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Europeans brace for a rough winter with surging gas prices

RACHEL MARTIN, HOST:

Europeans have a tough winter ahead. Rising inflation is biting into family budgets. The continent's been hit hard by drought. And the price of gas used to generate electricity and heating is just going up and up. Three of our correspondents have been looking into all this and what governments there are trying to do to help. Willem Marx is a reporter based in London. NPR's Eleanor Beardsley joins us this morning from Paris. And NPR's Rob Schmitz is in Berlin. Welcome to all of you.

ROB SCHMITZ, BYLINE: Good morning.

WILLEM MARX: Hey.

MARTIN: Rob, I want to start with you. Until the war in Ukraine, Germany was the country in Europe that was most dependent on Russian gas. What's the situation there as winter approaches?

SCHMITZ: Yeah. Before Russia's war in Ukraine, Germany depended on Russia for around 55% of its natural gas. But as of this month, Germany has been able to reduce that dependency to less than 10%. And it's done that by buying gas from Norway and the Netherlands, as well as by reducing its own gas use. Now, that's the good news for Germany. The bad news is that the price of gas has quadrupled from a year ago. And starting in October, all Germans will be required to pay more for their home gas use through a new gas levy. And the purpose of that is to ensure that the country's power companies don't go bankrupt. But many Germans are angry about this. We spoke to retired teacher Ulrike Steinke at a local market, and she complained about having to pay for this.

ULRIKE STEINKE: (Speaking German).

SCHMITZ: And, Rachel, she's saying here that she understands the energy companies need help, but at the end of the day, she says, they make their profits and line their pockets, while the middle and lower classes lose out. And there's a fierce debate inside of Germany's Parliament at the moment about this very concern.

MARTIN: OK. So let's pivot a bit. Eleanor, you're in Paris. Are things as bad there as they are in Germany?

ELEANOR BEARDSLEY, BYLINE: Well, no, they're not, because France does not rely as heavily on Russian gas as, say, Germany or Italy. It uses its own nuclear power to provide about 70% of its electricity needs. And the French government has also really stepped in to protect households. It froze gas prices - energy prices last November 2021 for consumers. And the state is so far paying the difference. This is called the tariff shield. So unlike in Germany and other countries, consumers for now aren't paying more. But of course, that's kicking the can down the road, eventually putting the burden on taxpayers. Still, electricity prices are expected to soar to their highest level ever. And the government has warned that France and Europe will be in trouble if Russia completely cuts off the spigots this winter because Europe will not have enough gas. And the only way to head off such a crisis and forced rationing for businesses, says the government, is to massively conserve energy. They're unveiling a plan this week, a sobriety plan for French companies.

But, you know, there's also a realization that it's not just about conserving energy this winter. The horrible drought, heat and forest fires of the summer have been a wake-up call to Europeans that the destruction of climate change is already here. And that, combined with Vladimir Putin's war in Ukraine, has only emphasized the need to get off Russian fossil fuels and transition to other cleaner energies as soon as possible.

MARTIN: OK. So, Willem, the U.K. is no longer in the EU. It doesn't get its gas from Russia. What are energy prices there doing?

MARX: Well, they're tracking the global price, so they're going up. In fact, just over the past week, the U.K. regulators announced unprecedented household price rises of 80%. That will kick in as of October. They're predicted to rise a further 75% by next summer. I talked about the consequence of this with Dan Paskins. He's the director of U.K. impact for the charity Save the Children. Here's what he had to say.

DAN PASKINS: The overall hit on family incomes is bigger than any in the U.K. since records began in terms of what's happening this year and next year. So it's something kind of without precedent.

MARX: And he pointed out that Save the Children works around the world in some very impoverished places. They're used to seeing these kinds of conditions elsewhere. But the group has not seen this kind of situation in parts of Britain for a very, very long time.

MARTIN: I mean, I don't get how consumers are going to deal with that. What's the plan from the British government?

MARX: Well, part of the problem, Rachel, is there's been kind of a zombie government in place the last couple of months, unwilling to make major spending decisions until a new conservative party leader is put in place to replace the outgoing prime minister, Boris Johnson. The foreign minister, Liz Truss, she's the favorite among the two remaining candidates. She said during the leadership campaign this summer that she'll reduce some extra taxes applied to fuel costs, which were designed to subsidize renewable energy sources. And she'll also reverse a recent rise in the U.K. equivalent of Social Security. But these are, I should emphasize, campaign comments, so she could well change her approach if she takes office. And that's expected to happen next week.

MARTIN: Rob, if you could pull back from Germany a bit, how is the EU thinking about this? I mean, what's the best strategy for the European Union when it comes to weaning itself off Russian energy?

SCHMITZ: They're worried about this. The European Union's energy ministers will hold an emergency meeting on September 9 to talk about this. In July, the EU introduced a plan to cut natural gas by 15% to lessen its members' dependence on Russia. There are concerns that Russia will cut off the flow of gas this coming winter as payback for EU sanctions. We've already seen Russia decrease gas flows and key pipelines to Europe. The latest example was this week when it cut off gas to both France and Germany. The industry and trade minister for the Czech Republic said on Twitter that the EU is now in an energy war with Russia, and it needs to take coordinated action to prevent damage.

MARTIN: Eleanor, you were at this conference this week, I understand, with European business leaders. How is the private sector thinking about this?

BEARDSLEY: Yeah. Well, of course, they're still concerned about their bottom line and energy costs rising. But this year - you know, I go every year - there was a different tone at this meeting, a real sense of urgency and the importance of European solidarity in this war with Russia that includes the energy sector. So business leaders told me the stakes are huge. They said, you know, it's about democracy and sovereignty in Europe. I was actually sitting next to Luis Antunes, the CEO of an energy consulting firm, as the opening speaker of this business forum, who was Ukrainian President Volodymyr Zelenskyy - by video link from Kyiv - as he wrapped up and he was given a standing ovation. And you can hear it here.

(APPLAUSE)

LUIS ANTUNES: (Speaking French).

BEARDSLEY: So, yeah, so he said, magnificent. You know, after listening to Zelenskyy, a clearly moved Antunes told me that Ukraine is committed to democracy, human rights and freedom, and Europe must stand by Ukraine. And he said Russia's war and autocratic government actually pose a bigger threat to European companies than rising energy prices do.

MARTIN: NPR's Eleanor Beardsley reporting from Paris, Rob Schmitz in Berlin and reporter Willem Marx in London, thanks to all of you.

BEARDSLEY: Thank you, Rachel.

SCHMITZ: Thank you.

MARX: Thank you. Transcript provided by NPR, Copyright NPR.

Willem Marx