climate governance lesson European governments should learn from the "gilets jaunes" experience.

This piece was  published in Corriere della Sera

Over the last two weeks the gilets jaunes (“yellow vests”) movement has quickly spread across France, leaving the country’s roads – as well as its political leadership – in turmoil. The movement emerged spontaneously against the rising fuel taxes intended by the government to foster the ecological transition by encouraging the use of more environment-friendly vehicles.
According to the gilets jaunes, rising fuel prices hit workers who depend on cars to get to and from work, particularly in the countryside. The dispute has therefore sparked a rift between the city-dwelling ‘elite’ and the

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Addressing Europe’s failure to clean up the transport sector

April 9, 2018

Bruegel Annual Meetings 2017
The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe.

Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys, Zsolt Darvas, Jean Luc Demarty, Maria Demertzis, Anna Ekström, Lowri Evans, Ferdinando Giugliano, Sandro Gozi, Peter Grünenfelder, Reiner Hoffmann, Levin Holle, Kate Kalutkiewicz, Steffen Kampeter, Peter Kažimír, Emmanuel Lagarrigue, Matti Maasikas, Steven Maijoor, Reza Moghadam, Nathalie Moll, James

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A new strategy for European Union-Turkey energy cooperation

October 24, 2017

In a period of stress in the relationship between the European Union and Turkey, cooperation over energy could be a bright spot, because of strong mutual interests. Fields such as renewables, energy efficiency, nuclear energy and emissions trading could make a real impact on long-term energy, climate and environmental sustainability, and on overall macroeconomic and geopolitical stability.

This paper was produced within the framework of the European Neighbourhood Energy and Climate Dialogues, with the kind support of Stiftung Mercator

In a period of stress in the relationship between the European Union and Turkey, cooperation over energy could be a bright spot, because of strong mutual interests. However, EU-Turkey cooperation over energy requires a rethink. Up to now, gas and

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Reinforcing the EU energy industry transformation: stronger policies needed

September 21, 2017

The European energy system is being transformed by three major forces, decarbonisation, digitalisation and decentralisation. Decarbonisation is changing the European energy mix, while innovation in digital technologies is enabling disruptive change in the way energy systems are operated.

Towards a 3D European energy system: decarbonised, digital and decentralised
The European energy system is going through a profound transformation as two trends reshape it: decarbonisation and digitalisation. Based on strong public policies, decarbonisation is changing the European energy mix, while innovation in digital technologies is enabling disruptive change in the way energy systems are operated.
Digitalisation can be an important catalyst for decarbonisation. Digital technologies, such as smart

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Adieu Paris: what’s next for climate policy if Trump ditches the Paris Agreement?

May 30, 2017

US President Trump has made it clear that he is not happy with the Paris Agreement. This week he will announce whether the US will withdraw from the Agreement altogether. What might that mean for the global fight against climate change? US decarbonisation is already well underway but the EU would need to step up and defend global climate governance.

Tweeting from Taormina after the G7 summit, President Trump announced his intention to make a final decision on the Paris Agreement this week. The fact that he did not join the other six leaders when they reaffirmed their commitment to the Paris Agreement might indicate a plan to pull the US out of the Agreement.
This decision would be a huge but expected U-turn in US climate policy, in line with Trump’s electoral campaign promises.

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Going local: empowering cities to lead EU decarbonisation

November 30, 2016

Decarbonisation and digitalisation are reshaping the European energy system, which will become more decentralised and interconnected with other sectors. Cities have the opportunity to be the key drivers of decarbonisation, but this will require the implementation of a new bottom-up governance system. This paper outlines a four-step mechanism in order to achieve decarbonisation at city level.

Four trends are reshaping the European energy system: decarbonisation, digitalisation and, as a result of the two, decentralisation and convergence.
Based on strong public policies, decarbonisation is reshuffling the European energy mix, while innovation in digital technologies is enabling disruptive change in the way energy systems are operated. This enables the European energy system to become more decentralised with increasing interaction between services (electricity, heat, transport, data) that used to be largely separate.
In this new context, cities are the key arenas of decarbonisation. However, European Union (EU) energy and climate governance is based on top-down policies that are not complemented by a solid bottom-up system that ensures consistency of EU, national and local measures and incentivises decarbonisation at city level.

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How to put cities at the heart of EU clean energy plans

November 30, 2016
How to put cities at the heart of EU clean energy plans

As the European Commission releases its new energy package, “Clean Energy for all Europeans”, our authors argue that cities are the key to success. They propose a new governance mechanism where cities develop and implement ambitious City Climate Plans – with direct monitoring and financial support from the EU.

Four trends are reshaping the European energy system. Decarbonisation and digitalisation are leading to decentralisation and convergence. Thanks to strong public policy decisions, decarbonisation is reshuffling the European energy mix. Meanwhile, innovation in digital technologies is enabling disruptive changes in the management of energy systems. This is allowing Europe’s energy system to become more decentralised and enabling a greater interaction and convergence between services (electricity, heat, transport, data) that used to be largely separate.
In this new context cities emerge as the key arenas of decarbonisation. About 70% of EU citizens live in urban areas – around 365 million people. With the end of binding national-level targets, including cities in the governance of EU climate policy will help keep Europe on track. Moreover, certain decarbonisation options can be better, or only, implemented at city level (for example district heating and cooling, or co-generation of heat and power). It makes sense to focus on cities.

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Decarbonisation: a future fiscal headache for europe?

October 25, 2016

Energy taxes contribute significantly to public budgets in the EU, but with the aim to reduce greenhouse emissions, the EU will have to fully decarbonise its energy system. However, taxing green energy poses a significant challenge, which could result in a tax revenue gap. Before this becomes a reality, European governments must start looking for alternative sources of public finance.

This op-ed was originally published in Le Monde.

EU governments face budget hole from decreases in energy tax revenues
If EU countries take their commitment to reducing emissions seriously, decreases in energy consumption could soon result in a tax revenue gap.
Energy taxes contribute significantly to public budgets in the EU. In 2014 governments across Europe received on average 6% of their revenues from taxes on energy. In 2014 the German government collected 48.7 billion euros in energy taxes. In Italy the figure was 47.7 billion, with 40.4 billion in the UK and 34.7 billion in France.
Almost all of this revenue comes from taxes on fossil fuels used for transport, heating and electricity production. But the EU has a long-term aim to reduce greenhouse gas emissions by 80-95% by 2050, compared to 1990 levels. To achieve this target, the EU will have to fully decarbonise its energy system by 2050. This will imply a huge drop in associated energy tax income.

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Can North Africa’s energy challenges become opportunities?

October 3, 2016

Cooperation in the energy sector could increase economic prosperity and political stability in North Africa and also generate economic opportunities for Europe. We propose a European public fund that would reduce the political risk for private sector investors in low-carbon energy in North Africa.

It is in Europe’s interest to foster stability, security and prosperity in North Africa. But so far Europe’s attempts to promote economic and political reform in the region have failed. The aftermath of the so-called ‘Arab Spring’ demonstrates the limitations of the EU’s leverage over economic and political developments in North Africa. But it also illustrated that ignoring the region is not an option. Enhanced energy cooperation with selected countries in the region might well be a way to change this scenario.
Economic development is key to stability, security and prosperity. Today, energy is an Achilles heel to economic development of North Africa, and the situation is set to deteriorate. Energy demand in the region is surging.: over the last decade it grew by 4 percent per year (compared to zero growth in OECD Europe). This trend will likely continue due to urbanization and increasing population.
In energy exporting countries, strongly growing domestic demand has already reduced energy exports.

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Rethinking the security of the European Union’s gas supply

June 29, 2016

Euro-Mediterranean energy talks
The energy landscape of the Southern and Eastern Mediterranean is inefficient and unsustainable. Yet there is much potential for cooperation. How could the EU work with this region to improve energy systems?

Speakers: Ali Aissaoui, Houda Allal, Ahmed Badr, Moncef Ben Abdallah, Jorge Borrego, Claudia Brandus, Uri Dadush, Karim El Aynaoui, Angelo Ferrante, Francesco Giunti, Ali Hached, Manfred Hafner, Ezzedine Khalfallah, Stefano Manservisi, Mehmet Öğütçü, Francis Perrin, Sabina Ratti, Edoardo Reviglio, André Sapir, Simone Tagliapietra, Hans van Steen, Guntram B. Wolff and Georg Zachmann
Topic: Energy & Climate
Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Date: May 31, 2016

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Energy across the Mediterranean: a call for realism

April 28, 2016

After almost two decades of unproductive regional cooperation attempts, the EU should reshape its energy cooperation efforts in the Mediterranean through new bilateral approaches
Political instability in the southern Mediterranean countries have highlighted the unsustainability of their economic models. Widespread economic discontent, and in particular very high youth unemployment, underpinned the Arab Spring uprisings. As the refugee crisis shows, this is also Europe’s problem and Euro-Mediterranean economic cooperation needs to be reviewed. Energy is a key part of the cooperation framework.
Policy Challenge
Trade links between southern Mediterranean countries (SMCs) are very limited and they trade mainly with the European Union. Energy represents more than half of SMC exports to the EU. While the regional energy relationships were developed on a bilateral basis, the EU’s Mediterranean energy policy has followed a regional approach, aimed at harmonising energy policies and regulatory frameworks in the region on the path to a Euro-Mediterranean energy market. This approach has proved unproductive and should change. The EU should pursue bilateral energy policies through public-private partnerships involving the European Bank for Reconstruction and Development (EBRD),  EU companies and selected SMCs.

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Rethinking the security of the European Union’s gas supply

January 20, 2016

Simone Tagliapietra and Georg Zachmann argue that instead of doing everything to reduce gas supplies from key suppliers like Russia, gas supply security could more effectively be safeguarded by ensuring that unused alternatives are maintained. They could then be tapped into for an indefinite period in the case of supply disruption from a key supplier.
The security of the European Union’s gas supplies is crucial to ensuring that supplies to households are not disrupted in freezing winters, that industry can flourish and that the EU cannot be blackmailed in vital foreign policy questions.
Gas supply security should be addressed at EU level because a joint solution would be cheaper, national approaches could undermine the internal energy market and have adverse effects on other countries, and the EU Treaty explicitly calls for energy solidarity.
The current focus on supply diversification and reduction of dependence on imported gas is expensive and does not constitute a systemic response.
Instead of doing everything to reduce gas supplies from key suppliers, gas supply security could more effectively be safeguarded by ensuring that unused alternatives are maintained so that they can be tapped into for an indefinite period in case of supply disruption from a key supplier.

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An overview of Bruegel scholars’ contributions on Energy Union

December 3, 2015

Bruegel scholars have contributed numerous ideas to the Energy Union concept – and to all five dimensions of the policy package. Georg Zachmann and Simone Tagliapietra provide a structured overview of the relevant policy analysis and proposals from Bruegel fellows.
From the 2014 Ukraine-Russia crisis to the Paris climate conference, the last two years have seen a wide range of international issues take energy and climate to the top of the European policy agenda. The European Commission has proposed to address the situation within a holistic framework: the Energy Union.
Bruegel scholars have made numerous contributions to the overall framework, as well as to its five dimensions (energy security, an integrated energy market, energy efficiency, decarbonisation of the economy, and research and innovation). Given the complexity of the matter, we want to provide a structured overview of these policy proposals. It is important to note that Bruegel takes no institutional standpoint. Some of the contributions might be contradicting and even the selection summarised here is subjective.
The Energy Union Framework
In September 2014 Georg Zachmann published detailed Memos to the new Commissioners for Energy and Climate Change, setting out where Europe stood and what the new Commissioners’ priorities should be.

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Egypt: The catalyst for a new Eastern Mediterranean gas hub?

November 30, 2015

The recent discovery of the large Zohr gas field in offshore Egypt – the largest ever made in the Mediterranean Sea – might completely change the regional gas outlook.

A shorter version of this blog post was published in Forbes and in Hurriyet Daily News. It will also be published in El Economista.

In recent years the Eastern Mediterranean has been a hot topic in international gas markets. Interest in the area peaked when three large fields were discovered between 2009 and 2011: the Tamar and Leviathan fields off the shore of Israel and the Aphrodite field off the shore of Cyprus. The resources of these three fields are currently estimated at about 1000 billion cubic metres (bcm), compared to about 2800 bcm of gas resources in the EU’s largest gas field.

To exploit this potential, a number of export options where progressively discussed, from pipelines (to Turkey or Greece) to liquefied natural gas (LNG) plants (in Cyprus, Israel and Egypt).
Analysts have expressed hopes that the new gas discoveries might not only strengthen the energy cooperation in the area but also pave the way for a new era of economic and political stability in the region.
However, the high initial expectations were largely muted over time.

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COP21: Climate action needs a new global architecture

November 26, 2015

A strong political momentum on climate action has arisen worldwide on the way to Paris. However private and public investors will only conduct the necessary long-term investments if COP21 manages to put in place a sustained political commitment of all relevant parties to the 2°C pathway. Such a commitment requires a new global architecture for climate action.
On November 30 the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) will finally start in Paris.
COP21 is supposed to deliver a new universal climate agreement that is applicable to all countries, with the aim of keeping the rise in global average temperatures below 2°C relative to pre-industrial levels.
In order to keep global average temperatures below this threshold, considered by the Intergovernmental Panel on Climate Change (IPCC) as the global warming limit to avoid serious consequences such as extreme climate events, climate experts estimate that by 2050, global greenhouse gas (GHG) emissions need to be reduced by 40-70% compared to 2010, and carbon neutrality (zero emissions) needs to be reached by the end of the century.
Strong political momentum on climate action has arisen worldwide on the way to Paris.

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