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Weekly Short
9 September, 2022
We are writing this on Thursday morning. By the time you read this, chances are a plan to address soaring energy costs will (finally) be in place for businesses and households. It also seems highly likely that this plan will do very little to ensure that sustained and ongoing dialogue and action on energy saving measures go hand in hand with action on price.
The IMF is clear. So far, it says, “Europe’s policymakers have responded to the energy cost surge mostly with broad-based, price-suppressing measures, including subsidies, tax cuts and price controls. But suppressing the pass-through to retail prices simply delays the needed adjustment to the energy shock by reducing incentives for households and businesses to conserve energy and enhance efficiency”.
Of course, people want and need help dealing with the horrendous economic shock, particularly those who are already facing the greatest cost of living crisis in decades. But there is also a perhaps unprecedented opening right now for meaningful debate about energy use, and how we heat our homes, run our servers and move around the country. In our view this should be grabbed with both hands. And if, as seems likely, the government doesn’t lead the way, then businesses and consumers should step up. We’ve already seen thought leadership and innovation in this space coming from the business sector – agree with the conclusions or not. Companies like Vitality are looking at ways of rewarding greener driving, by cutting insurance premiums for people who drive less or who drive in environmentally friendly ways – practical solutions that make economic sense and encourage people to develop good habits for the long term.
Our view is that we need leadership from all sides, and solutions from everyone to fill some of the chasm that we are confronting, while campaigning for broader policy changes to support the transition.
By Claire Jost and Larissa Persons