Soaring temperatures are forcing drastic measures in Europe, where successive heatwaves are straining an economy already under pressure from US tariffs, Chinese competition and higher energy prices because of the Iran war.
Romania’s state-owned nuclear power producer Nuclearelectrica started disconnecting its sole operational reactor from the power grid because of record-low water levels in the Danube, crucial for cooling its equipment, the company confirmed to CNN.
The country has declared a state of energy emergency throughout August and asked businesses and households to voluntarily reduce consumption, Reuters reported.
Elsewhere, France and Hungary have had to curtail nuclear power due to low river levels and high temperatures. Drought conditions are also fueling devastating, costly wildfires and reducing crop yields, threatening to push up food prices.
Europe’s sweltering summer could cost the economy $208 billion this year, or 1 per cent of GDP – roughly the entire expected economic growth of the European Union, according to an estimate by Netherlands-based Triodos Bank. “Lower labour productivity is likely to have the largest economic impact, alongside disruptions to agriculture, energy and transport,” the bank said in a report this month.
Swaths of Europe are enduring their fifth heatwave of the year this week, with parts of Britain, France, Spain and Italy under extreme heat warnings.
While some analysts doubt the heat will have a sizeable impact on economic growth this year, pointing to improved business confidence in July and increased GDP in the first half, hot weather is not the only economic threat.
Europeans also face the prospect of hikes to their energy bills this winter, as natural gas prices climb. The price of benchmark natural gas futures traded near their highest levels since the start of the Iran war this week, and almost twice as high as the same time last year.
The war in the Middle East has made cargoes more scarce and, in turn, more expensive, raising the prospects of another energy crunch. Blistering heat has also raised demand for air conditioning, driving up natural gas consumption at a time when stores need to be refilled ahead of winter.
The European Commission said earlier this year that EU member states should be investing about $81 bn per year to 2050 in climate adaptation – spending that could boost economies but will also pile pressure on strained government budgets.
Some companies have already started adapting in innovative ways. In England, a notoriously rainy part of the world, family-owned Rookery Farm is harvesting its crop at 3am to ensure it has sufficient moisture content.
Europe also faces the prospects of a winter energy crunch. Gas storage levels across the EU were 59pc full on Tuesday, according to data from Gas Infrastructure Europe – well below the average for this time of year and on par with levels seen during summer 2021, when Russia had begun restricting exports to the continent.
Summer is primetime in Europe for stocking up on gas before the colder winter months, when prices are often considerably higher. Yet the Strait of Hormuz is still effectively shut, choking off one fifth of the world’s supply of liquefied natural gas – a liquid form of the fuel carried by tankers.
Remaining cargoes, such as those from the United States, are also more likely to head for Asia than Europe, say analysts, because demand there is particularly strong and buyers are stumping up more.
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