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Pedro Braz Teixeira. “We are facing the first decarbonization energy crisis”

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Pedro Braz Teixeira. "Estamos perante a primeira crise energética da descarbonização"

















Faced with soaring energy prices, Pedro Braz Teixeira believes the best solution, instead of limiting imports, is for the EU to impose a tax on Russian imports, while “we continued to import the same amount of oil, but Russia got half of what he gets today” .

The new energy challenges were one of the topics of the debate organized by the Competitiveness Forum, moderated by Luis Mira Amaral. Jorge Mendonça y Costa, Executive Director of the Portuguese Association of Large Industrial Electricity Users, Ricardo Nunez, President of the Energy Traders Association, Pedro Sampaio Nunez, Former Secretary of State for Science and Innovation, and Pedro Neves Ferreira, Managing Director of Energy from EDP as speakers .

We are facing new energy challenges, but we are already seeing skyrocketing prices, especially with regard to fuel prices…

There is an important structure: we are facing the first energy crisis of decarbonization, which makes it especially difficult because it is an energy crisis in which we are trying to change the consumption pattern of the type of energy very quickly and perhaps we are trying to change too quickly. While everyone agrees on the need for decarbonization, the pace at which it is being planned does not seem very compatible with the technologies currently available because renewables have not gained much weight in recent decades and we are still very dependent on away from fossil fuels and wants a very fast transition. Even 2050 seems a little unrealistic.

And we’re already paying…

This energy crisis that we are experiencing began last spring, when there were a number of factors in the energy market that dictated these changes. The recovery of the economy along with the energy transition eventually made this worse, and for years we’ve been talking about decarburization, and it’s holding back investment in ancient fossil energy sources. I’m not going to explore new wells if I already know that I can’t sell them later.

So that led to a lot. This lack of planning results in us not having new energy because it takes a long time and we also don’t have old energy because we say the old has no future and therefore there is no investment in the old. . And at the same time, there is not enough energy on both sides, and when there is not enough energy, the price rises.

And now stakes like nuclear power and coal are back on the table…

The desire to go too fast repels us, but we cannot forget the problem of war. In fact, not only war, but also sanctions, because sanctions punish more than war. I am sincerely concerned about the sanctions. In this sixth round of sanctions, the EU wants to cut oil imports to Russia by 90% by the end of the year.

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And this is not enough time.

This is a huge amount of energy, and reaching this goal by the end of the year is unrealistic. It is very likely that we will have, especially with the approach of winter – when more energy is spent in Europe, namely for heating – a new increase in energy prices. By the way, this week we have new data and Russia is already cutting off gas supplies to Europe, which makes it clear that Europe will not be able to replenish its strategic gas reserves to weather the winter.

What I think will be on the table is that Russia is planning to take Europe to start the winter with a rope at its throat, with no reserves and no wiggle room, because it’s “plate won, plate worn out.” and Russia can cut off the gas supply at any time.

No plan B?

Oil and coal are two commodities that are easy to transport from one place to another. Of course, this is not the most practical solution, but we could import coal from Australia because it is physically possible. Now there is no gas, we need pipelines and liquefied gas, unlike oil, where no infrastructure needs to be built.

António Costa Silva has already proposed Sines as an alternative to gas.

Yes, but then there is no pipeline connection beyond the Pyrenees. This is a project that makes sense in the medium term but does not have an immediate response. I’m afraid that this winter we will have another surge in energy prices, then new pressure to raise interest rates, and soon we will have an economic slowdown. In fact, this week the chairman of the US Federal Reserve warned that there are factors beyond his control and that we could be in for inflationary surprises. Inflation is out of control and I see a very clear risk.

Is that why the Competitiveness Forum was more pessimistic than the government in terms of economic forecasts?

Because we are very concerned about the new increase in inflation.

Are we in danger of facing another crisis?

I would single out two aspects: on the one hand, the pandemic has brought an extraordinary innovation from the EU, in which they have finally managed to create a European responsibility, unlike what happened during the whole euro crisis, when they do not want to talk about it. And with the pandemic, European bonds were issued and this completely blocked path opened up. And if it was opened to help fight the pandemic, then it could also be opened to solve other European problems. Here we have a big advantage. In addition, we must be alert and be able to act very quickly. The euro crisis began in 2009 with the Greek elections, during which they revealed the whole financial situation, in which, after all, the Greek deficit was three or four times what they announced.

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What happened? Greece fell in May 2010, followed by Ireland and Portugal. It wasn’t until July 2012, after three rescues from three countries, that Mario Draghi started talking about the problem. Now the ECB got together, determined what the rate hike would be, and 10 days later the markets went crazy, leading the ECB to an emergency meeting and showing it was preparing a mechanism to be announced in July to prevent fragmentation. debt market, that is, to help Italy’s debt. Therefore, only after the announcement of this, the markets calmed down. This means that they are very attentive.

But, as a rule, exchanges react to problems in advance.

In the case of the markets, everything follows the American stock market. And the American stock market entered the so-called bear market, that is, where the bear hibernates and becomes negative. And when the market drops 20% from the previous high, that means you will enter a bear market, which is usually a very negative outlook. The US stock market, having infected everyone else, is negative about the outlook for the US economy, although here we must recall what Nobel laureate Paul Samuelson said: Stock markets have predicted nine of the last five recessions. .

Even now, BdP is forecasting growth of 6.3% this year and inflation of up to 5.9%. But after that, Mario Centeno said that he could not rule out the risk of a financial crisis…

Risk must be faced even as a risk, that is, it is not a certainty. Of course, it was possible to finally reach a peace agreement in Ukraine, but there is a risk that the situation will worsen. And when we talk about the financial crisis, it has more to do with the increase in interest rates in the eurozone, and Portugal will inevitably suffer, and with it there may be unrest. But I’m not so worried about the financial crisis, I’m more concerned about the energy issue, because the EU is stuck in this system of wanting to cut Russian imports by 90% by the end of the year.

Sanctions should hurt those who are subject to sanctions, not those who apply them. What is happening is that it will hurt us, and oil prices before the war were $60, and now $120, so Russia sells less, but sells twice as much. In other words, no more bills. There was a proposal that the EU, instead of restricting imports, introduce a tax on Russian imports. It so happened that we continued to import the same amount of oil, but Russia received half of what it receives today.

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Was it some kind of emergency tax?

It was a tax on oil exports. For example, Russia sells to India at a 25% discount, it’s like a tax. In other words, he sells to others at huge discounts.

This increase in energy costs is putting a burden on companies…

If this extraordinary tax were introduced, it would represent an extraordinary income for the entire treasury of all European countries. And at the same time, the margin for helping companies and families will be much larger. We see the opposite: we are paying with oil, half of which was state income.

And in the face of this increase in costs for companies, how do you feel about António Costa’s call for a 20% increase in wages for private workers?

This is an increase over five years and I divide this 20% over all the years it is not so significant, and in this year 2022 with inflation at such a level that 20% is the accumulated inflation over all these years.

The Competitiveness Forum was one of the first organizations to transition to the Recovery and Sustainability Plan payment deferral. How do you feel about Antonio Costa’s statements that “skepticism must be overcome”?

Portugal has been receiving European funds since 1981, so we have been receiving European funds for 41 years and we have had a stagnant economy for 20 years. I think it’s fair to think that we’re misusing European funds. And for at least 20 years we misused European funds, because when we received European funds, we had an obligation to move closer to Europe and not lose ground.

Over the past 20 years, we have misused European funds, and I apologize for this history of misuse of European funds and for the fact that PRR does not have a strategy based on economic growth, and therefore skeptical about the possibilities of PRR.

This is in line with what he was already defending when he said that “in recent decades everything has gone wrong in economic policy”…

It is not normal to use European funds. Portugal, even without European funds, was obliged to move closer to the European Union, because we are in a privileged space, we have the same currency, we have the same rules and we have the example of other countries. And even without European funds, we must move closer to Europe, and even with European funds we cannot do this.

Is income always the same regardless of the government?

Undoubtedly.



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Economy

Gas. Bottle sellers adjust prices

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Gás. Vendedores de garrafas corrigem preços

















Gas bottle sellers have adjusted prices that are not in line with government regulations limiting those values, said the National Energy Sector Organization (ENSE), which returned yesterday to review activity.

After conducting the first inspection on Tuesday, which found “high non-compliance” in 23.4% of outlets, the organization again carried out “108 inspection actions in Castelo Branco, Portalegre, Santarem, Evora and, in the municipalities of Cascais, Oeiras and Sintra in the Lisbon area, focusing on petrol stations, hypermarkets/supermarkets and other retail outlets.”

During this second check, ENSE found “seven violations (corresponding to 6.5% of the actions taken) in the selling prices (from 0.36 euros to 3.39 euros for T3 bottles and 6.92 euros for T5 bottles) of this type of product.” But he left a guarantee: “Of these actions, it was established mainly the correction of inappropriate prices, namely in relation to inflated amounts charged in several hypermarkets of the same brand.”

The maximum prices per bottle of liquefied petroleum gas (LPG) set by the government came into effect on Tuesday, saving almost 3.2 euros on a 13 kilograms (kg) bottle of butane.



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Economy

FRS minutes Press end of the session. Wall Street closes in the red – stock exchange

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FRS minutes Press end of the session.  Wall Street closes in the red - stock exchange

The session on Wall Street ended the same way it began: in the red. Closing of the day was marked by the publication of the minutes of the last meeting of the Federal Reserve System (FRS) of the United States, and technology fell most of all.

The Dow Jones Industrials fell 0.50% to 33,980.32 and the S&P 500 fell 0.72% to 4,274.04. For its part, the Nasdaq Composite Technology Index fell 1.25% to 12,938.12.

The Fed said in the minutes that it fears high inflation will take root in the US economy if the market begins to factor in a slower pace of US interest rate hikes. “Participants [no encontro] considers that there is a significant risk for the committee that high inflation could take root if the public begins to doubt that the committee will sufficiently adjust its political position, ”the minutes say.

The market has balanced, on the one hand, the likelihood that inflation has already peaked after the fall in the consumer price index in July, as well as the good results of companies in the “reporting season”.

According to Bloomberg, four out of five reporting companies achieved the expected results or even exceeded analysts’ estimates.

On the other hand, investor sentiment is under pressure from the fact that the US has entered a technical recession, as well as the prospect of further tightening of the Fed’s monetary policy, which could further worsen this scenario.

During this session, in addition to these concerns and good news, investors continued to digest data on US retail sales, which rose 0.7% higher than expected.

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Among the major market moves, shares of Target stood out, which fell 2.66% after the retailer reported results below analysts’ expectations.

Lowe’s, by contrast, rose 0.54% after the building materials retailer released last quarter results that beat analysts’ forecasts.

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Economy

Are we close to the end of physical money? Coins and banknotes are practically disappearing in these countries — Executive Digest

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Are we close to the end of physical money?  Coins and banknotes are practically disappearing in these countries — Executive Digest

At present, the number of payment alternatives in addition to physical money such as credit cards, payment with applications or mobile phones is increasing, and well-known coins and banknotes are gaining ground.

However, ElEconomist explains, there is evidence that, despite the apparent growth of other forms of payment, physical money continues to hold. According to the European Central Bank (ECB), almost half of all payments, 48%, are made using banknotes. In the US, the US Federal Reserve has noted that money in circulation has even reached an all-time high.

There are countries that are discussing this issue, and some countries are testing formulas for moving to a fully digital model. A Spanish website has compiled a list of cases where money could be on the brink of extinction.

Sweden:

Despite having the oldest central bank in the world, it has been leading the fight against physical money since the beginning of the last decade. Between 2011 and 2020, Swedish citizens reduced their use of cash from 39% to 9%. With companies, banks and other institutions refusing to accept payments in coins or banknotes, Sweden would be quite willing to move away from cash if rural areas didn’t resist its decline.

At the same time, the Swedish government is at the same time trying to slow down the transition by asking citizens to keep money at home.

Norway:

Norges Bank, the country’s central bank, has released figures that Norwegians only use banknotes or coins for 3 to 4% of their transactions, and the lack of physical liquidity in the country is a concern, so although they are about to achieve full digitization, they are trying to stop this is.

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The Norwegian Consumer Protection Agency has already received complaints about the inability to pay for bus tickets or cafes in cash in the center of the capital, and the country’s Pensioners’ Association has also warned of the concerns this raises among a less digitized population.

Netherlands:

It is one of the countries not only in Europe but also in the world with the most development in this aspect, with a share of cash payments below 24% compared to 52% in 2005, 40% in 2011 and 30% in 2015. . . .

Data from the Dutch Payments Association shows that card usage for payments now exceeds 75%, with mobile payments up 30% last year.

In this case, banks are the biggest drivers of total digitalization to cut costs at branches and ATMs. In the Netherlands, 89% of customers are already digital, compared to the European average of 60%.

China:

The country is becoming so digitized in this regard that the People’s Bank of China is imposing fines on public and private institutions that refuse to accept cash payments in order to “protect citizens’ rights to use cash.”

The latest survey by the region’s central bank shows that 66% of payments in the region are made using a mobile phone, compared to 23% in cash. At the same time, the percentage of card payments is even less: only 7% of transactions.

South Korea:

Since 2016, the country has been trying to digitize payments, which is why cash in circulation is only 40% of the total, which is an all-time low. Of the total number of transactions in the country, only 17% are made in physical money.

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Canada:

In the country led by Justin Trudeau, Visa said citizens are “ready to move away from cash” as Canada “has one of the highest penetration rates of credit card payments in the world (70%)”. As a percentage of total transactions in 2021, only 17% were made with physical money. Cards make up 60% of transactions and electronic payments 12%.

Australia:

The latest report from The Global Payments explains that the country is accelerating its transition to cash, which will account for just 2% of all transactions by 2025. From 75% in 2007 to around 30% in 2019.

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