Save Your Energy

    And so, summer is officially over up here in the North. The days might still be bright and sunny, yet night temperatures have been testing single-digit territory for a while now, making me reach for the duvet. The colours are just about to shift, and there is but a whiff of mushrooms and rotting apples in the crisp air. All the signs are here; it is not summer anymore.

    After a series of heat waves, wildfires, droughts, floods, and whatnot, few would perhaps admit to mourning the swift passage of the sizzling season. You might even be tempted to say, “Good riddance!” Well, you’d better think twice. I don’t know about you, but as we head into that long night, aka Nordic winter, the very real prospect of energy shortages sends an anticipatory chill down my spine. It takes terawatts to dispel the darkness around Lucia and keep us warm and full up here in the North.

    No wonder then that energy is on everyone’s mind. Politicians have definitely switched over to crisis mode. It conveys an unmistakable sense of urgency when Swedish ministers gather on a Sunday, in the last throws of a busy election campaign, to discuss extended credit guarantees to Nordic utilities to help them avoid technical defaults. Judging by the speed and size of government interventions, the threat of a ‘Lehman Brothers’ moment in the energy sector must be real.

    “Electricity prices on Europe’s electricity market must be decoupled from the exorbitant gas prices that Russia has created,” declares Sweden’s Prime Minister Magdalena Andersson, channelling her EU brethren. Of course, according to the opposition, her statement is simply “smoke and mirrors and a diversion because she doesn’t want to have to answer for her own energy policy in the election campaign” and would rather flee to Brussels.

    All eyes on Brussels, then. With another emergency meeting still underway, it’s too early to say exactly how those electricity prices are to be decoupled from gas. Luckily, there are friendly commissioners willing to leak some of the ideas being discussed. Like the proposal to impose a levy on revenues generated by non-gas electricity producers whenever gas prices exceed a certain threshold. Such a measure would undoubtedly appease President Ursula von der Leyen. Earlier this week, she was quoted saying that low-carbon energy producers are making “enormous revenues, revenues they never calculated, revenues they never dreamt of and revenues they cannot invest as fast”. The windfall should be redistributed, she argues, in the good old European spirit of égalité & fraternité[1], to help struggling households and companies.

    Is it just me, or does introducing exceptional tax measures on renewable electricity generation seem somewhat counter-intuitive? That is if we are still serious about encouraging the decarbonatization of energy generation, of course.

    There are other proposals that could prove even less popular, such as a mandatory electricity consumption reduction target (it’s a mouthful, I know). Well, some thriftier European nations have already started acting accordingly, competing to find creative energy-saving solutions. German official buildings are diligently switching off their light decorations, Spaniards bid their air conditioners goodbye, Italians are encouraged to take shorter showers, and even French swimming pools are shutting their doors in anticipation of a cold winter.

    No mention of such unpleasantries here in Sweden, though. We are in the middle of an election campaign, remember? Better go about business as usual, promise generously and wait for the EU to tell us what to do, eventually.

    Vote wisely, dear compatriots!

    [1] The third principle, that of liberté, is temporarily taking a step back.

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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