this is bbc news. we'll have the headlines for you at the top of the hour, which is straight after this programme. hello, everybody. a very warm welcome to talking business weekly with me, aaron heslehurst. let's go and take a look at what's on the show.

across europe, more than half a trillion dollars was spent in the last year protecting people from the high cost of energy. as the colder months come down the pipeline, and the war in ukraine shows no signs of stopping, is there still an energy crisis for europe and america? how much has changed in the market? and will governments have to spend billions again to protect us from massive bills? billions again to protect i'll going to be discussing all of that with these two — the united states government on energy strategy. plus, it's a year since president biden announced hundreds of billions of dollars for the push to clean energy. just months later, europe followed suit. so i'll talk to the boss of one of europe's biggest clean—energy companies, fortum, about the money flooding into the market, what happens when moscow seizes your assets, and what it all means for business, bills, and the future of the planet? wherever you'rejoining me from around the world, once again, a big hello and a warm welcome to the show. you know, vladimir putin's

full—scale invasion on ukraine back in february of 2022 sparked a seismic shock in global energy markets. prices spiked immediately, and this was felt nowhere more than in europe. for years, russian oil — and particularly gas — had kept that continent running, and that came to a screeching halt as a flotilla of sanctions all descended on russia from europe, the uk, and north america — targeting notjust the supply of oil and gas, but also how russia took payment, and even the insurance on its boats of fuel that were still being shipped to countries like, well, like india and china — countries which have maintained their ties with moscow and have taken advantage of the cheaper energy they're now receiving. then, a few months later, as autumn approached in europe, every single government, including here in the uk, announced measures to help their people deal with the bigger energy bills that were due to hit the doormats all across the continent. the world watched as europe raced to fill its storage capacity for winter. mysterious holes appeared in key pipelines. energy diplomacy was the name of the game.

when we spoke to my first guest last year, things had become so challenging for florian bockermann�*s business — a craft beer brewery in munster, germany — that he feared he may have to let people go, or even close the whole thing down. a year on, we wanted to know how things had gone. so, one year ago, the situation was very bad. so, we got bills coming in, all prices increased, energy prices, the malt prices, bottling prices — everything increased. so we really were worrying about our future. we are a small company, so we really were afraid maybe to close the company, or to lay off people. and that was a really bad feeling because, i mean, your employees, which really grow your company with you, they're your friends, you work with them very closely. they have families, they have children. and if you're really in such an unsecure situation to really not

know if they can stay or not, it is very bad. and so for me, last year was a really, really bad time. and, yeah, we are really happy what was happening now, or what is happening now, so we could increase our sales numbers. despite the increasing prices, we have done a lot to be more efficient. still, we have high production prices. the energy costs are high, everything is high. but with these increased prices and with the feeling that there's more stability now — the politics which gave us more stable feeling, what is going on in the future, i'm not really afraid that i have to close my company or lay off people. florian bockermann catching us up on just how one small brewery in germany's heartland managed to get through the energy shock. so, what do european

households face this winter? well, to find out, i sat down with the big boss of vaasaett. it monitors the cost of energy bills for every european country, including here in the uk. and their numbers are trusted as the official ones for the industry, and are used when countries put together their energy policy. philip lewis, a real pleasure having you on the show. and philip, let me start with this, because i'm just wondering, how extraordinary was the situation that we were looking at last year for european households? absolutely unprecedented. if you look at the amount of price rises, we saw countries — typically across europe — on average increasing by, or doubling, or in some cases, tripling their prices for energy. that compares, if you put it into context with historical levels, that's about as much of an increase as we saw in total for those countries over the past two decades. and i'm wondering, philip, how has the strategy for europe changed? because when i was looking at the research, it beggars belief that there really wasn't a strategy

in place before all of this, right? well, actually, a lot of the strategy was very nationally focused. it was focused on your own country. it really didn't look at this type of pan—european major problem that was sustained for a large period of time. so, it was far too narrow—focused and not... they didn'tjoin up the dots, in a sense. have theyjoined up the dots? is there a pan—european strategy in place now? yes, there is much more of a pan—european understanding of the problem. there's far more rules in place, orfar more guidelines in place and strategies in place as to how they would handle the problem if it happens again. of course, that hasn't been tested in practice. what remains to be seen is how countries will respond and support others, the solidarity that will be provided in the event that there really are maybe many countries, several countries who are in need of support from the broader system. and that's the challenge that we need to test out.

and, of course, while i've got you, i've got to ask you the question — what is your forecast, the prediction for energy bills this winter? our prediction for the future would be that the prices will stabilise where they are now, which are heavily—elevated prices. they could go down, but we're predicting that they probably are more likely to increase than decrease in the short—to—medium, or longer term especially. and does that vary across the region, if you will? it does. it does vary a lot, with the more expensive countries being, for example, the netherlands, great britain, ireland, italy, some of the baltic countries, as well. at the lower end... meaning it'll be more expensive — sorry, is that what you're saying? yes, yes, yes. why more expensive in those countries? because those countries are have in a way, they have more free pricing, despite the fact that they have measures in place. but they generally have more free

pricing in those markets. they're more, sort of, exposed to wholesale prices, in many cases. philip, do you think european countries have done enough to date to keep the lights on this winter? we don't know for sure. i mean, i think that if we... the test will be winter? the test will be winter, and the weather. the assumption always is that we won't get extreme weather. if there was extreme weather, and it was sustained over a long period of time, that could actually lead to some problems, as the storage levels might not be able to cope with that — the system might not be able to cope with that. so i think that, whether they've done enough will only be known probably in about within a year or two's time, but not really until we actually have some of that extreme weather to test it out in practice. and one of the other problems, of course, that we have to remember is that the prices are lower than they were a year ago. they're still high, very high, but they're are a lot lower

than they were a year ago. and those high prices that we had actually led to lower demand. there was a lot of demand that was reduced by people, by industry because of those high prices. if we lower the prices, even though they're still high, we will have more demand and more to support. all right. it's like a dog chasing its tail. it is, it is. we've turned off the lights or we've had less heating on because of the prices — those prices come down, we're like, "leave the light on, turn the heat up." exactly. i mean, in a sense, we've been having people say for four decades that energy is too cheap — not consumers, consumers are not saying that — but generally speaking, energy has been too cheap for people to really care about the cost of energy on a national basis, in most cases. when the price was very high, industry was turning off, households were turning off — not always in a good way, but that actually did lead to less

pressure on the system. what about energy bills here in the uk? because as a consumer, i mean, they're awfully high, yes? well, the measures that have been put in place by the regulator, the price cap, have, of course, brought the prices down from what they probably would have been otherwise, quite substantially so. but the prices are still, in a european context, they're still very high. britain still has some of the highest energy bills across europe. so, why here in the uk? because the uk is more exposed to those international prices, to some extent, it also has... just the general markets, the energy markets? yes, and there are also some other markets where the protection measures are even stronger, of course, the support that is being given is even larger. and so, therefore... but it's notjust britain, it's also ireland, it's also the netherlands, it's this this region within europe that actually has relatively high prices at the moment. and philip, let me end on this — it might be a toughie here — but you and i are sitting here right now in 2023, talking about this coming winter in the northern hemisphere. if we were sitting here in 2024,

how different would that situation be, do you think? i think the prices will be higher, a little bit higher than they are now — not as high as they were during the peak that we saw. not necessarily, of course, it will depend on those factors i mentioned. it could be a lot higher if the weather were to become extreme. i think the governments will be more prepared. i think storage systems, alternatives, and so on will be in a much better shape. but i think that we will still be at risk. i think we'll still be at risk from extreme situations that may transpire — whether that's in the supply of lng, whether that's in the other pipeline gas supply that we get, or maybe in the weather, or demand—related factors. phillip lewis, the big boss of vaasaett, a real pleasure. thanks very much for your time. thank you. another guest we spoke to a year ago said europe better pray for a mild winter,

or it could face blackouts. she's the managing director and head of global commodities at rbc capital markets. she also sits on the united states national petroleum council, which advises the american government on its oil and gas strategy. helima croft, a real pleasure having you back on the show. and helima, let me start with this, the big picture. are europe and north america in a better or worse position than last year. i mean, last year, we were worried about a winter of discontent. i mean, remember — we were deeply concerned about russia weaponizing energy. we were concerned that europe would have to choose between heating and eating. and a funny thing happened — europe got through winter well. the weather really helped. and so, europe was able to build storage, a number of energy—efficiency measures were put in place across europe, but europe got through winter. so what everybody feared

about vladimir putin's energy weapon turned out not to have been nearly as potent as the initial concerns. so, are they out of the woods completely? no, they're not completely out of the woods now. again, they're in a better situation because they've been able to build storage. also, there was new supplies being brought in from countries like the united states, with lng, qatar re—routed cargoes. again, the weather really helped out. but if it's an unseasonably cold winter, if we have other supply disruptions, we're not out of the woods. and so, again, much better outcome than when we spoke this time last year, but not a cause for complacency either. but we've seen, for example, in the last few weeks, the threat of labour strikes in australia's natural gas industry — that spiked prices on the market. there's a whole world of factors out there, aren't there? i mean, i'mjust wondering, helima, what are the ones you're watching? again, that's such a great point about the labour strikes in australia, because you look at who are the big suppliers and issues

about concentration risk. so, we don't think of australia as a geopolitical risk, but again, you highlight the labour issue. so again, you always have to be concerned. when you are net importer, you always have to become concerned about security of supply. and i think that is something that has moved to the forefront of policymaker concerns. the big oil and gas producers in the middle east and the gulf, they're partners with russia in what's called 0pec+, the cartel — and that's where they make the joint decisions on output and prices. helima, what's 0pec up to right now, in terms of supply? this is such a great question about the 0pec—russia relationship because, in 2016, november, you did have a declaration of cooperation where russia joined 0pec. a number of other producers joined 0pec in doing a significant production cut to shore up prices. remember, prices had collapsed in 2015. and so, this russia union with 0pec

— ijoke it was a shotgun marriage started by shell in the united, but the relationship did get legs. and the question is, is it built to last? and for now, there are no indications that russia will be leaving 0pec+, it will be vacating its position as co—chair of this super producer group. but i think that it's overstated, particularly in the saudi—russia relationship, that they are partnering on a whole range of issues. i think it's a very tactical relationship when it comes to oil. the saudis have said, "look, we have condemned russian action in ukraine multiple times in the un security council." the saudis just hosted this major peace negotiations in saudi arabia, where you had the us national security adviser there, you had a whole host of china—sent representatives there. so from the standpoint of the saudis, they're saying, "look, we're working with russia on the oil market because we need to, but that doesn't mean

that we are signing up for everything when it comes to russian foreign policy, military strategy." let's talk about china — how's china playing out in all of this? because we know their economy is having quite a few problems, and i'm wondering if that'll take a significant slice out of demand, and then help keep prices lower? this is another great question, because there's a broader concern about the chinese economy, property sector, a whole host of broader macro concerns. and that is keeping a lid on oil prices, particularly because you do have this significant 0pec cut in the market. but what is interesting, when you dive into the numbers on oil imports — if you look at oil imports forjune, china's oil imports, they were at multi—year highs. they're a bit softer injuly, but if you look at what we're seeing now in terms of chinese oil import data, it is strong. helima, i want to ask you about the black sea, that all—important shipping route, because we know recently russia withdrew from

the black sea grain agreement. but this area can also have an impact on our energy prices. russia did, as you mentioned, pull out of the black sea grain deal — it was a un—brokered agreement that allowed ukrainian grain to make it to global markets. they pulled out on 17 july, and that's a big food security story. but the energy angle came to play on 4—5 august when you had ukrainian officials come out and say, "it's immoral to carry russian oil and gas," and essentially they would be targeting russian energy supplies in the black sea. and we had two tankers attacked. and that raised questions about the security of black sea energy exports. and i think the biden administration was very concerned about that — and several days later, you had the announcement of essentially a safe commodity corridor in the black sea, whereby which ukraine agreed that they would only target military vessels and not commercial vessels.

but it certainly remains an important story to watch the security of the black sea. you do have the russians targeting ukrainian infrastructure. and so, the question is, even if the ukrainians are saying, "we're going to forego attacking commercial vessels," do you potentially have commercial vessels caught up in this sort of broader conflict that's playing out in this really important region for commodities? well, on that point, helima croft, always a pleasure having you on the show, and we'd love to talk to you again soon. thank you for having me. ok, so, so far in the program, we've been looking at how europe has dealt with the energy shock following russia's invasion of ukraine, and what that means for bills and businesses with winter coming down the pipeline. well, one company right at the heart of the issue is fortum. it's one of the biggest power supplies across the nordics, and it operates on the doorstep of both russia and western europe — and, as so happens, its energy is green.

markus rauramo, a real pleasure having you on the show. and markus, let's start with this, because before the war, you had operations in russia that were valued at around $2 billion — then russia invaded ukraine. markus, what happened to your operations in russia after that invasion? immediately when russia started its attack war in ukraine, we took the decision that we will not finance our russian operations any more, we will not take any new investment decisions. quite soon after that, we came to the conclusion that we have no other alternative than to exit russia. so we started a divestment process — which is still going on. a couple of months back, actually, russia took over administrative control of our operations in russia, changed the ceo. and today, we have no access to information from the company, and we have no access to the cash flows. we don't get loan repayments from russia. and what happened after that is that we have written down, actually,

our assets values in russia down to zero, and we have consolidated the business. so from our point of view, that chapter is now behind us, and what we are doing today is we have started the processes under international investment protection treaties to claim our money back, and we continue the sales efforts as we still are the legal title holder to these assets. but we have no access to information or cash. and markus, we're talking about $2 billion — can you ever get that money back? we actually invested even more than that over time. but the net that we have invested was $2 billion. so typically, these international investment protection treaty cases, they take a long time. so they may take many years in various courts. but we do expect that, at some point in time, we actually do get compensated — but that can be far out in the future. in the last year, markus, we've seen hundreds and hundreds

of billions of dollars promised to the industry by governments in europe and north america for the energy transition. i'm wondering how that's going. there are certainly areas where subsidies may be needed for this transition to happen. in our core areas, in the nordics, the market is already well—supplied with reliable and very cost—competitive hydropower and nuclear power. so the basis for the transition is good. but markus, is it going fast enough? the renewables growth is actually happening at quite the fast pace. yes, globally, further decisiveness is needed by the society, so we continuously, year after year, we need to push hard and make sure that the regulation and the market structures are in place that will actually enable this transition to happen. of course, the criticism of renewable energy is that it's expensive and difficult to store, unlike gas or coal. and those critics, markus,

they have a point, i'm just wondering, how do you fix that? in many places, actually, renewables — if you look atjust the cost of megawatt hour produced, actually is very competitive. that's the case in the nordics, it is for wind especially. it is the case in sunny areas for solar. so you get low—cost megawatt hours. but the problem is the intermittency, and the profile. so how do you deal with that issue? you need the flexibility, you need a system that will bring in also base load into the system. then, if we go further into, for example, offshore wind, yes, it is more expensive, but it is not prohibitively expensive. but again, the question is that we can'tjust have the intermittent energy. we need the baseload and the flexibility also. also on this show, markus, because we've been looking at the energy cost for businesses and households, especially

in europe this winter. what's your take, will those bills be lower? last year was a very turbulent one. so, after the attack of russia to ukraine and the disruptions in the gas supplies, energy prices spiked up, the market was in huge turbulence. now it's much calmer, so the forward prices are on a completely different lower levels than they were last year. so, if nothing else happens and today's market prices prevail, then energy costs will be lower. but i would say that the markets are very fragile — so we can say that with a little bit of news from somewhere in the world for lng supplies or the likes, the market will react very quickly, prices can jump very quickly up. and we have seen that recently in the nordics, as well. a little bit of disruption in transmission—line availability, nuclear availability, and so on — prices canjump up

massively, from close to zero up to several hundred euros per megawatt hour. and markus, let me end on this — has europe done enough to keep the lights on this winter? europe has certainly done a lot. so, ithink, looking back, i'm a little bit positively surprised that europe was able to do as much as it did then to convert from partly being reliant on supplies from the east, to actually imported lng. and if you look at the gas storage levels in europe now, actually, they are already over 90%. so, from the gas—supply point of view, things look quite robust for this coming winter. but again, even with these gas storage levels, you can see that a little bit of bad news from any direction immediately impacts the closer gas prices. well, on that point, markus rauramo,

the big boss of fortum, really appreciate your time, markus. thanks forjoining me, and i'll check in with you soon. thank you. well, that's it for this week's show! i hope you enjoyed it. don't forget, you can keep up with the latest on our global economy on the bbc website or smartphone app. of course, you can also follow me on x — x me, i'll x you back! you can get me at @bbcaaron. thanks for watching, i'll see you soon. bye— bye. hello. we'll take a look at the forecast for the weekend in a moment. but i want to look back, first of all, at some of the dramatic weather we saw during friday. because in parts of scotland, vicious thunderstorms spawned some funnel clouds — this one here in fife looking like it touched down on the ground, making it a tornado. and you can see the extent of those intense thunderstorms across eastern, central, and southern parts of

scotland through friday. but there were plenty of showers and storms elsewhere, as well. now, there are more showers in the outlook for the weekend, but i think they will tend to become a little less intense, a little less potent. there'll be some spells of sunshine, too. low pressure in charge of the scene, around the western flank of the lows, some quite brisk winds coming down from the north — you'll feel the effects of that across northwest scotland, parts of northern ireland. some rain in the north of scotland tending to spill southwards as the day wears on. cloud amounts increasing for northern ireland, again, some showers here. for england and wales, sunny spells, scattered showers, and particularly for central and eastern parts of england, some of those showers will be heavy and possibly thundery. 22 celsius in the southeast corner, cooler than that further north and west. at reading and leeds, for festivalgoers, i think some showers will be in the forecast, but there'll be some spells of sunshine in between. and, as we go through saturday nights, it'll actually be quite a cool and fresh affair.

some showers will continue, particularly in western areas. temperatures even in the towns and cities down to 9—10 celsius. and then, we will see a band of cloud and rain starting to push in across northern ireland. now, this will make very slow progress eastwards, it'll also peter out as it goes, so just turning cloudy and damp for northern ireland. elsewhere, sunny spells and showers, but the showers should be a little bit less intense by this stage. and temperatures, north to south, 14—21, maybe 22 celsius in the southeast. so for the notting hill carnival on sunday, a chance for a shower. i think there should be some lengthy, dry gaps in between any showers. and monday looks like being a largely dry day — because this area of high pressure will try to build in. so monday, which is a bank holiday for most of us, of course, looks like a mostly dry day. there will be 1—2 showers, some spells of sunshine, too, and temperatures in the high teens or low 20s.

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the flight recorder from yevgeny prigozhin�*s private jet is recovered as the kremlin denies involvement in his death. spain's world cup winning football team says they won't play again while the head of their national federation stays over the kiss controversy. and donald trump seeks to make the most of his historic georgia mugshot with campaign branded items now being sold. the russian authorities say they have recovered 10 bodies and flight recorders from the site where yevgeny prigozhin�*s private plane crashed two days ago. they added that tests would be carried out to identify the victims. the plane crashed exactly two months after the wagner group boss led a short lived rebellion — but questions remain about exactly what happened to him. the kremlin has denied ordering his death describing

such speculation as a �*complete lie�*.