Czech minister Havlíček: Europe enters another energy crisis, must take action

Europe is entering another energy crisis, with central Europe, including Czechia, set to be hit hardest. Karel Havlíček (ANO), the minister of industry and trade, said this at today’s energy summit at the Prague University of Economics and Business. He expects that although the crisis has not yet been reflected as strongly in prices for consumers, energy costs will rise in the coming months. Czechia will therefore seek allies in the EU for stabilising measures, primarily aiming to curb the operation of the emissions allowance system.

In connection with the energy crisis, Havlíček pointed to the current rise in energy prices on the exchange. At the start of the week, the wholesale price of natural gas for the European market reached its highest level since the end of 2022. The October delivery futures contract at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands exceeded EUR 84 (around CZK 2,040) per megawatt-hour (MWh). Although it gave back some of its gains during the week, the current level of around EUR 78 (CZK 1,896) is still more than double that at the start of the year. Electricity prices are also rising sharply alongside gas.

"We are entering another phase of the energy crisis. The wars in Ukraine and the Middle East are driving up prices. For now, it does not affect customers as much, because exchange prices reach us through long-term contracts, but energy prices will gradually rise with a delay of several months," Havlíček said.

"We need to do something about it and take measures. That is why we are looking for coalitions in Europe to push them through," he said.

He wants to focus in particular on emissions allowances. In his view, the EU should now postpone the planned ETS 2 system, which envisages extending the allowance system to further sectors from 2028, especially road transport and building heating. At the same time, Czechia will seek to curb the operation of the existing ETS 1 allowance system, at least for some industrial sectors.

Havlíček also noted that energy prices in Europe are significantly higher than in some other parts of the world. One reason, he said, is the so-called marginal source system, which has a fundamental impact on electricity prices. The marginal source—the last energy source that must be connected to the grid to cover current consumption—is gas. Particularly in central Europe, the minister said, the shutdown of German nuclear power plants and some other measures are also having a negative impact.

"Europe made mistakes and rushed some changes. We have lost 20 years as a result. It will take nearly as long to put things right. We must stabilise Europe with regard to lower dependency and the need to build new sources," Havlíček added.

In recent days, he had already indicated that if prices on the energy market continue to rise, the government is prepared to set maximum electricity prices for both producers and suppliers. However, he did not specify at what market electricity price level the government would do so. According to the minister, the measure would have no impact on the state budget.