"AS A FRENCHMAN, I PAY CLOSE ATTENTION TO THE PRICE OF THE BAKERY. AT PRESENT, THE PRICE HAS RISEN A LOT, AND MANY PEOPLE ARE WORRIED ABOUT THIS," EUROPEAN CENTRAL BANK PRESIDENT LAGARDE SAID IN A RECENT MEDIA INTERVIEW. SHE EMPHASIZED THAT AS THE INFLATION RATE CONTINUES TO RISE, THE INCREASE IN ENERGY PRICES IS THE MOST CONCERNING. WHEN PEOPLE REFUEL AT GAS STATIONS OR BUY HEATING OIL FOR WINTER, THEY CAN'T HELP BUT NOTICE THE PRICE INCREASEAGAINST THE BACKDROP OF GLOBAL ENERGY SUPPLY-DEMAND IMBALANCE, THE ENERGY CRISIS PLAGUING EUROPE IS BECOMING INCREASINGLY SEVERE, WITH NATURAL GAS AND ELECTRICITY PRICES CONSTANTLY RISING AND THE RISK OF POWER RATIONING AND OUTAGES CONTINUING TO INCREASE. AT THE SAME TIME, THE IMPACT OF HIGH INFLATION, MAINLY DRIVEN BY ENERGY PRICES, ON BUSINESS PRODUCTION AND RESIDENTS' LIVES IS INCREASINGLY EXPANDING.ANALYSTS BELIEVE THAT THE CURRENT ENERGY CRISIS REFLECTS THE CONTRADICTION BETWEEN THE EUROPEAN ECONOMIC SECTOR'S DEPENDENCE ON FOSSIL FUELS AND THE INSUFFICIENT SUPPLY OF RENEWABLE ENERGY. ALTHOUGH THE EU HAS PUT FORWARD AMBITIOUS ENERGY TRANSFORMATION AND CARBON NEUTRALITY GOALS, IT MAY TAKE A LONG TIME TO ESTABLISH A SUSTAINABLE AND STABLE RENEWABLE ENERGY SUPPLY CAPACITY. HOWEVER, THE GLOBAL SUPPLY CHAIN OBSTACLES CAUSED BY THE COVID-19 EPIDEMIC HAVE EXACERBATED THE COMPLEXITY OF THE ENERGY TRANSFORMATION, DRAGGING DOWN THE PROCESS OF EUROPEAN ECONOMY TURNING TO GREEN AND SUSTAINABLE DEVELOPMENT.SINCE AUGUST THIS YEAR, NATURAL GAS PRICES IN EUROPE HAVE BEEN RUNNING AT HIGH LEVELS. ACCORDING TO DATA FROM THE DUTCH NATURAL GAS TRADING CENTRE (TTF), THE EUROPEAN NATURAL GAS TRADING BENCHMARK, WHOLESALE PRICES IN NOVEMBER WERE ABOUT SIX TIMES HIGHER THAN THE SAME PERIOD LAST YEAR. DRIVEN BY GAS PRICES, ELECTRICITY PRICES IN EUROPE HAVE SKYROCKETED, WITH PRICES IN GERMANY, FRANCE, THE UK, SPAIN, AND OTHER PLACES REMAINING AT HISTORIC HIGHS.THE EUROPEAN COMMISSION POINTED OUT THAT WHOLESALE ENERGY PRICES IN EUROPE HAVE INCREASED SIGNIFICANTLY, MAINLY DRIVEN BY A SURGE IN NATURAL GAS DEMAND FROM THE GLOBAL MARKET AND A DECREASE IN EUROPEAN NATURAL GAS IMPORTS. IN ADDITION, THE UNFAVORABLE CLIMATE CONDITIONS IN 2021 HAVE LED TO A SIGNIFICANT SHORTAGE OF RENEWABLE ENERGY SOURCES SUCH AS WIND AND SOLAR POWER, EXACERBATING THE ENERGY SUPPLY SHORTAGE IN EUROPE. IN ADDITION, THE INCREASE IN CARBON EMISSION TRADING PERMIT PRICES UNDER THE EUROPEAN EMISSIONS TRADING SYSTEM (ETS) HAS ALSO PUSHED UP ENERGY PRICES.AS THE MOST IMPORTANT ALTERNATIVE ENERGY SOURCE FOR TRANSITIONING FROM FOSSIL FUELS TO GREEN ENERGY, WHICH CAN BALANCE ENERGY CONSUMPTION NEEDS AND CARBON REDUCTION, THE DEMAND FOR NATURAL GAS IN EUROPE HAS INCREASED, AND THE EU RELIES ON IMPORTS FOR 90% OF ITS NATURAL GAS, MOST OF WHICH COMES FROM RUSSIA. THEREFORE, GEOPOLITICAL FACTORS ALSO PLAY AN IMPORTANT ROLE IN EUROPEAN ENERGY PRICES. DUE TO THE INFLUENCE OF THE UNITED STATES, THE NORD STREAM 2 NATURAL GAS PIPELINE PROJECT CONNECTING GERMANY AND RUSSIA HAS YET TO BE PUT INTO OPERATION, MAKING IT EVEN MORE DIFFICULT FOR EUROPE TO SUPPLY NATURAL GAS THIS WINTER.FOR EUROPEAN BUSINESSES AND CITIZENS, THE RISE IN ENERGY PRICES IS DIRECTLY REFLECTED IN RAW MATERIAL AND CONSUMER PRICES. ACCORDING TO DATA FROM THE EUROPEAN STATISTICAL OFFICE, THE INFLATION RATE IN THE EUROZONE ROSE TO 4.1% IN OCTOBER, REACHING A 13 YEAR HIGH. ENERGY PRICES, WHICH INCREASED SIGNIFICANTLY BY 23.5% YEAR-ON-YEAR, WERE THE MAIN FACTOR DRIVING UP INFLATION.ANALYSTS BELIEVE THAT DUE TO THE FACT THAT LONG-TERM SUPPLY CONTRACTS ARE USUALLY PROVIDED AT FIXED PRICES, SOME SMALL ENERGY SUPPLIERS IN EUROPE ARE OFTEN UNABLE TO PASS ON HIGHER PROCUREMENT COSTS TO CUSTOMERS, AND THEIR ABILITY TO SURVIVE FACES SEVERE CHALLENGES, LARGELY DEPENDING ON HOW COLD THE WINTER IN EUROPE IS AND HOW LONG ENERGY PRICES RISE.ALEXANDER MCDONALD, CEO OF THE LONDON ENERGY BROKERS ASSOCIATION, BELIEVES THAT SOME INDUSTRIES IN THE UK MAY FACE THE RISK OF SHUTDOWNS THIS WINTER DUE TO HIGH ENERGY COSTS. FOR MILLIONS OF DOMESTIC ENERGY USERS IN THE UK, THIS CRISIS COULD SIGNAL THE END OF THE ERA OF CHEAP NATURAL GAS AND ELECTRICITY.FACED WITH THE CURRENT ENERGY CRISIS, EUROPEAN COUNTRIES ARE HOPING FOR AN INCREASE IN EXTERNAL SUPPLY, INCLUDING FROM RUSSIA, WHILE ALSO TAKING SOME INTERNAL SUPPORT MEASURES. FOR EXAMPLE, THE SPANISH GOVERNMENT HAS REQUESTED RESTRICTIONS ON ENERGY PRICES AND ELECTRICITY COMPANY PROFITS; FRANCE, ITALY AND OTHER EUROPEAN COUNTRIES HAVE PLEDGED TO PROVIDE RELEVANT SUBSIDIES FOR LOW-INCOME FAMILIES.HOWEVER, FUNDAMENTALLY SPEAKING, THE STRUCTURAL CONTRADICTIONS IN ENERGY SUPPLY DURING THE GREEN TRANSFORMATION PROCESS ARE EXPECTED TO CONTINUE TO PLAGUE EUROPE FOR A CERTAIN PERIOD OF TIME. EUROPEAN COMMISSION PRESIDENT VON DER LEYEN SAID THAT THE KEY TO SOLVING THE ENERGY CRISIS LIES IN "ACCELERATING THE TRANSITION TO CLEAN ENERGY". ANALYSIS HAS POINTED OUT THAT THE ENERGY TRANSITION OF THE EUROPEAN UNION REQUIRES SUFFICIENT NUCLEAR, COAL-FIRED, AND NATURAL GAS POWER PLANTS AS TRANSITIONAL SUPPLY GUARANTEES, AS WELL AS THE ESTABLISHMENT OF STABLE RENEWABLE ENERGY SUPPLY CAPACITY AND THE STRENGTHENING OF INTERNAL ENERGY MARKET CONSTRUCTION. EACH TASK IS EXTREMELY DIFFICULT.