Why the two crises should not have to compete and how in Switzerland we can still address both
Martina Rothenberger, Junior Consultant - Corporate Climate Strategies, from our Zurich office, analyzes the current situation in Switzerland and argues that the energy crisis and climate crisis should not compete with one another.
Webinars, articles, TV reports, symposia: The topics of "energy crisis" and "security of energy supply" have been in the spotlight in the past months. Of course, this crisis is felt globally, however Switzerland’s 70% dependency on energy imports is particularly worrying. Exceptionally warm river temperatures this past summer led to multiple shutdowns of French nuclear power plants, and the (complete) loss of Russian gas supplies due to the war in Ukraine have both led to extreme difficulties in ensuring energy availability in Switzerland.
In the past months we have seen hikes in the prices of energy leading to potential liquidity problems for companies and increased stress for households. In September 2022, the Swiss government promised a CHF4 billion (~4.1 billion EUR) credit line to the electricity provider Axpo, one of the major suppliers of energy in Switzerland, as a bailout for their very survival.
High energy prices make Switzerland shiver
The electricity prices for the winter of 2022/23 are frightening: The forward market reveals that electricity costs were situated at 50-100€ (~49-98 CHF) on the energy exchange before the crisis, but in August 2022, prices climbed to over 1000€ (~988 CHF). Prices have fallen since then, but the situation remains volatile. On average, prices are expected to increase approximately 27% for households in Switzerland. The affordability of these electricity taxes poses not only major challenges, but even points to a possible economic crisis, particularly for companies that have high energy and gas consumption.
It is important to note that Switzerland is already in the seventh year of the Energy Strategy 2050, which aims to reduce our carbon emissions by half by 2030 and reach the net zero target by 2050. For this to be successful, companies are required to do their part and contribute to this reduction. With surging energy prices however, the stress on companies’ very survival is in question and in such moments of crisis, climate commitment often falls out of focus.
"With surging energy prices however, the stress on companies’ very survival is in question and in such moments of crisis, climate commitment often falls out of focus. "
But how can we harmonize or even jointly solve this energy and supply security crisis with the acute climate change crisis? What options are there and how can we look to our future with confidence?
Window of Opportunity
Large overlapping crises can provide so-called "windows of opportunity". These are situations where crises individually do not gain such political and economic importance, but together could lead to a call to action.
At the last Swiss Green Economy Symposium, Jürg Grossen, President of the Swiss Green Liberal Party, called for Switzerland to wake up from its slumber, renew Swiss non-digitized power grids, and conclude the Swiss electricity and energy agreement with the EU. He went on to explain that this would would also decentralize electricity production. This investment would reduce import dependency in terms of security of supply, and increase renewable energy supply, thus reducing CO2 emissions.
This is especially relevant at a time when both companies and private households see the solution to the crises in renewable energy. All parties would be willing to invest more in renewable energy and heating but have also been waiting for months for the PV systems or the heat pumps to arrive, due to the Corona crisis that comes on top.
Avoid contradictory measures
At the same time, when misinterpreted, such a "window of opportunity" can also quickly lead to an existential crisis or to measures that achieve the opposite.
Swiss federal offices’ recommendation to switch to dual fuel systems with heating oil is an example of a measure where climate change and the energy crisis stand in contradiction to each other. This decision helps ease the gas crisis, as our oil imports are not almost entirely dependent on Russia (as opposed to gas). However, from an environmental impact perspective, oil performs worse than natural gas and leads to an increase in a country's greenhouse gas footprint. This, in turn, would contradict Switzerland’s nationally determined contributions for the Paris Climate Agreement.
Crises cannot be separated
It turns out both the energy crisis and climate crisis pose major challenges to both households and the economy. Time is running out to keep on track with 1.5°C goal set in the Paris Agreement, and quickly implementable solutions for the energy crisis are limited. Nonetheless, if we manage to keep a cool head this winter, which will not be difficult, we can successfully manage both crises together and kill two birds with one stone.
As private individuals, we can contribute to solutions by questioning our everyday habits and actively engage in finding solutions to the two crises. We can do this by not only promoting renewable energy and energy efficient lighting, but also by rethinking and questioning our production, consumption, and use. In this way, we can avoid using up too many valuable resources.
As a company, First Climate’s expertise and creativity in fighting against climate change and increasing renewable energy portions within clients’ energy supply, can help companies not only manage to survive, but thrive.
We need to stay on course for the 2050 targets and feasible solutions to the energy crisis should help us in that.
