The European energy crisis isn’t over
The continent is still scrambling to find new energy sources
One can — still — almost hear the collective sigh of relief throughout Europe that this year’s winter was one of the warmest in recorded history. While it might be tempting to point to the irony of global warming saving Europe from the consequences of its own climate change policies, the real question is whether the crisis is truly over.
Optimists draw attention to European prices for natural gas, which have slumped to their lowest level since 2021, surely an indicator that all the panicking of the past was baseless alarmism. But such optimism ignores that in addition to the fortunate weather, Europe bought every morsel of energy it could on the global markets.
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In addition to spending $1.2 trillion on energy over the last 14 months, LNG imports in 2022 were 60% higher than in 2021, and Europeans outspent China, Japan, and South Korea combined, with an extra $25 billion dedicated to LNG alone. Keep in mind, though, that Chinese demand was severely reduced by its Zero Covid policy, a condition that is about to change soon with China’s factory activity hitting the highest level since 2012.
These panic-buys have left their scars on the global markets, and triggered a widespread return to coal as the primary source of energy, since developing countries in particular fear that Europe outbidding them on global LNG markets will leave them literally in the dark. In other words, Europe might have saved itself in 2022, but in doing so sacrificed addressing the global climate crisis. With most of the developing world building out coal — which is dirty but also reliable, cheap, and easily storable — global emissions will not be significantly reduced any time soon.
But it would be unfair to point to the developing world, since Germany has done exactly the same: in addition to LNG, it was “King Coal” that kept the lights on. Thus one should not put too much stock into German promises to exit coal by “2030 or earlier” given that it’s highly unlikely that there will be any significant improvement in 2023 and beyond when it comes to matters of energy, especially natural gas. This has been laid out in great detail by the most recent Shell LNG Outlook 2023, which predicts significant global supply gaps in LNG during the coming decade and warns of ongoing under-investments in fossil fuels, despite their continuously rising use.
Once again, the optimist will tell you that these issues can be overcome by reducing gas demand, which is certainly possible. Europe has curbed its industrial use significantly below the 2013-2019 average, but at significant costs to the production of fertilisers, chemicals, steel, and cement. These four materials are usually considered the most important ingredients to maintain modern civilisation.
This might also help to explain why sanctions on Russian energy have been somewhat disappointing in their effect so far. While they are of course painful for Russia’s economy, this pain has not exactly been terminal, and the sanctions are often circumvented by European states themselves, like Austria or Spain.
Looking at the European energy situation, it increasingly looks like 2022 is closer to a new norm than an outlier. The question of energy security in Europe remains unanswered. Hoping for warm winters in the year to come is not a strategy: it is an act of desperation.
What “global climate crisis”?
What does this sentence mean anyone? :“With most of the developing world building out coal “
Indeed. If the climate supposedly gets “worse” in some regions, it gets “better” in others. Is it really a disaster if the UK gets a little warmer on average ? Most people complain that it isn’t warm enough here and choose warner places for their holidays – or even go to live in them. And we would surely be able to grow more food.
Of course, there are transition costs with all this and it creates some winners and losers and is arguably “unfair”. But “fairness” isn’t an objective standard. Harry and Meghan would doubtless consider it “unfair” if they lost Frogmore Cottage. You and I might consider it “unfair” that they are hogging a large property which has been left unused for some years in a country which is short of housing. And might be let at a profit.
But change is inevitable in everything. Attempting to legislate against what you cannot control (and there is natural climate change in addition to any man made change – and there is little evidence that we know how to control this) seems like a foolish and massive waste of resources.
Little evidence? We don’t even know how to stop a summer rain shower over St. Agnes. How on earth would be stop the shifting of the tectonic plates, a solar flare or the explosion of a volcano?
The continued rise in sea level because of climate warming is not good for anyone.
Sea levels have been rising at a steady 20cm per century for millennia. The fate of the Maldives is settled. It may be that human activity has accelerated sea level rise slightly but just how sensible is it to spend £Ts just to give the Maldives a few additional decades of existence?
There is zero issue with the Maldives. Aerial photography since WWII has conclusively shown they have grown larger, as have 80% of the coral islands in the Pacific. Coral reef sediment is responsible for the increase in land size. Waves sweep up the sediment and deposit it on islands.
Good grief. There are Herd members here who have actually downvoted this entirely uncontroversial comment. Yes, obviously climate warming will be a good thing for some countries (Russia for example) but sea level rise is unarguably an existential threat. Migrants in little boats is only a foretaste of the deluge to come as populations flee low lying parts of the world.
As Dougie said, sea level rise has been happening for 10,000 years. It’s a problem no doubt. The best thing we can do is help poor nations acquire the tools to grow their economies, and that starts with cheap, reliable energy. A third of the Netherlands is 5 feet below sea level. Sea level rise will cause displacement for sure, but it can also be managed.
‘Is it really a disaster if the UK gets a little warmer on average ?’
While I fully appreciated the thirty degree heat this year on my British beach holiday and my salad crops loved it, probably yes it does. This man is a good place to start.
You might want to read this article from the Guardian from 2016. His ideas about that climate evolved over time – not nearly as alarmist.
I wasn’t being alarmist. Nor did I say he was alarmist, neither is the article I shared alarmist. I don’t think he was ever an ‘alarmist’ as such. I just said probably yes it does matter if the UK gets warmer. Sorry I see Mr B put disaster, thats probably a bit strong but its going to have some effects, whether we can do anything about it it is another matter.
The idea is the planet is one system – Regardless of what you think about the temperature – We have air pollution, water pollution, soil pollution and erosion, loss of biodiversity, micro plastics pollution, deforestation, great massive garbage patches in the sea, etc. These problems all need considering and are tied up with the climate issues.
On the coal:
On this link scroll down to section 10:
‘Figure 7 shows that coal’s share of electricity production has been falling for OECD countries, especially since 2008. “Other” has been rising, but only enough to keep overall production flat. Other is comprised of renewables, including wind and solar, plus electricity from oil and from burning of trash. The latter categories are small.
The pattern of recent energy production for non-OECD countries is very different:
Figure 8 shows that non-OECD countries have been rapidly ramping up electricity production from coal. Other major sources of fuel are natural gas and electricity produced by hydroelectric dams. All these energy sources are relatively non-complex.’
Its a pretty interesting article in all to be fair, it does discuss the coal build out in developing countries a little.
The one thing we can be certain about is that the UK’s sticking plaster approach to a fair pricing mechanism will produce opportunistic gains for a few and misery for many. Another thing is that the sanctions against Russia were not, and will not, be thought through.
Maybe you could get Biden to blow up a couple pipelines that come from Azerbaijan through Turkey to feed Southern Europe – maybe that will help. Probably will not – but Biden would likely think it worth a try.
I think we might also see a long-term shift in the expression of concern away from “oh goodness the winter’s coming, we need so much energy to heat homes” to “oh my goodness, summer’s coming and we need so much energy for our air conditioning!”
None of which distracts from the key point which is: you need to find new reliable, sustainable and clean sources of energy.
Whatever happens, the one non-variable will be that the BBC complains about it.
There will be an interesting period during which the social justice lunatics make a big fuss over inequality of access to cool air in the summer. Won’t that be fun.
Unlike gas boilers, heat pumps can be run in reverse to provide air conditioning. So, in your scenario, Katherine, replacing the former with the latter would be counterproductive.
Oh dear. Maybe the green faction will have to decide between i) more nuclear plants, ii) CO2 reduction, and iii) keeping their own lights on. The horror!
“While it might be tempting to point to the irony of global warming saving Europe from the consequences of its own climate change policies, the real question is whether the crisis is truly over.”
Actually I don’t agree. I think this point nails it.
But anyway, the rest of the article is spot-on anyway, whether or not we buy into the implied notion that climate change politics deserves an automatic amnesty from its own consequences.
The goal of the global warming NGOs has always been to drive the plebs back to the stone age if possible. Because cold, dark, desperate people are more controllable.
Citizens who have the means of self-sufficiency and independence are a real pain in the ass. Serfs are more useful.
Sadly, the message has not yet hit home with the UK Government and, with Grant Shapps in charge of our energy policy, it’s unlikely to anytime soon.
‘our’ energy policy?
Part of the governments plan I’m sure was to have eight new nuclear power stations in eight years. Which I thought was good. It looks unlikely they will be delivered on time though.
Germany imported virtually zero LNG a year ago and had no real infrastructure for LNG imports. It’s moved faster than was expected and now has it’s first terminals complete and more in progress. That’s impressive reaction speed. Plenty of suppliers too – Norway, Qatar, Aus, USA,
France already in better position with Nuclear.
UK has some of the biggest LNG terminals. Our higher fuel costs are more to do with how we’ve managed the retail market.
Warmer winter has helped, but whilst we are v unlikely to return to the cheap fuel we had pre-invasion it’s not proven to be as existential a crisis as some suggested. It’s also turbo-charging more focus on efficient usage, re-review of Nuclear etc which can only be good for both resilience and climate targets.
As Europe fundamentally reduces reliance on Russian gas the question is will Putin really find other buyers at the price he wants/needs? No pipelines to China/India as yet and much investment needed – which only China could fund and will extract a significant price from Russia in the process. Plus if China moves in this direction it’ll potential release more LNG onto market for elsewhere.
2023 will still be tough, but overall this is looking much worse for Russia as they’ve stimulated a fundamental change that would not have accelerated as fast without the invasion.
it’s not proven to be as existential a crisis as some suggested.
Do you want to tell that to wade ceramics that went bust after a £500000 increase in their gas bill? Or to the German manufacturing sector that has contracted by 20%? The companies struggling with the increase in costs across the board? Every business we have had contact with this week are worried. Prices for everything are all over the place. Especially metals. Some stuff is not on the shelf.
Someone tell sunak his corporation tax rise would be actual murder.
Sorry Watson – These sanctions were basically suicide on our part I think. They are collapsing developing countries. Destroying our economy. They need lifting ASAP.
No disagree. There has been pain undoubtedly. And some Businesses will have been tipped over by the jump in prices. But nothing like as bad as was being feared. As you’ll know UK just avoided recession last quarter. That is not an existential crisis. And as we now know the energy subsidy being extended as not been as costly to Govt as expected.
We don’t have as many tomatoes of course due to additional energy costs, but we do have turnips as a Govt Minster indicated. So happy days, unless you don’t like turnips.
I feel like you’re just baiting me now. No. I don’t like turnips. We will be lucky to avoid a recession.
What does LNG stand for? ..gas
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