What is the energy cost of war for countries?

Qual o custo energético da guerra para os países?

The energy cost of war for countries has exceeded billions, impacting countries’ economies and generating world inflation.

When the conflict between Russia and Ukraine began six months ago, it was not imagined that the energy cost would be so high and would affect so many countries, including those that are not directly related to the war.

Economic sanctions imposed by the United States and the European Union on Russia and the country’s retaliation have compromised international energy distribution, as the Russian country is responsible for producing 19% of the world’s natural gas and 11% of oil.

The decrease in the export of these energy sources, therefore, in addition to triggering an increase in inflation in most countries due to the increase in energy prices, provoked the search for available alternatives that are easier and cheaper in the short term.

See the main consequences of this conflict for the global economy.

What is the energy cost of war for countries?

With rising energy costs, countries are under pressure. With the arrival of winter in the northern hemisphere in December and the imminent possibility of energy rationing, countries, especially European ones, are looking for alternatives to maintain energy supply.

That’s why several European governments have announced plans to help businesses and consumers deal with energy costs. In 2020, 30% of the total natural gas, 20% of the oil and 12% of the coal consumed by Europe and the United Kingdom came from the Russian country. The interruption of imports of these fuels, therefore, resulted in an increase in electric energy. To give you an idea, in the second quarter of 2022, the wholesale price of electricity reached values ​​three times higher than in the period of 2016 and 60% higher than in the same period of 2021.

In numbers, due to the rise in fossil fuels, the US accelerated the approval of a US$ 370 billion investment package. Germany spent US$ 15.28 billion for the purchase of Uniper SE, Spain allocated US$ 8 billion to help families and companies, France released US$ 760 million for industrial energy transition projects and the European Union launched a € 300 billion for energy independence from Russia.

Brazil’s relationship with the war

Although the conflict did not directly affect Brazil’s energy generation, the generalized economic instability, the rupture of production chains and the increase in inflation impact our country. Even though Brazil is a major commodity exporter, whose price increases progressively, the trend is that in the future there will be increases in world interest rates, which will impact the flow of capital, especially in emerging countries.

Otherwise, the renewable energy market sees an opportunity for greater investments and regulation of this medium to, consequently, export gas to Europe, which faces a severe energy crisis and demands other alternatives, especially clean ones, in which Brazil has a great commercial potential.

In view of this, some countries have sought homemade solutions to avoid a possible new scenario of energy dependence on another country, as is currently the case with Russia. The German government understood that the extension of the useful life of nuclear plants could contribute very little to solving the problem at very high economic costs. Therefore, it is necessary to opt for the expansion of the exploration of renewable energies, in addition to the temporary reactivation of coal thermal plants.

On the other hand, in Japan, the government will reactivate ten nuclear plants and plans to install new plants in the country. Talks about the introduction of renewable energy still depend on some policy decisions and investments in new compatible structures.

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