Thursday, May 17, 2018

GWPF Newsletter: Green Europe May Be On The Verge Of Blackouts

As Dutch Gas Production Collapses, Europe's Dependence On Russia Grows

In this newsletter:

1) Green & Anti-Shale: Europe May Be On The Verge Of Blackouts
Bloomberg, 16 May 2018 
2) Europe Grapples With Dutch Gas Production ‘Collapse’ & Growing Dependence On Russia
Euractiv, 16 May 2018
3) Subsidy Cuts: Investment In UK Clean Energy Suffers ‘Dramatic And Worrying Collapse’
Financial Times, 16 May 2018
4) UK Shale Bureaucracy Is Out Of Control
Andrew Montford, GWPF, 16 May 2018 
5) Renewable Energy Use In Europe Didn’t Stop CO2 Levels From Rising
Climate Change Dispatch, 15 May 2018 
6) Britain’s Green Fiasco: £23 Billion Goes Up In Smoke As Green Energy Scheme Flops
Daily Mail, 16 May 2018 

Full details:

1) Green & Anti-Shale: Europe May Be On The Verge Of Blackouts
Bloomberg, 16 May 2018 

Europe is facing power generation capacity shortages and may even risk blackouts without additional use of natural gas, one of the continent’s biggest producers of the fuel said.

“A severe shortage” in generation capacity is expected in the U.K., Germany, and Belgium, Tor Martin Anfinnsen, senior vice president for marketing and trading at Statoil ASA, said in an interview at a conference in Amsterdam on Tuesday. Those countries are phasing out or cutting coal-generation fleet and Germany and Belgium are also turning away from nuclear power.

“If you have a dangerous bend in the road and everyone knows there is a dangerous bend but nothing is done with it unless there is an accident in the road,” Anfinnsen said.

“Is that what we will see in Europe in power generation as well? Will we have to see blackouts before you see a change in policies? That remains to be seen but we are getting dangerously close in many markets.”

Reduced capacity reserve means higher use of gas to produce electricity, also supported by higher carbon prices that discourage dirtier-burning fuels.

“It is very difficult to see that there is any other way of fixing that up to 2030 by other means than increasing gas-fired power generation,” Anfinnsen said. “Not only through higher utilization of existing capacity but also adding new gas-based generation.”

Full story

2) Europe Grapples With Dutch Gas Production ‘Collapse’ & Rising Dependence On Russia
Euractiv, 16 May 2018

For the first time, the Netherlands became a net importer of gas last year, reflecting the inexorable decline in production from Europe’s North Sea fields – an issue EU policymakers are only starting to come to terms with.

Although the decline of Dutch gas production was long anticipated, the abruptness of the fall came as a surprise to industry observers.

“We did not realise until relatively recently that, in the Dutch gas sector, [production] would decline very quickly,” said Jonathan Stern, head of the Natural Gas Research Programme at the Oxford Institute for Energy Studies in the UK.

“The only question is to the speed of the decline,” he told EURACTIV in an interview.

How Europe eventually replaces Dutch production will probably redefine the fundamentals of the EU gas market in the coming decade or so. In fact, the effects are already being felt in a market where consumption is propped up by a gradual switch from coal to gas resulting from the pressure to decarbonise energy.

Demand on the rise

Natural gas consumption in Europe last year reached its highest level since 2010, according to EU figures released in April. And the vast majority of it was imported, representing a whopping 360 billion cubic meters (bcm) of the 491bcm consumed in Europe, up 10% from 2016.

This resulted in an estimated import bill of €75 billion, the European Commission said in its latest quarterly report on European gas markets.

“Recently, gas volumes have risen again, driven by factors such as economic growth and the replacement of coal-fired power generation by gas,” said Dennis Hesseling, head of the gas department at the Agency for the Cooperation of Energy Regulators in Europe (ACER). “Next to that, seasonal gas demand for heating is highly temperature-dependent,” he said referring to the cold 2017-18 winter, which fuelled higher demand for gas.

For the Netherlands, the combination of these factors was spectacular. For the first time, the country became a net importer of gas on an annual basis last year, reflecting the steady decline in supplies coming from North Sea fields. On 29 March, the Dutch government announced it will cut production at the Groningen gas field to 12 billion cubic meters (bcm) per year by 2022, and to zero by 2030.

Russia, meanwhile, maintained its role as Europe’s dominant supplier, at 43% of EU imports. Pipeline gas from Norway came a distant second, at 34%, while the combined share of Algerian and Libyan supplies stood much lower, at 10% of EU imports in 2017, down from 11% in 2016.

“The general trend is that the domestic EU production is declining and the import need of gas is increasing. And that’s a trend we’ve seen coming for years,” said Jannik Lindbaek, the head of EU office at Statoil, the Norwegian energy company.

Filling the gap: LNG and Russia

With domestic production falling inexorably, no country other than Russia seems in a position to raise its production significantly – at least in the short to medium term.

For different reasons, imports from Algeria and Libya are projected to erode slightly. And Norwegian imports aren’t expected to grow much either: “We have the capacity to supply the European gas market from the Norwegian Continental Shelf at the current level towards 2030,” said Statoil’s Lindbaek.

This leaves policymakers in Brussels grappling with an uncomfortable reality: Despite their best efforts to liberalise gas markets and diversify supplies, Russia is likely to remain Europe’s dominant supplier for many years.

“The key development that nobody outside the gas industry recognises is the collapse of Dutch production at the Groningen field,” Stern told EURACTIV.

“This is what is absolutely unbelievable for me: when politicians and media commentators speak about gas security problems, they only talk about Russia and nothing else. Whereas when gas industry people speak about security of supply, what they speak about is the decline of production in the Netherlands, the UK and, further in the future, Norway,” Stern said. [...]

Russia’s position will only strengthen when the Nord Stream 2 pipeline is built, roughly doubling Gazprom’s capacity to export gas to Europe directly to Germany via the Baltic Sea.

For EU policymakers bent on diversifying supplies away from Russia, this is perceived as a slap in the face. But “the problem is that there isn’t any other gas,” Stern said. “At least not in the short term. And that’s what people can’t accept”.

Full story

3) Subsidy Cuts: Investment In UK Clean Energy Suffers ‘Dramatic And Worrying Collapse’
Financial Times, 16 May 2018

Jim Pickard

There has been a “dramatic and worrying collapse” in investment in clean energy in the UK in the past three years, MPs have warned.

The proportion of Britain’s electricity generated from low-carbon sources — including nuclear — has doubled between 2009 and last year, when it hit a record 50 per cent.

Yet this belies a drop in the annual investment in clean energy, which fell 10 per cent year-on-year in 2016 and another 50 per cent in 2017 — when it was at its lowest level since 2008, according to the Commons environmental audit committee.

In a report published on Wednesday, the MPs on the committee blamed the trend on a succession of Conservative-led policy decisions, including cuts to green energy subsidies.

Since 2015, ministers have privatised the Green Investment Bank, prematurely closed the renewables obligation to onshore wind, removed the climate change levy exemption for renewables and reduced feed-in tariffs for small-scale renewable generation.

The government has also cancelled the zero carbon homes policy that was due to begin in 2016 and scrapped a £1bn competition to set up a new “carbon capture and storage” plant to remove carbon dioxide from gas plants.

Mary Creagh, the Labour MP who chairs the environmental audit committee, said billions of pounds of further investment were needed to decarbonise the entire energy system.

“A dramatic fall in investment is threatening the government’s ability to meet legally binding climate change targets,” she said, adding that the government “must urgently plug this policy gap and publish its plan to secure the investment required”.

Ministers produced a “clean growth strategy” last October, but Ms Creagh described the document as “long on aspiration but short on detail”. She said the strategy did not do enough to meet legally binding climate change targets even if all its policies were delivered in full.

Full story

4) UK Shale Bureaucracy Is Out Of Control
Andrew Montford, GWPF, 16 May 2018 

The Department of Housing Communities and Local Goverment is currently having an inquiry on the planning process as it relates to the unconventional oil and gas industry, and in particular whether the official guidance to planning officers needs to be updated.

It’s pretty dull stuff, to be sure, but there are a few astonishing snippets in the evidence presented. For example, Ken Cronin, from the onshore oil and gas industry body, told the inquiry that

… from the  beginning — that is, the scoping of  an environmental impact assessment with councils — through to setting planning conditions, the whole process now takes about 18 months. Three or  four years earlier, it was taking three to four months…

And Lynn Calder, from INEOS, had similar stories to tell:

We are facing two to three years of planning applications to get a core well approved at the moment.

That’s three years, just to get one of the necessary permissions to drill a hole to extract a core of rock. Not production, not fracking, just extracting a core of rock.

Pure insanity.

5) Renewable Energy Use In Europe Didn’t Stop CO2 Levels From Rising
Climate Change Dispatch, 15 May 2018 

Jason Hopkins

The proliferation of renewable energy in the European Union in 2017 did not stop the majority of member states from increasing their carbon footprint.

The European Union had a 25 percent growth in wind power and a six percent increase in solar, however, carbon emissions rose by 1.8 percent in 2017, according to a report from Greentech Media. Malta experienced the highest increase, with a 12.8 percent rise. Estonia and Bulgaria came next, with an 11.3 and 8.3 percent increase, respectively.

Altogether, 20 EU member countries saw their carbon dioxide rates go up, while seven were able to cut their rates.

The numbers indicate that, despite massive investments in the renewable energy sector, reducing emissions is a tough task while undergoing job and population growth. Wind and solar have not been able to keep pace with the higher number of electricity consumers. Market expansion is making it all the more difficult for EU leaders who plan to slash carbon to 40 percent below 1990 levels by 2030.

“This worrying rise in emissions shows that while renewables continue to grow, the most polluting energy sources are not being eliminated quickly enough,” said Molly Walsh, a renewables campaigner at Friends of the Earth Europe. The numbers reveal the EU Emissions Trading System — the largest greenhouse gas emissions trading scheme around the world — is not doing a satisfactory job, Walsh stated, according to Greentech Media.

The emissions increase is also surprising considering the amount of money European leaders have spent in recent years to prop up the renewable energy sector and fight climate change.

Germany has paid a fortune to become an international leader in wind energy, but that hasn’t stopped the country from remaining Europe’s largest polluter. Germany has burned an estimated 189 billion euros — around $222 billion — on subsidies for renewable energy since 2000. Emissions have mostly remained at 2009 levels, despite the big financial commitment. The country managed a negligible 0.2 percent improvement from their 2016 carbon dioxide levels.

France established strong renewable energy targets. However, the country witnessed a 3.2 percent carbon emissions rise in 2017. Italy experienced the same rate increase. Spain enjoys robust wind, solar and hydro reserves, yet the country still saw its emissions rise by 7.4 percent, accounting for a 7.7 percent share of Europe’s total output in 2017.

The situation in Europe will likely get worse as the population continues to climb and a slate of nuclear plants begin to phase out.

6) Britain’s Green Fiasco: £23 Billion Goes Up In Smoke As Green Energy Scheme Flops
Daily Mail, 16 May 2018 

Billions have been wasted in a drive to fit green boilers in homes which could have made air pollution worse, MPs warned last night.

The scheme is expected to cost £23billion but only 60,000 boilers have been installed in the past four years.

Half were boilers that burn biomass such as wood, which cause a ‘serious public health issue’ by pumping out smoke and worsening local air quality, said the Commons public accounts committee.

The Renewable Heat Incentive (RHI) is also open to fraud, added a scathing report.

Under the initiative, businesses and households pay for a renewable energy boiler upfront then receive payments for up to 20 years depending on the amount of heat they produce.

However, it is open to ‘gaming’, said MPs.

Some unscrupulous homeowners can double the amount they produce by using heat generated under the RHI to dry wood or other materials.

This can then be fed back into the boiler to burn it and generate even more heat – and money from the public purse.

The scheme was started in 2011 by Chris Huhne, then Liberal Democrat energy secretary, for businesses then extended to domestic customers three years later.

Households and firms can apply for grants to switch from fossil fuel heating systems to renewable ones such as biomass boilers, which burn wood pellets, chips or logs, and ground or air source heat pumps.

As the scheme is open to applications until 2021, final payments to participants will run to at least 2041. By this time, the bill for taxpayers is expected to hit £23billion.

Originally, ministers expected to install 513,000 new systems but now admit the scheme will only fund 111,000. Civil servants told MPs that their forecasts suffered from ‘optimism bias’.

Over the past four years, just 60,000 new renewable boilers have been installed in homes compared to 6.2million gas systems. The MPs found that the take-up under the RHI was much lower than expected because of the hassle factor and huge upfront installation cost, which is much higher than conventional gas boilers.

Many of the new systems would have been installed anyway so the scheme did not offer value for money, added the committee.

It was scathing of the fact that the RHI encouraged people to install biomass boilers even though they increase pollution.

Full story

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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