Home Energy system Is America doomed to reproduce the European energy crisis?

Is America doomed to reproduce the European energy crisis?

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For weeks now, there has been hardly any news other than the energy crisis which surprised Europe in September and which has since shaken all markets and all industries and raised fears of blackouts, astronomical utility bills and rising food prices.

The official version of events is that increasing energy demand has coincided with tight energy supply. The unofficial version concerns Europe’s energy transition agenda and the possibility that it rushed into it without enough long-term planning. And now the United States has basically an identical program, focused on increasing the capacity of wind and solar power generation, reducing the demand for oil and gas, and encouraging people to buy vehicles. electric vehicles instead of internal combustion engine cars.

David blackmon wrote earlier this week for Forbes that “The energy crisis in Western Europe this summer was caused by the premature withdrawals of hundreds of coal and natural gas power plants in favor of massive reliance on wind power and, in a lesser extent, solar. “

He went on to note that, “Ironically, this crisis is unfolding just as Speaker of the House Nancy Pelosi and the Democrats in Congress are trying to pass their massive 3.50 ‘budget reconciliation’ bill. $ which is largely designed to recreate the European model in the United States. States. “

Europe currently has around 220 GW of wind power, according to at Wind Europe. Solar capacity stood at nearly 131 GW at the end of 2019, but rose sharply last year, garnering praise from the media that even the pandemic could not slow the deployment of cheap solar farms. which would bring Europe closer to its net zero ambitions for 2050. And then suddenly, everything changed.

At present, factories are closing in Europe, including greenhouses in the Netherlands which produce, to put it mildly, food – and utilities desperate to buy coal – those fortunate enough to still have coal-fired power plants. Some are switching from gas to petroleum derivatives, the latter having become cheaper than natural gas. And officials such as IEA chief Fatih Birol warn against anyone blaming renewables. On the contrary, the discourse for ever more renewable energies remains as strong as ever, at least in some circles.

What’s happening in Europe – including the UK, by the way, one of the most active energy transition countries – is a cautionary tale of magnificent proportions right now. Even Bloomberg, who published an article a few weeks ago claiming that Europe’s energy crisis shows the downsides of fossil fuels, recently posted another, warning that The global energy crisis is the first in a long series in the age of clean energy.

The energy crisis in Europe and, to a large extent in China, shows the rest of the world how not to make an energy transition at a time when many parts of this rest of the world are planning their own transitions. The American plan is, by all means, the most ambitious and generous, as befits the world’s largest economy. But that also makes it the riskiest transition plan in light of recent European events.

“This huge bill [the $3.5-trillion Biden administration bill] is chock-full of hundreds of billions of dollars in new subsidies, mandates, and incentives for these same intermittent, low-density energy sources, along with draconian new taxes and regulatory measures designed to increase the cost of fossil fuels in power generation and transportation, ”Blackmon wrote.

For the most part, then, the current US administration is repeating the mistake the EU made in its ambition to go green and cut emissions both deeply and quickly. By the way, the consequences of this precipitous transition will start with higher emissions, as the continent relies heavily on fossil fuels and supply remains limited due to transition efforts that have led to years of under- investment in new production.

In all fairness, there was a speculative element to the gas price crisis in Europe. In mid-September, Reuters’ Clyde Russell wrote a column this must have gone relatively unnoticed as the noise around the price started to get louder. What Russell noted in the column was that despite rising spot market prices for LNG, fuel flows to Asia and Europe were stable.

In other words, Europe was not in a particular rush to top up its gas reserves at the time, and neither was Asia. Everything was as usual. Europe was importing LNG at a rate of 5 to 6 million tonnes per month in the second quarter, which Russell said was the usual seasonal amount. There was no crisis until September.

The speculative element of the crisis deserves special attention. It is mentioned here for the sake of fairness. Because something else happened this year: the wind didn’t blow as much as everyone expected. The major players in the wind industry suffered profit cuts as a result, and utilities suffered production cuts. Demand, however, has not declined and apparently solar farms could step in to support the weight, so it was gas that had to be used, even reluctantly, to keep the lights on.

The rapidly deteriorating energy situation in Europe should give anyone planning a major overhaul of the energy system to think twice before following exactly the same scenario as Europe. This should motivate the development of alternative pathways to net zero or perhaps even reconsider the need for net-zero commitments. Unfortunately, this is unlikely to happen.

By Irina Slav for Oil Octobers

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