High energy prices in Europe, uncertainties caused by the war in Ukraine are testing EU companies’ ability to invest in climate change measures, found a study by the European Investment Bank (EIB).
In Central and Eastern Europe, Romanian companies are in top places when it comes to investing in green technologies and energy efficiency, writes eToro analyst for Romania, Bogdan Maioreanu. Climate change is also pressuring prices of food and energy but specialists warn that the El Nino weather phenomenon’s influence may also have an impact in Europe and across the Atlantic Ocean.
The EIB survey was made on over 12.000 companies across EU 27 plus 800 US companies active in Manufacturing, Services, Construction and Infrastructure sectors. The energy crisis made 90% of the Romanian companies to be preoccupied about energy costs. This concern resulted in 67% of surveyed Romanian companies declaring that they have already invested in energy efficiency, the highest level in Central and Eastern Europe, the same as Hungary and more than any other country in the region.
Also 59% of Romanian companies declared that they are investing in green technologies or products. This is the largest number in the whole survey at par with only Finland. The climate changes are prompting 69% of Romanian companies to consider that they are facing physical risks from this.
However, when asked if they invest in adaptation to the new realities only 49% answered positively and only 17% declared that they are investing in insurance. Though lower, these two figures place Romania in the top quarter of the survey, with Romanian companies appearing more conscious and better prepared than peers from most other EU countries.
The investments in energy efficiency could help Romanian companies this coming winter. Despite a respite in utilities prices , the energy crisis in Europe is far from over. The El Nino phenomenon might bring a drier and colder winter season this year. As a result of global warming, scientists expect El Nino’s influence over the North Atlantic and northern European winter will strengthen.
In preparation for the winter, Europe is starting to refill the natural gas reserves. S&P Global estimates that the gas prices will go up in Q3 pushed by demand and the recent price drop. With EU storage sites already 77% full, stocks could top out well before winter, leaving market players struggling to find a home for gas in Europe later.
El Nino’s impact usually brings widespread weather and agricultural commodities disruption. But one silver lining is an often weaker-than-average Atlantic hurricane season. This runs from June-November, and three major storms are expected to hit the US this year. It’s an annual threat to US gasoline, LNG, and insurance markets especially. US Refiners (MPC to VLO) and LNG exporters (LNG to NFE) are overwhelmingly clustered on the exposed gulf coast.
Climate-related risks—including physical, transition, and litigation risks—also present new and increasingly significant challenges for the insurance industry, found the US Federal Insurance Office in the report concerning climate risks. These risks also warrant careful monitoring by financial regulators, policymakers, and insurers. With the climate change situation evolving globally, reinsurers from Swiss Re (SREN.ZU) to Muenchener (MUV2.DE) have seen rising rates alongside the increased frequency and severity of natural catastrophes.
Investors are also paying attention according to the latest eToro Retail Investor Beat Survey: in the next three months, 20% of the Romanian investors declared that they will increase their investments in the Energy sector and 15% in the Financial Services Sector.
