The Crisis that Brought Reality Back into the Spotlight

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The energy crunch that started in Europe, extended to Asia and has now become a global problem has turned into the news of the year, temporarily replacing even the pandemic from the spotlight. While to some, it came as a shocking surprise, to those who pay attention to energy markets, it was bound to happen.

How it all began: a shortage of gas supplies in storage combined with a wind drought in much of Europe to produce higher electricity bills and, in some places, protests. According to the FT, the UK suffered a particularly hard blow because of its significant reliance on wind power relative to other European countries. Indeed, the UK had to restart a coal plant in September to offset the effects of the wind drought. However, next time this happens, the coal plant may not be around to provide that additional power.

The UK has vowed to retire all its coal plants in the next three years as part of its energy transition efforts. This means that if another wind drought occurs, the country would have to lean more heavily on gas, which is also a fossil fuel and as such frowned upon, or on electricity imports. But the UK is not the only country planning to retire its coal plants.

Germany has also set its sights on coal plant retirement, even if during the first half of this year it was coal that made up the biggest part of its energy mix, topping wind, whose share in the mix fell to the lowest in 2018. And that’s according to Deutsche Welle, not some conservative climate-denying website. There is more, too. In October, a coal power plant in western Germany had to stop operation because it ran out of coal. The reason it ran out of coal is that because of the sky-high gas prices, a lot of utilities are turning to dirty, polluting coal because there is no other alternative.

If something about the energy situation in the UK and Germany sounds a bit off, it’s because it is. And what is off is that the energy future these countries’ governments are planning goes against common sense even if it is flawless theoretically and ideologically. In fact, it very much smacks of the five-year plans that governments in Eastern Europe set for various industries in their totalitarian past.

In some industries, such as heavy machinery manufacturing, these plans could work, at least in the supply part because all it takes is raw materials and equipment, and you can manufacture as many tractors as you want, as long as you have the raw materials. In others, however, setting such goals is risky business because you don’t just depend on raw materials and equipment. In agriculture, to take a non-random example, you depend very much on the weather.

I was reminded of that fact earlier this year when a cold spell put an end to all my plans for apricot cider and sour cherry jam. Our cherry trees froze. Our apricots yielded a tenth of their usual output. That agriculture is a highly risky business is public knowledge, and the reason it is risky is the fact it is overwhelmingly dependent on the weather. Of course, there are all sorts of technological advances being made in agriculture, allowing people to grow a lot of foods in artificial environments, but until we can feed whole nations with lab-grown wheat and meat, we depend on the weather.

Speaking of those tech advancements in agriculture, one can’t fail to notice their primary goal is to make food production less dependent on the weather. It makes perfect sense, really. The weather is a fickle mistress and a highly unreliable business partner. This, then, begs the question: if in agriculture we are purposefully moving towards lower dependency on the weather, why are we at the same time equally purposefully moving towards much greater, even complete, dependence on the weather in energy?

The energy transition’s three main pillars are wind power, solar power, and hydrogen, but green hydrogen produced through the electrolysis of water using electricity generated by wind and solar farms. Each of these is entirely dependent on weather factors.

The answer to why governments want to make their countries dependent on the weather is, of course, emission reduction. I’m sure many would readily argue that over the long term, the emission-related advantages of wind and solar over fossil fuels are questionable, what with all the recycling challenges, but that’s beside the point I’m trying to make here. The emissions problem of modern civilization has been elevated to such paramount importance that all other problems we have, such as hunger and poverty have been pushed back and even redefined to now become consequences of human-made climate change.

Yet both hunger and poverty have very much to do with the weather, and they have had very much to do with the weather since time immemorial. Once upon a time, and indeed until quite recently, most of the Earth’s human population was almost entirely dependent on the weather for survival. It was with the advent of the Industrial Age — and fossil fuels — that this dependence began to diminish, and, yes, hunger and poverty began gradually declining. Both are still a huge problem and one that will probably never be solved, but hard scientific data unequivocally proves humankind is better off now in every respect than it was before the Industrial Age. Except, that is, in respect of emissions.

The focus on emissions has become so singular and exclusive that a lot of other problems have been either brushed aside as insignificant or wilfully ignored. And yet, amid the European gas crunch that took less than a month to spill over globally, the facts began to leak in. Consider this recent article in Bloomberg — a news agency with a strong green bend — that says the current energy crisis in Europe has been in the making for years. The authors point to the rise of wind and solar in Europe and the shutdown of coal and gas power plants. From an emission-centric perspective, the article is nothing short of blasphemy. From a common-sense perspective, it was about time.

“Europe is short of gas and coal, and if the wind doesn’t blow, the worst-case scenario could play out: widespread blackouts that force businesses and factories to shut,” the authors write. Indeed, in the autumn and winter, solar is not at its best, so it’s wind that needs to pick up the slack. Unfortunately, weather, as already pointed out, is not a reliable partner in energy security.

The UK energy minister has promised there will not be blackouts, but some people worry. Other people blame Gazprom and Putin, but Gazprom has fulfilled all its contract obligations with regard to gas supplies to Europe. Could it send more gas given the dire need? It confirmed it could. Must it? There is no stipulation anywhere that obliges the company to supply as much gas as Europe needs, and in the political circumstances, it would be perfectly understandable if it doesn’t. But the blame game once again shows just how dependent Europe is on energy imports.

There has been a lot of talk about reducing this dependence, including by building a solid amount of wind and solar capacity. This has clearly failed to solve the dependence problem. So have attempts to replace at least some Russian supply with Central Asian gas. Those plans must have fallen through when emissions took the upper hand over energy security. So it seems that at the moment Europe is reaping the fruit of its war on emissions and, sadly, seeing the proof that this war will not be as victimless as Brussels officials like to make it sound.

In a sense, the current crisis is a blessing in disguise. The disguise may be — and it is — scary, but it is still a blessing. The currency energy crunch and the real threat of blackouts may prompt some politicians to stop galloping to a solar-wind-hydrogen future that sounds so good in climate models and energy consultancy forecasts. It might not be a bad idea to take a break for a reality check. Otherwise, it won’t be long before we see yet another proof that the “whatever it takes” approach is usually not the wisest one.

At the time of writing, the COP26 climate summit in Glasgow is still ongoing. Yet it was pretty clear how it would end even before the summit began and before PM Johnson admitted he had doubts about its success. Agreeing concrete steps to tackle the Paris Agreement emission reduction targets could have never been easy given the scale and cost of the transformation this would require.

Yet the energy crunch and the reality check it presented — not a moment too soon, either — must have contributed to the deepening of divisions between the first-world renewable power disciples and the energy-poor developing nations. China sent the clearest signal why the energy transition will be anything but a piece of cake. The country quickly prioritized energy security to net-zero goals when energy supply for the winter came under threat from the fossil fuel crunch. This was an important lesson to anyone willing to see it. Whether anyone would see it remains as questionable as the plausibility of the Paris Agreement targets.

About the Author: Irina Slav has been writing about energy, with a focus on the oil and gas industry, since 2006. Her articles have appeared in Oilprice, Fortune, Insider, and Time magazine, among others.

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