Europe Must Avoid A Subsidy Race
Global Voices
By Clemens Fuest, President, Ifo Institute: Europe’s cross-border energy market must remain open, and the European Union should leverage its market power when purchasing gas in third countries.
The energy crisis – especially the shortage of gas due to a loss of supplies from Russia – is plunging Europe into recession and causing social tensions and distributional conflicts. European governments are eagerly seeking ways to defuse the situation, but they will succeed only if they cooperate closely. The cross-border energy market must remain open, and the European Union should leverage its market power when purchasing gas in third countries. But without coordinated national crisis-management strategies, Europe’s response could become a self-defeating subsidy race. Sharply rising energy prices have reduced output and consumption alike, with households responding to rising costs by cutting back on other expenses.
Europe Must Avoid A Subsidy Race
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