There is no gas, but you hold on: the time pressure of the European "green transition"
Source: theglobeandmail.com
A good start to a controversial story
The progressive European community has long been preparing for a fourth energy transition.
Residents of the smallest part of the world seriously think that the massive transfer of everything and everyone to alternative fuel (electricity) will save the ecological balance on the entire planet. Well, at least it will push other countries to this.
Environmentally positive story at first, it seems to promise global prosperity - phasing out internal combustion engines by 2035, a partial ban on coal by the end of this decade, and massive tree planting.
Europe in the very near future, according to the authors of the "green transition", should go to a zero carbon balance. Carbon neutrality is now becoming a real seal of quality - companies that fail to do so will soon become outcasts. Google announced at the end of last year that it had not only "zeroed out" its carbon footprint, but that it had erased its carbon footprint in its 22 years of existence.
The trend, of course, is commendable, but is it any wonder such an achievement from an IT company?
For example, let a chemical giant like BASF somehow achieve zero carbon balance.
In 2019, Europeans have indeed made tangible progress in reducing emissions from combustion of hydrocarbon fuels. First of all, the production and combustion of coal was reduced by 24% - this is minus 12% of the total European volume of carbon dioxide into the atmosphere. Europe has made a breakthrough in greening the energy market that has not existed since 1990. As EU officials reported, it was they who became the world's testing ground for the final phase-out of coal, which accounts for up to 30% of greenhouse gas emissions.
Up to 50% of the volume of reduction in coal power generation was achieved due to new wind turbines and solar panels. The rest is due to natural gas, mainly Russian.
In these statistics lies the paradox of the European fourth energy transition.
On the one hand, the possibilities of alternative electricity generation are expanding, and on the other, they are massively switching to natural gas, which is a sign of the previous, fourth transition.
In their victorious reports, the "greens" blame the countries of Eastern Europe for the slow rate of abandonment of coal. Thus, Hungary will be able to do this only by 2030. Of the 27 EU countries, only 20 will be able to follow the example of Budapest. The rest are planning to move to an even later period.
It remains only to sympathize with the daredevils who will not be in time by the deadline - Brussels intends to impose draconian taxes for this. At the same time, the Europeans place special emphasis on wind generation of environmentally friendly electricity. For obvious reasons, the first in this story is Great Britain - the location of the country is not very conducive to solar panels.
In contrast, for example, from Portugal, in which until recently the price of "solar kilowatt" has been steadily declining. The British in the pre-pandemic period abundantly placed wind turbines on the adjacent shelf. On the Scottish shelf of Aberdeen Bay, for example, the world's largest landfill with wind turbines appeared. According to the developers of the project, the total capacity of the facility can supply electricity to about 80 thousand British households.
But in 2021, a completely unexpected happened - calm weather for several months.
Gas growth
The events of early September hint at the shortsightedness of the European establishment.
They gave up hydrocarbons too early and re-tuned the economy to the "green wave" too quickly. As a result, the business becomes unprofitable for electricity generated from natural gas. The reason is the unprecedented growth in the cost of imported gaseous fuel, approaching $ 1000 per thousand cubic meters. In a market economy, this entails the shutdown of enterprises that are not ready to work with such energy bills.
The calm weather alone cannot be blamed for the European energy deadlock.
Last winter, despite global warming, turned out to be extremely cold and caused a significant overconsumption of blue fuel. It would seem that you are heating yourself with coal, but high duties on its use have practically crushed the industry. At least in Western Europe. As a result, the underground storage facilities are half-empty and at the moment are not ready for the coming winter.
The second culprit for the deficit is the coronavirus.
All over the world, the production of liquefied gas, with which the Europeans can replace the Russian compressed gas, either did not reach full capacity due to restrictions, or were closed for preventive maintenance. The closest saviors of Europe could be the Norwegians, but they also sent their mining infrastructure for planned repairs for a long time.
COVID-19 has slightly slowed down in Scandinavia, and it is time to finally service its own gas production. It should be noted that in mid-September, Norwegian gas workers put gas terminals into operation ahead of schedule, which slightly slowed down the rise in prices. But this did not happen at all facilities, and in principle, the situation will not be corrected by winter.
China is also to blame for the market price under $ 1000 per 1000 cubic meters of gas.
The Celestial Empire was so long ago and stubbornly pressured to reduce the burning of coal: which Beijing finally decided to do. As a result, the rapidly growing economy takes the lion's share of liquefied gas at prices favorable to suppliers. And Europe, with a thriving green transition, is suffering from gas hunger. So far, we can only guess what sacrifices Brussels will have to make to resolve the problem.
And now we are seeing production stops throughout the region.
The first to surrender to high gas prices were the British from CF Industries Holdings and the Norwegians from Yara International, which produce fertilizers. The chemical industry traditionally requires a lot of energy and it is easier for factories to stop the cycle than to endure the cost. Naturally, this will lead to higher prices for fertilizers and, ultimately, for food. The situation was spoiled for the British by the French, who had a breakdown of the electric cable supplying energy to the islands. Goldman Sachs, analyzing the situation, warns of a possible acceleration of inflation across Europe.
Even their own power generation capacities do not save. Chemists from BASF warn that they will shut down the plant in the near future, despite the fact that 80% of the electricity needs are covered by themselves. In France, Tereos and Roquette Freres, both involved in sugar and starch production, have warned of a potential factory shutdown. They are directly dependent on the supply of packaging from the UK, where electricity prices are breaking all records.
By the way, packaging manufacturers were indirectly hooked by the shutdown of the Norwegian fertilizer plant Yara International. It's all about ammonia and carbon dioxide, which are produced by enterprises. Manufacturers of food packaging for production are buying these ingredients and have already warned of an imminent lockdown.
Then everything follows the domino principle: no packaging - no products on the counter. Not only that, in fear of falling purchase prices for meat, UK livestock farms began slaughtering livestock.
So far, these are isolated cases, but they may well become massive.
Russia, save me!
Europeans are worried about the coming winter.
Even if the remaining coal-fired CHPPs are put into operation, this will still not cover the electricity deficit. France is contemplating decommissioning the nuclear power plant, but after decades of downtime, the power units cannot be brought to full capacity so quickly. The Europeans have no choice but to ask their main supplier, Gazprom, to increase fuel supplies in October.
By and large, Russia is not opposed to satisfying feverish Europe with gas, but only through the "Nord Stream-2". There can be no question of increasing the volume of blue fuel pumped through Ukraine. At the same time, Moscow has every opportunity to rapidly increase production volumes. According to Alexei Miller, Gazprom can easily increase the annual rate by 150 billion cubic meters.
Having not received what they wanted from Moscow, the Europeans turned to Washington for help. And now Amos Hochstein, senior adviser to the US State Department for energy security, in a conversation with Bloomberg calls on Gazprom to increase the supply of blue fuel to the EU.
European officials once again found themselves in a difficult situation.
First, when recklessly, without weighing anything, they rushed into the "green energy". And the second time, when relations with Russia, as with the main energy supplier, were spoiled. Sanctions as a tool of blackmail, public insults and military provocations have become the norm for European elites. One masquerade with the Russian Sputnik V vaccine is worth a lot.
Now, having trampled its own pride, Brussels, together with London, is asking the Kremlin to increase gas supplies. In this game, the ball is definitely on the side of Russia, and simple financial benefits cannot be avoided here. In addition to the emergency launch of Nord Stream 2, our country has the right to demand military and political indulgences from the Europeans. After all, now in Europe there are no risks of starvation and cold death, and there is only the threat of a slight decline in living standards.
Guardians of Western values, as always, warn Gazprom against rash steps. Say, Europe, in response to its refusal, will diversify its supplies, turn to the countries of the Middle East, or, with even greater zeal, will continue to transform itself "green". Of course, this is so, but will “green electricity” work until the first calm or cold winter?
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