Energy, decoupling: what it is and how it works

Europe is experiencing complex months in an attempt to intervene on the energy market, not only for gas but also for the price of domestic electricity and, in particular, for industrial use. In recent weeks, also thanks to the worsening of the energy crisis of EU member countries – look at the possible blockade in the sale of electricity to Italy -, the work to prevent the surge in electricity gas prices has led to two possible strategies. On the one hand, the much requested price cap, that is, the ceiling on the price of imported gas. This could be defined in a temporary version, so as to bring together many more countries; the second option is that of decouplingthat is the decoupling the price of gas from that of energy on wholesale markets.

The question of decoupling (in technical jargon “decoupling”) is not new and Europe has been discussing it for about a year as a solution to the surge in the prices of energy raw materials due to the post-Covid economic recovery.

However, the instrument, although it has worked for decades (about 20 years), guaranteeing energy at affordable prices, as he also remembers Handleit was a good way to liberalize and decarbonise, but today it could be an obstacle to renewable energies.

There are several countries that had requested a reform of the energy price market (decoupling), including Italy, France, Spain, Romania and Greece and several other countries had agreed to the changes. These two camps, like those existing in the price cap diatribe, today discuss the feasibility of these two options which want to be a solution to break the spiral of dear energy.

EU energy and strategy: what is decoupling?

The term “decoupling” refers to the decoupling of the price of electricity from that of gas. It is a strategy that Europe has adopted over the past twenty years to decarbonise energy production.

Decoupling is also used to mean an economy capable of growing without increasing environmental pressure, since historically economic growth is directly linked to environmental degradation and the excessive exploitation of resources. The energy transition therefore went through the decoupling between CO2 emissions and GDP growth, improving energy efficiency and bringing the price of coal to rise, favoring its disposal.

Energy and EU strategy: how does it work?

Specifically, how does decoupling work? In Europe, the cost of electricity on the market is linked to that of gas, ie what is needed to put the plants into operation. At the moment, however, the price of gas has increased tenfold and so also the prices of electricity are rising accordingly.

The decoupling would allow to release the two values and to sell the electricity produced at lower prices, also and above all that produced from other sources besides gas. The problem, however, is to rethink the price system in the short term. Several countries that have already requested a reform of this mechanism clash with the feasibility of the proposal. The European Commission has little time to clarify the feasibility of this reform, proposing and comparing all European countries on the energy issue and possible solutions.

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Energy, decoupling: what it is and how it works

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