Renewables and domestic energy, lessons from Europe, Part 6
Here are the figures for household gas prices in 2007 from the European Statistics Office (Eurostat):
Source: Eurostat, European Price Statistics 2008
The cost of household gas in Denmark, which is otherwise similar in many ways to the UK (including the low proportion of land that is wooded), is more than two-and-a-half times higher than in the UK, thanks largely to the gas being taxed at more than 100%, as opposed to 5% in the UK. Wood provides over 9% of Denmark's gross energy consumption (and other forms of biomass provide another 5%), compared to under 0.5% (and 1%) in the UK. Likewise, in Sweden household gas costs more than twice as much as in the UK, thanks to 75% tax, and the Swedes use wood for nearly 17% of their gross energy consumption (over 19%, including other forms of biomass). Is it just coincidence that people find ways to use alternative sources of energy where fossil fuels are expensive?
Notice also that the UK was further to the right (i.e. relatively more expensive) in 2007 than 2008. Most countries had moved the other way. Prices in most countries were higher in 2008 than in 2007. In other words, higher wholesale costs of fossil fuels had translated (as they should) into higher costs to customers in most countries, sending important signals about consumption relative to availability and security of gas supplies, whereas UK customers had been relatively insulated from the market signals (contrary to British perceptions, although prices did rise significantly later in 2008 than the point at which the graph on the previous page was based).
This is important, because some of these countries (particularly the Netherlands, which has relatively low utilization of wood for energy despite high costs of conventional household energy), might seem to contradict the theory that high fossil-fuel prices produce high utilization of alternative forms of energy. What matters is not only the absolute prices of fossil fuels, but their stability or volatility over time, and how they compare in cost with the alternatives. So how have prices changed over time?