The energy sector has a significant impact on the national economy, as energy prices and availability can boost or dampen economic development. It therefore also has considerable political weight and, in my opinion, should be given the same attention as other instruments for influencing the course of the economy. It should, however, address it in a different way.
Any monetary policy measures taken by the national bank are commented on, criticised and debated. The same applies to fiscal or budgetary policy. However, energy policy, which has the potential for much longer-term and more structural changes in the state’s economy, receives rather selective attention and is a politically gripping topic.
The results of changes in fiscal or budgetary policy and monetary policy measures will become apparent during the election period. Moreover, the mechanisms are sufficiently well described and the economists’ discussion can refer to many examples from the past, the discussions have political potential and there are disproportionately more economists and financiers than energy experts.
Beyond the electoral horizon
The energy industry is simply a long-distance race, bound by the laws of physics. It is politically difficult to grasp, especially as the effects of decisions are not clear until several election periods have passed and it encounters a number of “physical buffers” along the way. The long run is not entirely in harmony with the electoral period. The results of decisions, good ones, wrong ones, become apparent with the passage of time. Those who make them are aware of this and often do not make unpopular decisions.
The passage of time can be presented, for example, in the desulphurisation of coal-fired power plants. It was simple. Do you want to trade electricity on the European market? Here are the rules for entering the market and there is an environmental part. If this decision had not been made, the Erzgebirge would be without forests today and we would be an energy island. By the way, in the 1990s. In the 1990s, it was an investment comparable in monetary terms to the cost of two units of Temelín. Another example – the international Montreal Protocol on Substances that Deplete the Ozone Layer, signed in 1987, excluding the use of CFCs. CFC production ended in 2010 and the smallest ozone hole since 1982 was observed in 2019. A simple substance with a simple application, the result came after about 32 years.
Purposeful questioning of the Green Deal
It simply takes more statesmen than politicians to keep the attention of the electorate and to take up an issue that has positive results far beyond the horizon of the electoral term. But history remembers statesmen above all.
The Green Deal, and the energy policy that follows it, will affect the national economy for years to come. Changes should be explained and communicated in a targeted way, and consensus should be sought across the political party maxim. Citizens are not stupid; unpleasant things must be communicated directly.
Now let’s compare that to what’s going on around Fit for 55, or if you prefer, around the Green Deal. A much more comprehensive deal, cutting across all sectors and also dealing with much more serious issues. We will see its first positive results in 2060. Consensus has been reached on guidelines and content at the level of all developed countries, not just European ones.
And what happens in our country as we get into communicating unpopular measures? Some of the former government parties that were present at the approval of these European decisions were basically, by their own admission, not present at all. Other parties are scoring populist political points by questioning the Green Deal. It is just a convenient topic. The questioning is done on purpose, selectively, I guess, according to opinion polls. The Green Deal really is not just about internal combustion engines and it really is not a dogma imposed by the European Commission administration. If decisions had been made in the same way in the past, we would still have the Erzgebirge without forests and aCO2 emission factor for electricity generation not of 0.37 tCO2/MWh, as we had in 2023, but probably at around 1990 levels, which is 0.73 tCO2/MWh.
We need political consensus
What I’m trying to say with this whole article. Energy policy and major decisions on energy really do go beyond the election period and therefore should be supported by the citizens (who are the holders of sovereign power) and then across the political spectrum. I know it’s hard, but hopefully the basic elements of the party will be agreed upon and if there is popular support, the populists will succeed.
Energy policy is the cornerstone of economic policy. Without a transparent discussion and communication with citizens, it will always be a declaration that will not survive a single term.
And then there are the results of this procedure: the cancelled tender for Temelín (the first one), the spontaneous disconnection of coal-fired power plants (failure to apply for capacity payments), the three-year-long process of notification of support for cogeneration, the operational support for photovoltaic power plants, or the desperate pursuit of the amount of installed capacity in renewable sources without a ready system for the application of their production to consumers. And finally, the Czech Green Deal submitted to the government over the holidays, which is being swept under the carpet along with the expansion of emission allowances.
The energy sector is indeed a serious part of the economy to be handled without knowledge and a certain amount of respect for the possible consequences of measures and regulations that may lead to undesirable consequences.
Vladimír Hlavinka, owner of ORGREZ Group