In this newsletter:
1) Mugged by reality: Germany may extend coal use to replace Russian gas
Bloomberg, 28 February 2022
2) Nuclear, coal, LNG: 'No taboos' in Germany's energy about-face
Reuters, 27 February 2022
3) Patrick O'Flynn: Britain needs a nuclear renaissance to end our decadent dependence on Russian resources
The Daily Telegraph, 27 February 2022
4) Rupert Darwall: Standing up to Putin means ditching Net Zero
Real Clear Energy, 24 February 2022
5) WSJ: Energy, Russia and American Power
The Wall Street Journal, 27 February 2022
6) European industry faces shrink or shut decisions on energy cost crisis
Bloomberg, 27 February 2022
7) Susan Crabtree: Russia’s Ukraine invasion scrambles Biden’s green agenda
Real Clear Politics, 28 February 2022
8) Dan Eberhart: Unleashing U.S. oil industry offers Biden path to avoid energy crisis
Forbes, 25 February 2022
9) Nick Timothy: It’s time to stop letting despots weaponise our Western freedoms
The Daily Telegraph, 28 February 2022
10) Climate Cleanup at the Supreme Court
Editorial, The Wall Street Journal, 27 February 2022
Full details:
1) Mugged by reality: Germany may extend coal use to replace Russian gas
Bloomberg, 28 February 2022
Germany could extend its use of coal as the country rethinks its energy plans in the aftermath of Russia’s invasion of Ukraine, according to Economy Minister Robert Habeck.
The former co-leader of the Green party said coal plants could run for longer and even said he wasn’t “ideologically opposed” to extending the use of nuclear energy. Chancellor Olaf Scholz announced on Sunday plans to build two new liquefied natural gas terminals to expand Germany’s energy choices and reduce its reliance on Russia.
The government wants to reach a point where it can “pick and choose which countries we want to build energy partnerships with,” Habeck said in an interview late on Sunday on ARD television. “Being able to choose also means, in case of doubt, that you can become independent from Russian gas, coal or oil.”
While Germany can manage without Russian gas for the coming months, the country would have to expand its purchasing strategy significantly for next winter, he said.
Extending the use of coal beyond 2030 might entail risks, and in the long term, there’s no alternative to renewable power in terms of energy security, Habeck said.
“Running for longer means a longer dependence on coal, possibly also from Russia. Or we get it somewhere else,” he said. “But it’s another form of dependence.”
Nuclear is unlikely to be a short-term fix, since the country’s last three reactors are already in the process of being wound down.
“The preparations for shutting down are at such an advanced stage that the atomic power plants could only be operated for longer under the highest security concerns and possibly with fuel supply that hasn’t yet been secured,” Habeck said. “That’s certainly not something we’d want.”
2) Nuclear, coal, LNG: 'No taboos' in Germany's energy about-face
Reuters, 27 February 2022
Reuters, 27 February 2022
Germany signalled a U-turn in key energy policies on Sunday, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, part of a broad political rethink following Moscow's invasion of Ukraine.
Europe's top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options.
In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany's energy needs.
"The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security," Scholz told lawmakers in a special Bundestag session called to address the Ukraine crisis.
"We must change course to overcome our dependence on imports from individual energy suppliers," he said.
This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves.
These plans will likely be a boon for Germany's top utility RWE (RWEG.DE), which has been backing efforts by German LNG Terminal, a joint venture of Gasunie (GSUNI.UL), Oiltanking GmbH and Vopak LNG Holding (VOPA.AS), to build an LNG terminal in Brunsbuettel.
Separately, the German government has asked RWE's smaller rival Uniper (UN01.DE) to revive plans to build an LNG terminal in Wilhelmshaven, Handelsblatt newspaper reported on Sunday, after the company scrapped such plans in late 2020. read more
Uniper was not immediately available for comment and the Economy Ministry declined to comment.
Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project, Europe's most divisive energy project after Russia formally recognised two breakaway regions in eastern Ukraine. read more
Russia has since invaded Ukraine, prompting the West to slap further sanctions on Moscow and making the energy supply issue even more pressing. read more
The revamp of energy priorities comes alongside a paradigm shift in German foreign and defence policy, with Scholz also announcing a dramatic hike in military spending. read more
'NO TABOOS'
Germany last year embarked on an ambitious shift towards solar and wind power and Greens member Oliver Krischer on Sunday said a draft law to ensure renewables will account for 100% of Germany's power supply by 2035 already was completed.
Germany will also increase the volume of natural gas in its storage facilities by 2 billion cubic metres (bcm) via long-term options and will buy additional natural gas on world markets in coordination with the European Union, Scholz said.
Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.
Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country's energy supply, the country's economy minister Robert Habeck, a member of the Greens, said.
Asked by German broadcaster ARD whether he could imagine allowing nuclear plants to run longer than planned under Germany's exit plan, which foresees shutting the country's three remaining plants by the end of 2022, he said: "It is part of my ministry's tasks to answer this question ... I would not reject it on ideological grounds."
Isar 2, Emsland and Neckarwestheim 2 are the last remaining nuclear plants producing power in Germany after the country a decade ago decided to phase out the fuel in the wake of Japan's Fukushima disaster.
The three plants are owned by German energy firms E.ON (EONGn.DE), RWE and EnBW (EBKG.DE), respectively.
Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany's ambitious exit from coal, which is planned for 2030.
"There are no taboos on deliberations," Habeck said, adding that it was Germany's goal to ultimately choose which country will supply its energy.
"Being able to choose also means, in case of doubt, saying goodbye to Russian gas, coal or oil. And should Russia wilfully cut off this supply, then the decision has of course been made," Habeck said.
"In that case they will never be rebuilt. I think the Kremlin knows that, too."
3) Patrick O'Flynn: Britain needs a nuclear renaissance to end our decadent dependence on Russian resources
The Daily Telegraph, 27 February 2022
As we enter what will be at best the era of a new Cold War we are going to need a much harder-headed energy policy if we are not to find it very chilly indeed.
There are few things we Brits enjoy so much as feeling morally superior to the Germans and it should be acknowledged at once that they have made that rather easy down the ages.
One doesn’t need to reopen any historical cans of worms to luxuriate in such a sensation right now because, via its foot-dragging on taking effective sanctions against Russia and the paltry nature of its initial support for Ukraine, Germany is rendering itself a very easy target for morality-based wrath.
But in truth we are kidding ourselves if we believe the pusillanimous reaction of Germany to Vladimir Putin’s disgusting conduct compared to the more robust responses of our own country says anything much about ethics.
The reality is that, were we dependent upon Russia for nearly half our natural gas compared to just three per cent of it, we would be just as hamstrung as Germany has been in the face of Putin’s evil.
Would British public opinion be as gung-ho towards the Russian regime if the consequences included shivering in their own homes, massive increases in the price of food and other essential commodities, huge waves of job losses in key industrial sectors and a potential economic depression? That must be highly doubtful.
And it is arguably just as much through luck as judgment that we are not in such an unhappy situation. For we have neglected our own energy security and abandoned the strategic goal of self-sufficiency almost as acutely as Germany.
Successive German chancellors are culpable for winding down their nuclear energy sector and ramping up dependency upon Russian gas supplies, with the long-serving and recently departed Angela Merkel deservedly getting the lion’s share of the flak.
But in recent decades British governments of all political shades have also taken massively complacent decisions about energy provision. The 21st century is thus far a dismal tale of UK expertise in nuclear energy being allowed to wither away, Whitehall deciding to get China – of all countries – deeply embedded in the provision of what little new capacity it did facilitate, fracking getting abandoned at the first whiff of environmentalist aggro, most of our gas-storage capability being scrapped and coal mining more or less completely shutting down.
While it is true that there has been a boom in renewable energy, everybody knows that back-up sources of power are needed when the sun doesn’t shine and the wind either doesn’t blow or blows too hard.
The past few years of the Covid pandemic and grotesque behaviour by China and Russia should by now have shattered various conceits and delusions that have been prevalent in our liberal establishment. The arc of history does not necessarily bend towards progress, globalising supply chains is not a cost-free exercise, some countries are never going to behave well or transition to liberal democracy, and the folly of neglecting the capacity of the domestic nation state is thrown into sharpest relief when tough times arrive.
Fortunately, our own nation state was able to draw on sufficient resources of expertise and finance to deliver the world’s best vaccination programme against Covid. Kate Bingham’s marvellous Vaccine Taskforce, commissioned by Boris Johnson, was authorised to slice through usual time-consuming Whitehall procedures and processes. And what a difference it made, saving tens of thousands of lives.
Britain needs to do something similar in the field of power generation and time is of the essence. An Energy Security Taskforce, based on the high-speed Bingham model, should be established at once. Clearly, new power plants cannot be conjured up overnight. But does anyone believe that if or when China starts majoring on nuclear energy it will take them 10 years per plant – the schedule our own Hinkley Point is working to and already slipping behind – rather than 10 months?
It is absurd that the environmental movement in Britain has forged so strong an alliance with the ever-present NIMBY tendency that creating any extra energy-generation capacity other than via renewables has become the work of decades.
Back in the 1980s, the green movement made opposing nuclear energy one of its central aims because of over-hyped concerns about safety and storing spent fuel rods. But once reducing carbon emissions had been elevated to the top planet-saving goal, the British state should have made a hard-headed decision to forge ahead with major new nuclear capacity.
To abandon coal, envisage winding down gas long-term and decommission ageing nuclear plants without replacing them in a timely manner amounted to a decadent strategy predicated on the world becoming a happy and peaceful family of civilised nations reliably helping each other out, such as it has never been.
The Russian boot may not be bearing down on the British throat quite as savagely as it is upon the German one right now, but do not imagine we are altogether insulated. The market for energy is predominantly global and when the massive financial firepower of Germany is deployed to find alternative supplies for its citizens the effect will be to bid up prices for everyone.
A luxury mindset has dominated British public life for too many years, resulting in the elevation of trivial and divisive identity politics to a central position as well an eco-tyranny that brooks no compromise. As we enter what will be at best the era of a new Cold War we are going to need a much harder-headed approach if we are not to find it very chilly indeed.
4) Rupert Darwall: Standing up to Putin means ditching Net Zero
Real Clear Energy, 24 February 2022
Geopolitical realism requires energy realism. It also demands realism about the prospects for net-zero. The West either understands what is at stake and plays by the rules of geopolitics or the West loses.
Vladimir Putin’s inflammatory speech, in which he set out his aim to reconstitute the Russian empire and blamed Lenin for its demise, and his decision to back this up with a full-scale invasion of Ukraine, signals the return of geopolitics.
Until now, Western leaders have been saying that the biggest threat to the world is climate change. Now comes Putin armed with nuclear weapons, tanks, and thousands of troops declaring his intent to overthrow Europe’s post-Cold War order. The dilemma for the West: you can’t win a geopolitical conflict lasting years or decades with an economy powered intermittently by wind turbines and solar panels.
From the start of the Biden presidency, tensions existed within the administration between geopolitical realists, notably Secretary of State Antony Blinken, and climate hawks led by the president’s climate envoy John Kerry, who saw friendly relations with China as an essential ingredient for any global deal on the environment.
Although Blinken’s position that Chinese expansionism is the biggest threat to the interests of the United States now has the upper hand, the administration’s anti-fossil-fuel policies will progressively degrade America’s capacity to prevail against its geopolitical adversaries.
Expanded pipeline infrastructure is critical to American energy security. One of the Biden administration’s first actions was cancelling the license for the Keystone XL pipeline. Thanks to inadequate infrastructure connecting New England to the rest of the country and the century-old Jones Act – requiring that all goods moving by water between American ports travel on ships built, owned, and manned by Americans – the winter of 2018 saw Russian liquefied natural gasbeing brought ashore in Boston Harbor. Currently, the Securities and Exchange Commission (SEC) is mulling a climate disclosure rule.
The intent is to strengthen the hand of Wall Street and woke institutional investors to impose, in effect, an embargo on investment in domestic oil and gas production. The logic appears to be that domestically produced oil and gas incurs climate risk, whereas imported energy from beyond Wall Street’s writ does not.
And just last month, the Pentagon released a net- zero plan for the army, which would see it relying on an all-electric, non-tactical vehicle fleet by 2035.
It could be even worse. If John Kerry and the climate hawks had their way, the United States would be like Europe. The European Union is a paper empire. Its power is bureaucratic, deriving from rules and regulations. It is institutionally incapable of thinking and acting geopolitically because the EU is meant to be the exemplar of a post-geopolitical world, in which national sovereignty is dissolved in a supra-national, rules-based order.
Net-zero and the UN climate process represent EU-style supranationalism at a global level. “Climate neutrality is our European destiny,” European Commission president Ursula von der Leyen said two years ago when she announced the European Climate Law setting a legally binding target of net-zero greenhouse gas emissions by 2050.
The push for wind and solar power, which started in Germany with the Renewable Energy Act of 2000, means greater reliance on supplies of Russian natural gas to keep the lights on. Europe’s dependence on Russian gas is stark. At an EU meeting last week to discuss possible sanctions against Moscow, Italy’s prime minister, Mario Draghi, pleaded that any measures “should be concentrated on narrow sectors without including energy.”
This applies to Britain, too. When it comes to climate and energy, Britain (despite Brexit) remains functionally part of the EU, regardless of cost and the geostrategic consequences. In late 2019, Boris Johnson banned commercial fracking. Earlier this month, the British government ordered that concrete be poured into the country’s two exploratory shale wells and for them to be abandoned. The move was blasted by Cuadrilla Resources CEO Francis Egan, who pointed out that the Bowland shale formation could supply 50 years of current U.K. gas demand. “The value of just 10% of the in-place British resource would be approximately £3.3 trillion ($4.5 tn),” Egan wrote.
The Soviet Union began supplying gas to western Europe in the 1960s. West German chancellor Willy Brandt quickly saw a political opportunity to do business with Moscow based on his belief that Moscow held the key to German reunification. (For the same reason, the East German communist regime strongly opposed the burgeoning Soviet-West German gas trade.) Not once during the Cold War did Moscow renege on a gas contract. In this respect, Putin, who has a deep understanding of the gas industry, is different from his Soviet predecessors. As a result of the breakup of the Soviet Union, Russia ended up with the gas and Ukraine the pipeline and transit fees – a source of intense frustration to Putin.
In 2009, the Russian gas company Gazprom temporarily cut off exports to Europe. The Nord Stream 2 gas pipeline, like Nord Stream 1, takes the most direct route from Siberia to Europe, bypassing Ukraine. Credit the Biden administration for helping German chancellor Olaf Scholz over the line in suspending Nord Stream 2 – but if Moscow controls Ukraine, Putin will have solved his Ukrainian transit problem by extinguishing Ukrainian independence.
On the other hand, Germany’s and the EU’s net-zero policies will deepen their dependence on Putin’s goodwill as they increase their exposure to unreliable wind and solar, phase out coal, and – in the case of Germany and Belgium – prematurely close their nuclear power stations. Strategically, that’s a win for Putin.
Geopolitical realism requires energy realism. It also demands realism about the prospects for net-zero. Last week, Alok Sharma, the British president of the UN COP 26 climate conference, maintained that net-zero “remains alive,” but admitted, “the pulse is weak.” Achieving this barely-alive objective requires global emissions to be cut in half by the end of this decade. That’s not going to happen.
The basic math of the West vs. the Rest’s greenhouse gas emissions means that what the West does has a diminishing effect on the trajectory of global emissions.
In an age when Russia invades a sovereign state on a baseless pretext and denies its right to exist, it’s high time Western leaders got real. The West either understands what is at stake and plays by the rules of geopolitics or the West loses. The speed with which the West adjusts to this new reality will determine how much ground Russia and China can take.
5) WSJ: Energy, Russia and American Power
The Wall Street Journal, 27 February 2022
Russia’s invasion of Ukraine is a 3 a.m. wake-up call to President Biden and America’s liberal political class: Cease your war on U.S. energy. Europe’s climate obsessions have rendered it vulnerable to Vladimir Putin’s extortion, and the U.S. is in danger of repeating that tragic mistake.
No less than Igor Sechin, CEO of Russia’s state-owned Rosneft, warned Europe last summer: “Some ecologists and politicians urge for a hasty energy transition, yet it requires an unrealistically fast launch of renewable energy sources and faces issues with storage, ensuring reliability and stability of power generation.”
Europe’s hefty renewable subsidies have rendered nuclear and coal power economically uncompetitive. Governments have also forced loads of nuclear and coal plants to retire prematurely, believing wind and solar could replace them. Hello? Renewables don’t provide reliable power 365 days a year, 24 hours a day.
Europe has been left to rely increasingly on natural gas to keep the lights on. But governments have effectively banned hydraulic fracturing, which would have let them charge their economies with domestically produced gas. Europe now imports almost all of its gas, with 40% coming from Russia.
Sluggish wind last summer sent natural gas demand and prices soaring. Some manufacturers had to shut down. Then Russia slowed gas deliveries, limiting Europe’s supply heading into the winter. Strategic advantage: Putin.
The Biden Administration has been left scrambling to supply gas for Europe amid Kremlin threats to cut off supply. Shippers have redirected liquefied natural gas (LNG) cargos to Europe from Asia. Asian economies have shifted to burning more coal. In other words, Europe has reduced its CO2 emissions by outsourcing them.
Europe’s anti-carbon policies will have zero impact on global emissions. China has six times more coal power under development than all of Germany’s coal-fired capacity. China has promised to reduce emissions before 2030, but if you believe that, Mr. Putin has a promise of peace to sell you.
Mr. Biden ought to be exploiting America’s homegrown energy advantage. Instead he has spent a year disarming a la Europe. He has suspended leases in Alaska’s Arctic National Wildlife Refuge, halted oil and gas leases on federal land, and killed the Keystone XL pipeline, which would have helped Canada develop its oil sands.
Green groups and Democratic states have compounded the masochism by obstructing new pipelines, thereby limiting development of LNG export facilities, especially on the Atlantic Coast. In 2018 the Northeast had to import Russian LNG owing to a shortage of pipeline capacity. Mr. Putin can thank Andrew Cuomo, New York’s deposed Governor, for that.
The pandemic caused U.S. production to fall as demand and prices plunged. But crude prices have exceeded the break-even point for most oil plays since December 2020. U.S. oil production is nonetheless 1.5 million barrels a day below the pre-pandemic peak and 15% below the Energy Information Administration’s late 2019 forecast.
Production has increased in the Permian Basin, where break-even is about $35 per barrel. But the oil-and-gas giants have slashed investment in other plays and redirected money to subsidized renewables. Companies respond to political signals as well as prices, and they have to consider long-term risks and returns.
Democrats have promised higher taxes on oil and gas—including $100 billion in Build Back Better—as well as new regulatory burdens that will reduce their return on capital. Blackstone, the private equity firm, is black-listing new oil and gas investment, Bloomberg reports. “It’s not a moral or ethical stance,” said Blackstone’s Environmental, Social and Governance (ESG) global head Jean Rogers. “It is reading the signals in the market.” Well, yes.
Energy CEOs aren’t conspiring to fatten profits. Prices respond to fluctuations in supply and demand as well as market expectations. Crude prices surged this past year because production hasn’t kept pace with demand. “The world risks a severe deficit of oil and gas,” Rosneft’s CEO noted last summer. “The world consumes oil, but isn’t ready to invest in it.”
He’s right—at least about the West. Russia is investing heavily to develop its oil and gas resources, especially in the Arctic. And guess who benefits from high prices? Oil at $100 a barrel funds the cruise missiles hitting Kyiv. Mr. Putin will be the victor of the self-defeating U.S. war on fossil fuels.
The casualties will be hundreds of millions of Americans, forced to pay more for energy that will become less reliable. Higher energy prices will crimp economic growth and standards of living. If Ukraine’s strategic shock doesn’t awaken Democrats to this reality, Republicans need to bang voters on the head with it every day through Nov. 8.
6) European industry faces shrink or shut decisions on energy cost crisis
Bloomberg, 27 February 2022
Europe’s biggest industrial firms have been banking on spring to bring down soaring energy costs. Those hopes faded this week as Russian tanks rolled into Ukraine.
Smelters and chemical factories across Europe were already struggling before the invasion sparked another jump in gas and electricity prices. Now, a growing list of companies including Europe’s biggest chemicals maker BASF SE are warning the energy crisis will keep hacking away at their bottom lines for the foreseeable future.
“Energy prices will stay at a high level and they won’t go back to normal soon,” said Martin Brudermueller, BASF’s chief executive officer.
BASF already took an 800-million euro ($900 million) hit from rising gas prices in the fourth quarter, and the situation could worsen if the U.S. and Europe broaden sanctions against Russia, which supplies more than 40% of the European Union’s natural gas.
“It would be very difficult to replace Russian gas with liquefied natural gas from elsewhere,” Brudermueller said.
BASF isn’t alone. The energy-intensive metals industry is also struggling. Aluminium Dunkerque Industries France, Europe’s largest aluminum smelter, had planned to ramp up curtailed production after the French government helped shoulder as much as 80% of the cost burden. But the renewed surge in prices following Russia’s invasion of Ukraine has put the plan on ice, a labor union official said.
Meanwhile, Germany’s Trimet Aluminium SE said manufacturing the metal isn’t economical at present energy prices. And building-materials giant HeidelbergCement AG on Thursday warned that profits are likely to suffer from rising energy costs over the coming months.
European energy prices surged in the autumn, tipping smaller firms across the continent toward bankruptcy and prompting others to temporarily cut production at unprofitable factories. The continent’s larger industrial firms typically purchase their energy in monthly tranches, a strategy that initially enabled them to absorb the price shocks and more gradually pass them to consumers.
While mild weather eased gas prices off record highs hit Dec. 21, benchmark month-ahead prices have traded at nearly four times the five-year average of 90 euros per megawatt hour over the past five months.
Gas prices have been highly volatile since Russia’s invasion. Benchmark month-ahead contracts surged 60% to an intraday high of 143 euros per megawatt hour Thursday, before falling back to trade around 90 euros per megawatt hour late Friday.
Wolfgang Hahn, owner of Energy Consulting GmbH that gives energy advisory services to 2,500 companies in Germany, said there’s growing concern about energy supplies later in the year.
“Many companies are already looking forward to next autumn and winter and are wondering whether the gas storage facilities will be filled again,” Hahn said. They’re also worried “whether an appropriate alternative to Russian gas will be found, or whether gas imports from Russia will be completely interrupted.”
In the days since hostilities began in Ukraine, prices have spiked for forward contracts for warmer months when consumers typically use less energy to power and heat their homes. The impact of sanctions, Germany’s decision to halt the Nord Stream 2 pipeline, and uncertainty around Russian gas supplies that flow through Ukraine are expected to keep prices elevated over the coming months.
“Firm supplies through Ukraine and NS2 are needed to balance the European gas market and rebuild depleted storage levels,” Rystad Energy analysts said in a note. “The suspension of NS2 wipes out all hope of this and will likely create a prolonged supply deficit and high prices in the European gas market.”
Goldman Sachs Inc. analysts said prolonged price increases will force some industrial producers to shrink or shutter.
“We now believe price-induced industrial demand destruction will be required in the second half of the year to balance the European gas market,” the analysts wrote in a note.
Companies are asking governments for help. France has already moved to relieve gas costs for consumers and Prime Minister Jean Castex froze gas tariffs in November until the end of 2022, with the government pledging to compensate suppliers with loans until prices recede. Italy has also slashed taxes on gas consumption.
Germany, which imports more than half of its natural gas from Russia and has the highest industrial electricity prices in the EU, has yet to step in.
A spokesman for Germany’s chemical industry association, the VCI, said the country’s energy-intensive companies were watching developments in the Ukraine with concern and renewed calls to lower gas and electricity taxes to the lowest possible minimum under European law.
7) Susan Crabtree: Russia’s Ukraine invasion scrambles Biden’s green agenda
Real Clear Politics, 28 February 2022
In the middle of President Biden’s Thursday speech laying out sanctions and denouncing Russia for its “brutal” and unprovoked invasion into Ukraine, one line stood out. About halfway through, Biden sternly warned American oil and gas companies not to “exploit this moment to hike their prices to raise profits.”
The harsh words roiled many Republicans who were strongly backing Biden’s sanctions against Russia while pressing him to put a halt to Moscow’s oil exports, which funded 36% of the country’s national budget last year.
Larry Kudlow, who served as Trump’s top economic adviser and is now a Fox Business host, praised Biden’s sanctions announcement but said the president’s lecture to U.S. oil companies made “the hair on the back of my neck stand up.”
“Joe Biden just can’t help himself,” Kudlow added, casting the comments as an effort to pander to environmentalists in the middle of a global crisis.
The U.S. bought 7% of its crude oil from Russia in 2021, and that’s the salient problem here, Biden’s critics say.
They insist that Biden should do everything in his power to ramp up energy production at home – from re-opening the Keystone pipeline to increasing drilling permits on federal land – in an effort to rapidly expand U.S. oil and natural gas supplies. The goal, they say, should be to eliminate Americans’ need for Russian oil and natural gas, while simultaneously helping Europe shift to a U.S. supply.
To free-market enthusiasts, the idea is simple and obvious.
“If you carve out energy, that’s Putin’s lifeblood,” Rep. Mike McCaul, the ranking member of the House Armed Services Committee, told Fox News’ Maria Bartiromo on Sunday.
Ukrainian leaders, including President Volodymyr Zelensky, echoed the sentiments late last week.
“We need real sanctions, not just some problems for Putin’s friends,” Ukrainian lawmaker Oleksiy Goncharenko said in a video posted to Twitter Thursday. “We need an embargo on Russian gas and oil because every barrel of Russian oil and every cubic meter of Russian gas is now full of the blood of Ukrainians.”
In the near-term, the issue is more complicated. Immediately cutting off Russian oil supplies to Europe could do more harm to the West than to Moscow by pushing global oil prices higher than they already are, putting more money in the the coffers of Russian energy oligarchs loyal to Putin.
The EU relies on Russia for a whopping 35% of its natural gas. Prices have been climbing amid the tensions between Russia and Ukraine, putting additional strain on a fuel-price crisis that began last year. On Thursday, the day of the invasion, national gas prices spiked 51% in Europe, and crude oil hit a seven-year high of $105 a barrel.
Cutting off the Russian oil supply also won’t have the immediate impact many expect. Even though Europe is responsible for buying more than 70% of Russia’s natural gas sales and an EU embargo would hit Russia hard eventually, it’s unlikely to deter Putin’s designs on Ukraine. Moscow can absorb such a blow on the front end.
In the last few years, Russia has built up all-time high foreign exchange reserves of $630 billion.
For these reasons, the Biden administration and the European Union carefully crafted an energy exemption to last week’s sanctions against Russia to allow for the U.S. and Europe to continue purchasing Russian oil and gas and to avoid any “disruption” to their current flow.
“We’ve carved out energy payments on a time-bound basis to allow for an orderly transition,” away from sanctioned Russian entities, Deputy National Security Adviser Daleep Singh told reporters late Thursday.
Richard Nephew, a sanctions expert with Columbia University's Center on Global Energy Policy, said a global embargo against Russia “isn’t a clean win for anyone.”
“The bigger issue is a gross market one,” he tells RealClearPolitics in an email. “The Russians put out a lot of oil. They’re in the top three oil production/exporting list every year. Even if we maxed out our production, we’re not in a position to substitute for Russia in a global market.”
Over time, however, Nephew said the U.S. and Europe could certainly start drawing down their use of Russian energy “allowing for other producers to step up or finding alternative means of providing energy.”
That’s one of the painful lessons Europe and the Baltics need to take from this Russian invasion, according to Stephen Yates, a senior fellow at the America First Institute who served as a deputy national security adviser in the George W. Bush administration.
“It’s very, very clear that the lecture that was delivered very bluntly to Europe by President Trump did not sink in … the fact that Europe has not invested enough in its own self-defense and did not wean itself sufficiently from dependence on Russia left it with limited options,” he told RCP in an interview last week.
Nothing crystalizes geopolitical threats like the invasion of a neighboring country, and Europe was forced to wake up to a new reality. After pursuing the Nord Stream 2 pipeline project for years, Germany abruptly froze certification of the project last week. EU officials on March 2 plan to announce a new strategy to reduce dependence on Russian energy as quickly as possible, with a target to reduce fossil fuel use by 40% by 2030.
The U.S. also must change course to stop importing Russian energy as well. Doing so will take time and commitment, according to Michael O’Hanlon, the director of foreign policy research at the Brookings Institution.
“We need a plan to go after existing oil and gas exports, upon which Russia depends for 60% of its total export earnings,” he wrote in an USA Today op-ed. “Our goal, stated or unstated, should be to drive the Russian economy into recession for the rest of Putin’s presidency if need be – unless he promptly agrees to be peaceful and take his forces home.”
Achieving the energy decoupling won’t come overnight, O’Hanlon notes, but he’s clear about the steps.
Increase oil and gas production in North America and elsewhere.
Build more liquid natural gas terminals in western Europe.
Empower relevant gas authorities in Europe to pay higher prices for non-Russian gas.
And, where possible, accelerate transitions to greener energy sources.
It’s no easy pivot for Biden, who shut down the Keystone Pipeline on his first day as president and committed to ending U.S. dependence on fossil fuels early in his campaign, at a presidential debate in none other than the fuel-reliant motor city of Detroit. Biden also would inevitably have to withstand an outcry from his liberal base to abandon their green agenda.
Yates predicts that the president likely won’t make any dramatic changes to his climate policies unless he loses big in the November midterms, signaling the need for a drastic shift in priorities. “When it comes to energy independence, I fear we are stuck in that slower lane,” he said.
Destabilizing world events, however, have a way of furiously shifting domestic priorities. Although White House press secretary Jen Psaki said last week that sanctioning Russia’s energy sector could “actually benefit President Putin and pad his pockets given high oil and gas prices,” she was quick to note, “it’s not off the table.”
Later in the week, Psaki tried to put a green spin on the possibility of weaning the U.S. off foreign oil, even if the initial attempt inevitably would require more U.S. commitments to increase domestic oil and gas production to meet the shifting European demand.
She said the Russian invasion of Ukraine makes the case for reducing U.S. dependence on foreign oil “even stronger,” arguing that Biden supports “diversifying the range and means of energy production everywhere around the world.”
Just how quickly and sharply Biden is willing to shift gears on U.S. fossil fuel production will play a crucial role in whether the West shows Russia and the world that it has learned its lesson, whether it continues to play into Putin’s hands or hits him where it really hurts – the energy sector.
Europe's top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options.
In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany's energy needs.
"The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security," Scholz told lawmakers in a special Bundestag session called to address the Ukraine crisis.
"We must change course to overcome our dependence on imports from individual energy suppliers," he said.
This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves.
These plans will likely be a boon for Germany's top utility RWE (RWEG.DE), which has been backing efforts by German LNG Terminal, a joint venture of Gasunie (GSUNI.UL), Oiltanking GmbH and Vopak LNG Holding (VOPA.AS), to build an LNG terminal in Brunsbuettel.
Separately, the German government has asked RWE's smaller rival Uniper (UN01.DE) to revive plans to build an LNG terminal in Wilhelmshaven, Handelsblatt newspaper reported on Sunday, after the company scrapped such plans in late 2020. read more
Uniper was not immediately available for comment and the Economy Ministry declined to comment.
Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project, Europe's most divisive energy project after Russia formally recognised two breakaway regions in eastern Ukraine. read more
Russia has since invaded Ukraine, prompting the West to slap further sanctions on Moscow and making the energy supply issue even more pressing. read more
The revamp of energy priorities comes alongside a paradigm shift in German foreign and defence policy, with Scholz also announcing a dramatic hike in military spending. read more
'NO TABOOS'
Germany last year embarked on an ambitious shift towards solar and wind power and Greens member Oliver Krischer on Sunday said a draft law to ensure renewables will account for 100% of Germany's power supply by 2035 already was completed.
Germany will also increase the volume of natural gas in its storage facilities by 2 billion cubic metres (bcm) via long-term options and will buy additional natural gas on world markets in coordination with the European Union, Scholz said.
Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.
Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country's energy supply, the country's economy minister Robert Habeck, a member of the Greens, said.
Asked by German broadcaster ARD whether he could imagine allowing nuclear plants to run longer than planned under Germany's exit plan, which foresees shutting the country's three remaining plants by the end of 2022, he said: "It is part of my ministry's tasks to answer this question ... I would not reject it on ideological grounds."
Isar 2, Emsland and Neckarwestheim 2 are the last remaining nuclear plants producing power in Germany after the country a decade ago decided to phase out the fuel in the wake of Japan's Fukushima disaster.
The three plants are owned by German energy firms E.ON (EONGn.DE), RWE and EnBW (EBKG.DE), respectively.
Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany's ambitious exit from coal, which is planned for 2030.
"There are no taboos on deliberations," Habeck said, adding that it was Germany's goal to ultimately choose which country will supply its energy.
"Being able to choose also means, in case of doubt, saying goodbye to Russian gas, coal or oil. And should Russia wilfully cut off this supply, then the decision has of course been made," Habeck said.
"In that case they will never be rebuilt. I think the Kremlin knows that, too."
3) Patrick O'Flynn: Britain needs a nuclear renaissance to end our decadent dependence on Russian resources
The Daily Telegraph, 27 February 2022
As we enter what will be at best the era of a new Cold War we are going to need a much harder-headed energy policy if we are not to find it very chilly indeed.
There are few things we Brits enjoy so much as feeling morally superior to the Germans and it should be acknowledged at once that they have made that rather easy down the ages.
One doesn’t need to reopen any historical cans of worms to luxuriate in such a sensation right now because, via its foot-dragging on taking effective sanctions against Russia and the paltry nature of its initial support for Ukraine, Germany is rendering itself a very easy target for morality-based wrath.
But in truth we are kidding ourselves if we believe the pusillanimous reaction of Germany to Vladimir Putin’s disgusting conduct compared to the more robust responses of our own country says anything much about ethics.
The reality is that, were we dependent upon Russia for nearly half our natural gas compared to just three per cent of it, we would be just as hamstrung as Germany has been in the face of Putin’s evil.
Would British public opinion be as gung-ho towards the Russian regime if the consequences included shivering in their own homes, massive increases in the price of food and other essential commodities, huge waves of job losses in key industrial sectors and a potential economic depression? That must be highly doubtful.
And it is arguably just as much through luck as judgment that we are not in such an unhappy situation. For we have neglected our own energy security and abandoned the strategic goal of self-sufficiency almost as acutely as Germany.
Successive German chancellors are culpable for winding down their nuclear energy sector and ramping up dependency upon Russian gas supplies, with the long-serving and recently departed Angela Merkel deservedly getting the lion’s share of the flak.
But in recent decades British governments of all political shades have also taken massively complacent decisions about energy provision. The 21st century is thus far a dismal tale of UK expertise in nuclear energy being allowed to wither away, Whitehall deciding to get China – of all countries – deeply embedded in the provision of what little new capacity it did facilitate, fracking getting abandoned at the first whiff of environmentalist aggro, most of our gas-storage capability being scrapped and coal mining more or less completely shutting down.
While it is true that there has been a boom in renewable energy, everybody knows that back-up sources of power are needed when the sun doesn’t shine and the wind either doesn’t blow or blows too hard.
The past few years of the Covid pandemic and grotesque behaviour by China and Russia should by now have shattered various conceits and delusions that have been prevalent in our liberal establishment. The arc of history does not necessarily bend towards progress, globalising supply chains is not a cost-free exercise, some countries are never going to behave well or transition to liberal democracy, and the folly of neglecting the capacity of the domestic nation state is thrown into sharpest relief when tough times arrive.
Fortunately, our own nation state was able to draw on sufficient resources of expertise and finance to deliver the world’s best vaccination programme against Covid. Kate Bingham’s marvellous Vaccine Taskforce, commissioned by Boris Johnson, was authorised to slice through usual time-consuming Whitehall procedures and processes. And what a difference it made, saving tens of thousands of lives.
Britain needs to do something similar in the field of power generation and time is of the essence. An Energy Security Taskforce, based on the high-speed Bingham model, should be established at once. Clearly, new power plants cannot be conjured up overnight. But does anyone believe that if or when China starts majoring on nuclear energy it will take them 10 years per plant – the schedule our own Hinkley Point is working to and already slipping behind – rather than 10 months?
It is absurd that the environmental movement in Britain has forged so strong an alliance with the ever-present NIMBY tendency that creating any extra energy-generation capacity other than via renewables has become the work of decades.
Back in the 1980s, the green movement made opposing nuclear energy one of its central aims because of over-hyped concerns about safety and storing spent fuel rods. But once reducing carbon emissions had been elevated to the top planet-saving goal, the British state should have made a hard-headed decision to forge ahead with major new nuclear capacity.
To abandon coal, envisage winding down gas long-term and decommission ageing nuclear plants without replacing them in a timely manner amounted to a decadent strategy predicated on the world becoming a happy and peaceful family of civilised nations reliably helping each other out, such as it has never been.
The Russian boot may not be bearing down on the British throat quite as savagely as it is upon the German one right now, but do not imagine we are altogether insulated. The market for energy is predominantly global and when the massive financial firepower of Germany is deployed to find alternative supplies for its citizens the effect will be to bid up prices for everyone.
A luxury mindset has dominated British public life for too many years, resulting in the elevation of trivial and divisive identity politics to a central position as well an eco-tyranny that brooks no compromise. As we enter what will be at best the era of a new Cold War we are going to need a much harder-headed approach if we are not to find it very chilly indeed.
4) Rupert Darwall: Standing up to Putin means ditching Net Zero
Real Clear Energy, 24 February 2022
Geopolitical realism requires energy realism. It also demands realism about the prospects for net-zero. The West either understands what is at stake and plays by the rules of geopolitics or the West loses.
Vladimir Putin’s inflammatory speech, in which he set out his aim to reconstitute the Russian empire and blamed Lenin for its demise, and his decision to back this up with a full-scale invasion of Ukraine, signals the return of geopolitics.
Until now, Western leaders have been saying that the biggest threat to the world is climate change. Now comes Putin armed with nuclear weapons, tanks, and thousands of troops declaring his intent to overthrow Europe’s post-Cold War order. The dilemma for the West: you can’t win a geopolitical conflict lasting years or decades with an economy powered intermittently by wind turbines and solar panels.
From the start of the Biden presidency, tensions existed within the administration between geopolitical realists, notably Secretary of State Antony Blinken, and climate hawks led by the president’s climate envoy John Kerry, who saw friendly relations with China as an essential ingredient for any global deal on the environment.
Although Blinken’s position that Chinese expansionism is the biggest threat to the interests of the United States now has the upper hand, the administration’s anti-fossil-fuel policies will progressively degrade America’s capacity to prevail against its geopolitical adversaries.
Expanded pipeline infrastructure is critical to American energy security. One of the Biden administration’s first actions was cancelling the license for the Keystone XL pipeline. Thanks to inadequate infrastructure connecting New England to the rest of the country and the century-old Jones Act – requiring that all goods moving by water between American ports travel on ships built, owned, and manned by Americans – the winter of 2018 saw Russian liquefied natural gasbeing brought ashore in Boston Harbor. Currently, the Securities and Exchange Commission (SEC) is mulling a climate disclosure rule.
The intent is to strengthen the hand of Wall Street and woke institutional investors to impose, in effect, an embargo on investment in domestic oil and gas production. The logic appears to be that domestically produced oil and gas incurs climate risk, whereas imported energy from beyond Wall Street’s writ does not.
And just last month, the Pentagon released a net- zero plan for the army, which would see it relying on an all-electric, non-tactical vehicle fleet by 2035.
It could be even worse. If John Kerry and the climate hawks had their way, the United States would be like Europe. The European Union is a paper empire. Its power is bureaucratic, deriving from rules and regulations. It is institutionally incapable of thinking and acting geopolitically because the EU is meant to be the exemplar of a post-geopolitical world, in which national sovereignty is dissolved in a supra-national, rules-based order.
Net-zero and the UN climate process represent EU-style supranationalism at a global level. “Climate neutrality is our European destiny,” European Commission president Ursula von der Leyen said two years ago when she announced the European Climate Law setting a legally binding target of net-zero greenhouse gas emissions by 2050.
The push for wind and solar power, which started in Germany with the Renewable Energy Act of 2000, means greater reliance on supplies of Russian natural gas to keep the lights on. Europe’s dependence on Russian gas is stark. At an EU meeting last week to discuss possible sanctions against Moscow, Italy’s prime minister, Mario Draghi, pleaded that any measures “should be concentrated on narrow sectors without including energy.”
This applies to Britain, too. When it comes to climate and energy, Britain (despite Brexit) remains functionally part of the EU, regardless of cost and the geostrategic consequences. In late 2019, Boris Johnson banned commercial fracking. Earlier this month, the British government ordered that concrete be poured into the country’s two exploratory shale wells and for them to be abandoned. The move was blasted by Cuadrilla Resources CEO Francis Egan, who pointed out that the Bowland shale formation could supply 50 years of current U.K. gas demand. “The value of just 10% of the in-place British resource would be approximately £3.3 trillion ($4.5 tn),” Egan wrote.
The Soviet Union began supplying gas to western Europe in the 1960s. West German chancellor Willy Brandt quickly saw a political opportunity to do business with Moscow based on his belief that Moscow held the key to German reunification. (For the same reason, the East German communist regime strongly opposed the burgeoning Soviet-West German gas trade.) Not once during the Cold War did Moscow renege on a gas contract. In this respect, Putin, who has a deep understanding of the gas industry, is different from his Soviet predecessors. As a result of the breakup of the Soviet Union, Russia ended up with the gas and Ukraine the pipeline and transit fees – a source of intense frustration to Putin.
In 2009, the Russian gas company Gazprom temporarily cut off exports to Europe. The Nord Stream 2 gas pipeline, like Nord Stream 1, takes the most direct route from Siberia to Europe, bypassing Ukraine. Credit the Biden administration for helping German chancellor Olaf Scholz over the line in suspending Nord Stream 2 – but if Moscow controls Ukraine, Putin will have solved his Ukrainian transit problem by extinguishing Ukrainian independence.
On the other hand, Germany’s and the EU’s net-zero policies will deepen their dependence on Putin’s goodwill as they increase their exposure to unreliable wind and solar, phase out coal, and – in the case of Germany and Belgium – prematurely close their nuclear power stations. Strategically, that’s a win for Putin.
Geopolitical realism requires energy realism. It also demands realism about the prospects for net-zero. Last week, Alok Sharma, the British president of the UN COP 26 climate conference, maintained that net-zero “remains alive,” but admitted, “the pulse is weak.” Achieving this barely-alive objective requires global emissions to be cut in half by the end of this decade. That’s not going to happen.
The basic math of the West vs. the Rest’s greenhouse gas emissions means that what the West does has a diminishing effect on the trajectory of global emissions.
In an age when Russia invades a sovereign state on a baseless pretext and denies its right to exist, it’s high time Western leaders got real. The West either understands what is at stake and plays by the rules of geopolitics or the West loses. The speed with which the West adjusts to this new reality will determine how much ground Russia and China can take.
5) WSJ: Energy, Russia and American Power
The Wall Street Journal, 27 February 2022
Russia’s invasion of Ukraine is a 3 a.m. wake-up call to President Biden and America’s liberal political class: Cease your war on U.S. energy. Europe’s climate obsessions have rendered it vulnerable to Vladimir Putin’s extortion, and the U.S. is in danger of repeating that tragic mistake.
No less than Igor Sechin, CEO of Russia’s state-owned Rosneft, warned Europe last summer: “Some ecologists and politicians urge for a hasty energy transition, yet it requires an unrealistically fast launch of renewable energy sources and faces issues with storage, ensuring reliability and stability of power generation.”
Europe’s hefty renewable subsidies have rendered nuclear and coal power economically uncompetitive. Governments have also forced loads of nuclear and coal plants to retire prematurely, believing wind and solar could replace them. Hello? Renewables don’t provide reliable power 365 days a year, 24 hours a day.
Europe has been left to rely increasingly on natural gas to keep the lights on. But governments have effectively banned hydraulic fracturing, which would have let them charge their economies with domestically produced gas. Europe now imports almost all of its gas, with 40% coming from Russia.
Sluggish wind last summer sent natural gas demand and prices soaring. Some manufacturers had to shut down. Then Russia slowed gas deliveries, limiting Europe’s supply heading into the winter. Strategic advantage: Putin.
The Biden Administration has been left scrambling to supply gas for Europe amid Kremlin threats to cut off supply. Shippers have redirected liquefied natural gas (LNG) cargos to Europe from Asia. Asian economies have shifted to burning more coal. In other words, Europe has reduced its CO2 emissions by outsourcing them.
Europe’s anti-carbon policies will have zero impact on global emissions. China has six times more coal power under development than all of Germany’s coal-fired capacity. China has promised to reduce emissions before 2030, but if you believe that, Mr. Putin has a promise of peace to sell you.
Mr. Biden ought to be exploiting America’s homegrown energy advantage. Instead he has spent a year disarming a la Europe. He has suspended leases in Alaska’s Arctic National Wildlife Refuge, halted oil and gas leases on federal land, and killed the Keystone XL pipeline, which would have helped Canada develop its oil sands.
Green groups and Democratic states have compounded the masochism by obstructing new pipelines, thereby limiting development of LNG export facilities, especially on the Atlantic Coast. In 2018 the Northeast had to import Russian LNG owing to a shortage of pipeline capacity. Mr. Putin can thank Andrew Cuomo, New York’s deposed Governor, for that.
The pandemic caused U.S. production to fall as demand and prices plunged. But crude prices have exceeded the break-even point for most oil plays since December 2020. U.S. oil production is nonetheless 1.5 million barrels a day below the pre-pandemic peak and 15% below the Energy Information Administration’s late 2019 forecast.
Production has increased in the Permian Basin, where break-even is about $35 per barrel. But the oil-and-gas giants have slashed investment in other plays and redirected money to subsidized renewables. Companies respond to political signals as well as prices, and they have to consider long-term risks and returns.
Democrats have promised higher taxes on oil and gas—including $100 billion in Build Back Better—as well as new regulatory burdens that will reduce their return on capital. Blackstone, the private equity firm, is black-listing new oil and gas investment, Bloomberg reports. “It’s not a moral or ethical stance,” said Blackstone’s Environmental, Social and Governance (ESG) global head Jean Rogers. “It is reading the signals in the market.” Well, yes.
Energy CEOs aren’t conspiring to fatten profits. Prices respond to fluctuations in supply and demand as well as market expectations. Crude prices surged this past year because production hasn’t kept pace with demand. “The world risks a severe deficit of oil and gas,” Rosneft’s CEO noted last summer. “The world consumes oil, but isn’t ready to invest in it.”
He’s right—at least about the West. Russia is investing heavily to develop its oil and gas resources, especially in the Arctic. And guess who benefits from high prices? Oil at $100 a barrel funds the cruise missiles hitting Kyiv. Mr. Putin will be the victor of the self-defeating U.S. war on fossil fuels.
The casualties will be hundreds of millions of Americans, forced to pay more for energy that will become less reliable. Higher energy prices will crimp economic growth and standards of living. If Ukraine’s strategic shock doesn’t awaken Democrats to this reality, Republicans need to bang voters on the head with it every day through Nov. 8.
6) European industry faces shrink or shut decisions on energy cost crisis
Bloomberg, 27 February 2022
Europe’s biggest industrial firms have been banking on spring to bring down soaring energy costs. Those hopes faded this week as Russian tanks rolled into Ukraine.
Smelters and chemical factories across Europe were already struggling before the invasion sparked another jump in gas and electricity prices. Now, a growing list of companies including Europe’s biggest chemicals maker BASF SE are warning the energy crisis will keep hacking away at their bottom lines for the foreseeable future.
“Energy prices will stay at a high level and they won’t go back to normal soon,” said Martin Brudermueller, BASF’s chief executive officer.
BASF already took an 800-million euro ($900 million) hit from rising gas prices in the fourth quarter, and the situation could worsen if the U.S. and Europe broaden sanctions against Russia, which supplies more than 40% of the European Union’s natural gas.
“It would be very difficult to replace Russian gas with liquefied natural gas from elsewhere,” Brudermueller said.
BASF isn’t alone. The energy-intensive metals industry is also struggling. Aluminium Dunkerque Industries France, Europe’s largest aluminum smelter, had planned to ramp up curtailed production after the French government helped shoulder as much as 80% of the cost burden. But the renewed surge in prices following Russia’s invasion of Ukraine has put the plan on ice, a labor union official said.
Meanwhile, Germany’s Trimet Aluminium SE said manufacturing the metal isn’t economical at present energy prices. And building-materials giant HeidelbergCement AG on Thursday warned that profits are likely to suffer from rising energy costs over the coming months.
European energy prices surged in the autumn, tipping smaller firms across the continent toward bankruptcy and prompting others to temporarily cut production at unprofitable factories. The continent’s larger industrial firms typically purchase their energy in monthly tranches, a strategy that initially enabled them to absorb the price shocks and more gradually pass them to consumers.
While mild weather eased gas prices off record highs hit Dec. 21, benchmark month-ahead prices have traded at nearly four times the five-year average of 90 euros per megawatt hour over the past five months.
Gas prices have been highly volatile since Russia’s invasion. Benchmark month-ahead contracts surged 60% to an intraday high of 143 euros per megawatt hour Thursday, before falling back to trade around 90 euros per megawatt hour late Friday.
Wolfgang Hahn, owner of Energy Consulting GmbH that gives energy advisory services to 2,500 companies in Germany, said there’s growing concern about energy supplies later in the year.
“Many companies are already looking forward to next autumn and winter and are wondering whether the gas storage facilities will be filled again,” Hahn said. They’re also worried “whether an appropriate alternative to Russian gas will be found, or whether gas imports from Russia will be completely interrupted.”
In the days since hostilities began in Ukraine, prices have spiked for forward contracts for warmer months when consumers typically use less energy to power and heat their homes. The impact of sanctions, Germany’s decision to halt the Nord Stream 2 pipeline, and uncertainty around Russian gas supplies that flow through Ukraine are expected to keep prices elevated over the coming months.
“Firm supplies through Ukraine and NS2 are needed to balance the European gas market and rebuild depleted storage levels,” Rystad Energy analysts said in a note. “The suspension of NS2 wipes out all hope of this and will likely create a prolonged supply deficit and high prices in the European gas market.”
Goldman Sachs Inc. analysts said prolonged price increases will force some industrial producers to shrink or shutter.
“We now believe price-induced industrial demand destruction will be required in the second half of the year to balance the European gas market,” the analysts wrote in a note.
Companies are asking governments for help. France has already moved to relieve gas costs for consumers and Prime Minister Jean Castex froze gas tariffs in November until the end of 2022, with the government pledging to compensate suppliers with loans until prices recede. Italy has also slashed taxes on gas consumption.
Germany, which imports more than half of its natural gas from Russia and has the highest industrial electricity prices in the EU, has yet to step in.
A spokesman for Germany’s chemical industry association, the VCI, said the country’s energy-intensive companies were watching developments in the Ukraine with concern and renewed calls to lower gas and electricity taxes to the lowest possible minimum under European law.
7) Susan Crabtree: Russia’s Ukraine invasion scrambles Biden’s green agenda
Real Clear Politics, 28 February 2022
In the middle of President Biden’s Thursday speech laying out sanctions and denouncing Russia for its “brutal” and unprovoked invasion into Ukraine, one line stood out. About halfway through, Biden sternly warned American oil and gas companies not to “exploit this moment to hike their prices to raise profits.”
The harsh words roiled many Republicans who were strongly backing Biden’s sanctions against Russia while pressing him to put a halt to Moscow’s oil exports, which funded 36% of the country’s national budget last year.
Larry Kudlow, who served as Trump’s top economic adviser and is now a Fox Business host, praised Biden’s sanctions announcement but said the president’s lecture to U.S. oil companies made “the hair on the back of my neck stand up.”
“Joe Biden just can’t help himself,” Kudlow added, casting the comments as an effort to pander to environmentalists in the middle of a global crisis.
The U.S. bought 7% of its crude oil from Russia in 2021, and that’s the salient problem here, Biden’s critics say.
They insist that Biden should do everything in his power to ramp up energy production at home – from re-opening the Keystone pipeline to increasing drilling permits on federal land – in an effort to rapidly expand U.S. oil and natural gas supplies. The goal, they say, should be to eliminate Americans’ need for Russian oil and natural gas, while simultaneously helping Europe shift to a U.S. supply.
To free-market enthusiasts, the idea is simple and obvious.
“If you carve out energy, that’s Putin’s lifeblood,” Rep. Mike McCaul, the ranking member of the House Armed Services Committee, told Fox News’ Maria Bartiromo on Sunday.
Ukrainian leaders, including President Volodymyr Zelensky, echoed the sentiments late last week.
“We need real sanctions, not just some problems for Putin’s friends,” Ukrainian lawmaker Oleksiy Goncharenko said in a video posted to Twitter Thursday. “We need an embargo on Russian gas and oil because every barrel of Russian oil and every cubic meter of Russian gas is now full of the blood of Ukrainians.”
In the near-term, the issue is more complicated. Immediately cutting off Russian oil supplies to Europe could do more harm to the West than to Moscow by pushing global oil prices higher than they already are, putting more money in the the coffers of Russian energy oligarchs loyal to Putin.
The EU relies on Russia for a whopping 35% of its natural gas. Prices have been climbing amid the tensions between Russia and Ukraine, putting additional strain on a fuel-price crisis that began last year. On Thursday, the day of the invasion, national gas prices spiked 51% in Europe, and crude oil hit a seven-year high of $105 a barrel.
Cutting off the Russian oil supply also won’t have the immediate impact many expect. Even though Europe is responsible for buying more than 70% of Russia’s natural gas sales and an EU embargo would hit Russia hard eventually, it’s unlikely to deter Putin’s designs on Ukraine. Moscow can absorb such a blow on the front end.
In the last few years, Russia has built up all-time high foreign exchange reserves of $630 billion.
For these reasons, the Biden administration and the European Union carefully crafted an energy exemption to last week’s sanctions against Russia to allow for the U.S. and Europe to continue purchasing Russian oil and gas and to avoid any “disruption” to their current flow.
“We’ve carved out energy payments on a time-bound basis to allow for an orderly transition,” away from sanctioned Russian entities, Deputy National Security Adviser Daleep Singh told reporters late Thursday.
Richard Nephew, a sanctions expert with Columbia University's Center on Global Energy Policy, said a global embargo against Russia “isn’t a clean win for anyone.”
“The bigger issue is a gross market one,” he tells RealClearPolitics in an email. “The Russians put out a lot of oil. They’re in the top three oil production/exporting list every year. Even if we maxed out our production, we’re not in a position to substitute for Russia in a global market.”
Over time, however, Nephew said the U.S. and Europe could certainly start drawing down their use of Russian energy “allowing for other producers to step up or finding alternative means of providing energy.”
That’s one of the painful lessons Europe and the Baltics need to take from this Russian invasion, according to Stephen Yates, a senior fellow at the America First Institute who served as a deputy national security adviser in the George W. Bush administration.
“It’s very, very clear that the lecture that was delivered very bluntly to Europe by President Trump did not sink in … the fact that Europe has not invested enough in its own self-defense and did not wean itself sufficiently from dependence on Russia left it with limited options,” he told RCP in an interview last week.
Nothing crystalizes geopolitical threats like the invasion of a neighboring country, and Europe was forced to wake up to a new reality. After pursuing the Nord Stream 2 pipeline project for years, Germany abruptly froze certification of the project last week. EU officials on March 2 plan to announce a new strategy to reduce dependence on Russian energy as quickly as possible, with a target to reduce fossil fuel use by 40% by 2030.
The U.S. also must change course to stop importing Russian energy as well. Doing so will take time and commitment, according to Michael O’Hanlon, the director of foreign policy research at the Brookings Institution.
“We need a plan to go after existing oil and gas exports, upon which Russia depends for 60% of its total export earnings,” he wrote in an USA Today op-ed. “Our goal, stated or unstated, should be to drive the Russian economy into recession for the rest of Putin’s presidency if need be – unless he promptly agrees to be peaceful and take his forces home.”
Achieving the energy decoupling won’t come overnight, O’Hanlon notes, but he’s clear about the steps.
Increase oil and gas production in North America and elsewhere.
Build more liquid natural gas terminals in western Europe.
Empower relevant gas authorities in Europe to pay higher prices for non-Russian gas.
And, where possible, accelerate transitions to greener energy sources.
It’s no easy pivot for Biden, who shut down the Keystone Pipeline on his first day as president and committed to ending U.S. dependence on fossil fuels early in his campaign, at a presidential debate in none other than the fuel-reliant motor city of Detroit. Biden also would inevitably have to withstand an outcry from his liberal base to abandon their green agenda.
Yates predicts that the president likely won’t make any dramatic changes to his climate policies unless he loses big in the November midterms, signaling the need for a drastic shift in priorities. “When it comes to energy independence, I fear we are stuck in that slower lane,” he said.
Destabilizing world events, however, have a way of furiously shifting domestic priorities. Although White House press secretary Jen Psaki said last week that sanctioning Russia’s energy sector could “actually benefit President Putin and pad his pockets given high oil and gas prices,” she was quick to note, “it’s not off the table.”
Later in the week, Psaki tried to put a green spin on the possibility of weaning the U.S. off foreign oil, even if the initial attempt inevitably would require more U.S. commitments to increase domestic oil and gas production to meet the shifting European demand.
She said the Russian invasion of Ukraine makes the case for reducing U.S. dependence on foreign oil “even stronger,” arguing that Biden supports “diversifying the range and means of energy production everywhere around the world.”
Just how quickly and sharply Biden is willing to shift gears on U.S. fossil fuel production will play a crucial role in whether the West shows Russia and the world that it has learned its lesson, whether it continues to play into Putin’s hands or hits him where it really hurts – the energy sector.
8) Dan Eberhart: Unleashing U.S. oil industry offers Biden path to avoid energy crisis
Forbes, 25 February 2022
Forbes, 25 February 2022
If there was ever a time for President Joe Biden to call a truce with America’s oil and gas producers by pausing his climate agenda, now is the time.
War in Europe never ends well for the world.
Russia’s invasion of Ukraine is a game-changer that, at worst, threatens global disorder. At a minimum, Putin’s brazen aggression promises sustained turmoil in markets – and none appear more vulnerable than energy due to Russia’s outsized importance to the global oil and natural gas supply.
While full-scale military conflict between Russia and the West is unlikely, a deep economic war looks inevitable. Russia cannot win an outright economic war, but it does have a significant weapon to wield – oil and gas exports. Russia is the world’s third-largest oil producer, and it accounts for 27 percent of Europe’s oil imports and 40 percent of its gas imports.
This week’s escalation of the conflict immediately jeopardizes up to 1 million barrels a day of crude supplies that transit through Ukraine and the Black Sea by pipeline, but the long-term disruptions could be far more significant.
Oil prices already breached $100 a barrel this week – their highest level since 2014 – and consultancy Rystad Energy says they could surge to around $130 a barrel in coming weeks and months. JP Morgan Chase’s forecast is more draconian. It reckons that a full-scale Russian invasion of Ukraine could prompt oil flows to drop by 2.3 million barrels a day, boosting prices to $150 a barrel and reducing global GDP by 1.6 percent.
Consumers will feel the squeeze at the gas pump and in their power bills. The reality is that significantly higher prices are on the horizon in Europe and overseas because oil and natural gas are global commodities.
Putin likely timed the invasion of Ukraine to coincide with the tightening energy markets to gain additional leverage against the energy-hungry West. Europe has suffered from a gas and power supply crisis since late last year, with crude prices rising sharply since December due to dwindling spare production capacity within the OPEC+ cartel, which has struggled to add enough supply to meet growing demand.
Outside of a handful of producers in OPEC+, which Saudi Arabia and Russia lead, there is little spare production capacity that can be tapped fast enough to make up for supply disruptions. Global spare capacity is around 3 million barrels a day, which is an oil market of roughly 100 million barrels a day, does not offer much of a cushion.
The U.S. and Europe are lining up more sanctions to punish Russia and hopefully get it to stand down. But it would seem that the toughest sanctions – those that hit Russia’s energy exports – are off the table because of European dependence on Russian oil and gas and already high commodity prices.
An increasingly erratic Putin may opt to wield the energy weapon himself and cut off flows to Europe. While that would hurt Russian export revenues, Moscow has socked away $640 billion in foreign currency reserves in recent years, perhaps with this moment in mind.
For the United States, the smartest move now is to enhance its domestic energy security by boosting American oil and gas production. This would help keep consumer prices in check at home and make supplies available for export to Europe to reduce the continent’s dependence on Russia.
However, Biden’s ambitious climate agenda has put the administration at odds with domestic oil and gas producers over the past year. From the cancellation of the Keystone XL pipeline to attempts to block new lease sales in federal areas, the Biden administration has worked overtime to “keep it in the ground.”
Europe and United States under Biden have governed as if the zero-carbon energy transition is nearly complete. The reality is that it has barely begun. It will take decades to move global energy systems away from fossil fuels and toward full electrification under renewable power.
In the meantime, American shale can provide the additional barrels that the market now so desperately needs. As I’ve said before, shale could be doing much more to relieve global supply tightness.
Shale producers have the unique ability to bring wells to production in a relatively short period, often within a matter of months. While the shale industry has limited investment to satisfy shareholder profit demands, current prices are tempting many to resume exploratory drilling. Those investment decisions have been made more difficult, however, by a White House actively working against an all-of-the-above energy policy.
Biden has a choice. He can dither at the margins with stopgap measures like tapping the Strategic Petroleum Reserve – which can provide, at best, temporary price relief – or continue to beg Saudi Arabia to pump more oil.
Or he can make peace with the domestic oil and gas sector and call on it to increase output and deflate a geopolitical risk premium that has ballooned to add up to $15 to the price of a barrel of oil.
Energy security is national security. Enhancing our domestic energy supplies will give America and our European allies more options to deal with Putin in this conflict, and whatever comes next.
War in Europe never ends well for the world.
Russia’s invasion of Ukraine is a game-changer that, at worst, threatens global disorder. At a minimum, Putin’s brazen aggression promises sustained turmoil in markets – and none appear more vulnerable than energy due to Russia’s outsized importance to the global oil and natural gas supply.
While full-scale military conflict between Russia and the West is unlikely, a deep economic war looks inevitable. Russia cannot win an outright economic war, but it does have a significant weapon to wield – oil and gas exports. Russia is the world’s third-largest oil producer, and it accounts for 27 percent of Europe’s oil imports and 40 percent of its gas imports.
This week’s escalation of the conflict immediately jeopardizes up to 1 million barrels a day of crude supplies that transit through Ukraine and the Black Sea by pipeline, but the long-term disruptions could be far more significant.
Oil prices already breached $100 a barrel this week – their highest level since 2014 – and consultancy Rystad Energy says they could surge to around $130 a barrel in coming weeks and months. JP Morgan Chase’s forecast is more draconian. It reckons that a full-scale Russian invasion of Ukraine could prompt oil flows to drop by 2.3 million barrels a day, boosting prices to $150 a barrel and reducing global GDP by 1.6 percent.
Consumers will feel the squeeze at the gas pump and in their power bills. The reality is that significantly higher prices are on the horizon in Europe and overseas because oil and natural gas are global commodities.
Putin likely timed the invasion of Ukraine to coincide with the tightening energy markets to gain additional leverage against the energy-hungry West. Europe has suffered from a gas and power supply crisis since late last year, with crude prices rising sharply since December due to dwindling spare production capacity within the OPEC+ cartel, which has struggled to add enough supply to meet growing demand.
Outside of a handful of producers in OPEC+, which Saudi Arabia and Russia lead, there is little spare production capacity that can be tapped fast enough to make up for supply disruptions. Global spare capacity is around 3 million barrels a day, which is an oil market of roughly 100 million barrels a day, does not offer much of a cushion.
The U.S. and Europe are lining up more sanctions to punish Russia and hopefully get it to stand down. But it would seem that the toughest sanctions – those that hit Russia’s energy exports – are off the table because of European dependence on Russian oil and gas and already high commodity prices.
An increasingly erratic Putin may opt to wield the energy weapon himself and cut off flows to Europe. While that would hurt Russian export revenues, Moscow has socked away $640 billion in foreign currency reserves in recent years, perhaps with this moment in mind.
For the United States, the smartest move now is to enhance its domestic energy security by boosting American oil and gas production. This would help keep consumer prices in check at home and make supplies available for export to Europe to reduce the continent’s dependence on Russia.
However, Biden’s ambitious climate agenda has put the administration at odds with domestic oil and gas producers over the past year. From the cancellation of the Keystone XL pipeline to attempts to block new lease sales in federal areas, the Biden administration has worked overtime to “keep it in the ground.”
Europe and United States under Biden have governed as if the zero-carbon energy transition is nearly complete. The reality is that it has barely begun. It will take decades to move global energy systems away from fossil fuels and toward full electrification under renewable power.
In the meantime, American shale can provide the additional barrels that the market now so desperately needs. As I’ve said before, shale could be doing much more to relieve global supply tightness.
Shale producers have the unique ability to bring wells to production in a relatively short period, often within a matter of months. While the shale industry has limited investment to satisfy shareholder profit demands, current prices are tempting many to resume exploratory drilling. Those investment decisions have been made more difficult, however, by a White House actively working against an all-of-the-above energy policy.
Biden has a choice. He can dither at the margins with stopgap measures like tapping the Strategic Petroleum Reserve – which can provide, at best, temporary price relief – or continue to beg Saudi Arabia to pump more oil.
Or he can make peace with the domestic oil and gas sector and call on it to increase output and deflate a geopolitical risk premium that has ballooned to add up to $15 to the price of a barrel of oil.
Energy security is national security. Enhancing our domestic energy supplies will give America and our European allies more options to deal with Putin in this conflict, and whatever comes next.
9) Nick Timothy: It’s time to stop letting despots weaponise our Western freedoms
The Daily Telegraph, 28 February 2022
In universities, law courts and property markets, open societies have been infiltrated by malign forces
The arc of history, we are often told, bends towards justice. It is a warming sentiment, but as the Russian invasion of Ukraine shows, it is without foundation. There is no arc of history, progress is not inevitable, and civilisation rests on shifting sands.
Yet the delusion of progress, and the belief that the future belongs to us, remain powerful. Time and again we are stung by our complacency, yet inconvenient old truths – that security relies on strength, freedom depends on force, laws rely on the power to uphold them – are routinely ignored.
Whatever progress we might achieve in technology, commerce or human knowledge, clashes of values and interests between states and ethnic and religious groups will always be unavoidable. Indeed, it is not only that human achievements will fail to prevent such clashes; they can make them more dangerous and violent.
Consider how China uses internet technologies to control its population, persecute the Uighurs and steal industrial and security secrets from the West. And how social media enables the radicalisation and recruitment of young Muslims to jihadist organisations. Imagine the devastation made possible by a theocratic rogue state or terror group gaining knowledge of chemical, biological or nuclear weapons.
And consider Russia. Global interconnectedness was supposed to make the world safer. Countries that trade with one another, went the theory, will not fight one another. But Russia, like China and Islamists, has worked out how to exploit our open societies and economies. It has used its presence within them to corrupt and weaken us, empower and enrich itself, and develop post-modern, post-truth offensive hybrid capabilities.
Russia has a smaller economy than Italy, and its per capita income is a quarter of that in Britain. But, thanks to catastrophic decisions in Europe, made most notably by Angela Merkel, it has engineered a situation in which the European economy is dependent on its energy exports. From the likes of François Fillon and Gerhard Schröder to regional and local politicians further down the food chain, it has bought influence and political power within European democracies.
Britain is hardly less culpable. The London property market, and the City’s financial markets, are awash with dirty Russian money. Russian oligarchs – few of whom made or keep their vast fortunes without some support for Putin’s murderous regime – go about their lives here freely. As the Intelligence and Security Committee noted, a whole industry exists in London to enable “the extension of Russian influence which is often linked to promoting the nefarious interests of the Russian state”.
Russian agents have murdered Putin’s political opponents here and in other European countries. Russia hosts criminal groups that commit sophisticated cyber crimes and organised child abuse. It undermines news and democratic processes here and elsewhere. Wittingly or not, our politicians, officials, lawyers, accountants, PR professionals and even estate agents have facilitated these activities. Our very strengths – freedom of speech, property rights, the rule of law – have been exploited. And thanks to the revenues raised, we have turned a blind eye.
It’s not only Russia. China has bought its way into our critical national infrastructure and our universities. Its companies occupy our telecommunications network and provide CCTV inside ministerial offices. Its media mouthpieces churn out lies in freely available newspapers and social media accounts.
Islamists are the same. Foreign governments that fund organisations like the Muslim Brotherhood finance media outlets employing British journalists. Hate preachers and extremist organisations play identity politics, manipulate the press regulator and hire the most expensive lawyers to shut down scrutiny. As ever, self-loathing useful idiots and frightened politicians often do the extremists’ work for them.
The West mishandled Russia after the Cold War, and Britain made appalling errors in the pursuit of a “golden era” of relations with China and the appeasement of homegrown extremists. But there is now no excuse for inaction when we urgently need to overcome our weakness.
It is vital that we stop our enemies using our free societies against us. Our intelligence services, overwhelmed by threats, need more resources. We need stronger energy security, which we can achieve with more nuclear power and greater exploitation of our own gas fields. We need tougher laws on the foreign ownership of British assets and companies. We need to put an end to dirty money being laundered in London, and we need to kick China out of our universities and infrastructure.
Most immediately we must act against Russian interests. We should delist Russian companies from Western exchanges and stop trading their debts and bonds. We should force companies to stop servicing Russian companies. And if our laws are being used to frustrate action against Russian oligarchs in London, Parliament should pass an act, notwithstanding those laws, freezing the assets of named oligarchs and their families, and expelling them from the country.
We need to strengthen our military capabilities. Our defence policies and budgets assume future wars will be elective and against weaker states and terrorists. But we must be prepared for peer-to-peer warfare. Russia and China have hypersonic missile technologies superior to our defences and US offensive capabilities. Our strategy is based on aircraft carriers that could be destroyed in moments.
We need to compete for global influence, resist the corruption of international institutions, and build new groupings to promote cooperation between allies. We must keep strategic industrial and technological capabilities away from China, and stop giving away for free what should be used for leverage. We need to get Sweden and Finland into Nato and deploy more troops in Eastern Europe.
Decoupling ourselves from states like Russia and China will be difficult, expensive and painful. But the longer we wait the harder it will get. With weak leaders and domestic divisions, it is easy to believe the West is done for, but we are far stronger, richer and better than our enemies. With realism and leadership we can still prevail.
The Daily Telegraph, 28 February 2022
In universities, law courts and property markets, open societies have been infiltrated by malign forces
The arc of history, we are often told, bends towards justice. It is a warming sentiment, but as the Russian invasion of Ukraine shows, it is without foundation. There is no arc of history, progress is not inevitable, and civilisation rests on shifting sands.
Yet the delusion of progress, and the belief that the future belongs to us, remain powerful. Time and again we are stung by our complacency, yet inconvenient old truths – that security relies on strength, freedom depends on force, laws rely on the power to uphold them – are routinely ignored.
Whatever progress we might achieve in technology, commerce or human knowledge, clashes of values and interests between states and ethnic and religious groups will always be unavoidable. Indeed, it is not only that human achievements will fail to prevent such clashes; they can make them more dangerous and violent.
Consider how China uses internet technologies to control its population, persecute the Uighurs and steal industrial and security secrets from the West. And how social media enables the radicalisation and recruitment of young Muslims to jihadist organisations. Imagine the devastation made possible by a theocratic rogue state or terror group gaining knowledge of chemical, biological or nuclear weapons.
And consider Russia. Global interconnectedness was supposed to make the world safer. Countries that trade with one another, went the theory, will not fight one another. But Russia, like China and Islamists, has worked out how to exploit our open societies and economies. It has used its presence within them to corrupt and weaken us, empower and enrich itself, and develop post-modern, post-truth offensive hybrid capabilities.
Russia has a smaller economy than Italy, and its per capita income is a quarter of that in Britain. But, thanks to catastrophic decisions in Europe, made most notably by Angela Merkel, it has engineered a situation in which the European economy is dependent on its energy exports. From the likes of François Fillon and Gerhard Schröder to regional and local politicians further down the food chain, it has bought influence and political power within European democracies.
Britain is hardly less culpable. The London property market, and the City’s financial markets, are awash with dirty Russian money. Russian oligarchs – few of whom made or keep their vast fortunes without some support for Putin’s murderous regime – go about their lives here freely. As the Intelligence and Security Committee noted, a whole industry exists in London to enable “the extension of Russian influence which is often linked to promoting the nefarious interests of the Russian state”.
Russian agents have murdered Putin’s political opponents here and in other European countries. Russia hosts criminal groups that commit sophisticated cyber crimes and organised child abuse. It undermines news and democratic processes here and elsewhere. Wittingly or not, our politicians, officials, lawyers, accountants, PR professionals and even estate agents have facilitated these activities. Our very strengths – freedom of speech, property rights, the rule of law – have been exploited. And thanks to the revenues raised, we have turned a blind eye.
It’s not only Russia. China has bought its way into our critical national infrastructure and our universities. Its companies occupy our telecommunications network and provide CCTV inside ministerial offices. Its media mouthpieces churn out lies in freely available newspapers and social media accounts.
Islamists are the same. Foreign governments that fund organisations like the Muslim Brotherhood finance media outlets employing British journalists. Hate preachers and extremist organisations play identity politics, manipulate the press regulator and hire the most expensive lawyers to shut down scrutiny. As ever, self-loathing useful idiots and frightened politicians often do the extremists’ work for them.
The West mishandled Russia after the Cold War, and Britain made appalling errors in the pursuit of a “golden era” of relations with China and the appeasement of homegrown extremists. But there is now no excuse for inaction when we urgently need to overcome our weakness.
It is vital that we stop our enemies using our free societies against us. Our intelligence services, overwhelmed by threats, need more resources. We need stronger energy security, which we can achieve with more nuclear power and greater exploitation of our own gas fields. We need tougher laws on the foreign ownership of British assets and companies. We need to put an end to dirty money being laundered in London, and we need to kick China out of our universities and infrastructure.
Most immediately we must act against Russian interests. We should delist Russian companies from Western exchanges and stop trading their debts and bonds. We should force companies to stop servicing Russian companies. And if our laws are being used to frustrate action against Russian oligarchs in London, Parliament should pass an act, notwithstanding those laws, freezing the assets of named oligarchs and their families, and expelling them from the country.
We need to strengthen our military capabilities. Our defence policies and budgets assume future wars will be elective and against weaker states and terrorists. But we must be prepared for peer-to-peer warfare. Russia and China have hypersonic missile technologies superior to our defences and US offensive capabilities. Our strategy is based on aircraft carriers that could be destroyed in moments.
We need to compete for global influence, resist the corruption of international institutions, and build new groupings to promote cooperation between allies. We must keep strategic industrial and technological capabilities away from China, and stop giving away for free what should be used for leverage. We need to get Sweden and Finland into Nato and deploy more troops in Eastern Europe.
Decoupling ourselves from states like Russia and China will be difficult, expensive and painful. But the longer we wait the harder it will get. With weak leaders and domestic divisions, it is easy to believe the West is done for, but we are far stronger, richer and better than our enemies. With realism and leadership we can still prevail.
10) Climate Cleanup at the Supreme Court
Editorial, The Wall Street Journal, 27 February 2022
The Justices get a second chance to stop the EPA’s lawbreaking.
Monday is cleanup duty at the Supreme Court, as the Justices take up an errant decision by the D.C. Circuit Court of Appeals last year that revived the Obama Clean Power Plan—the same rule they blocked six years ago.
At issue in West Virginia v. EPA is whether Congress gave the Environmental Protection Agency a limitless license to regulate greenhouse gas emissions. States and coal companies aren’t asking the Court to reverse its misconceived Massachusetts v. EPA (2009) precedent that empowered the EPA to regulate CO2 emissions, though that deserves to be revisited.
They merely want the Court to bar the EPA from invoking narrow provisions of the Clean Air Act to force wholesale changes in energy systems. The Obama Clean Power rule required states to develop plans to reduce CO2 emissions from their grids. Meeting EPA targets would effectively require them to shut down coal plants and eventually gas plants too.
Power providers over time would have to generate more renewable electricity, subsidize competitors to do so, or go out of business. If the EPA didn’t like states’ plans, it could impose its own. In short, the agency pointed a gun at states and ordered them to shut down fossil-fuel plants. This violates the High Court’s anti-commandeering doctrine.
The Obama EPA divined its regulatory authority from a section of the Clean Air Act that requires states to submit plans setting “standards of performance” for sources of emissions within their borders. The EPA had never before used this section to regulate a gas as ubiquitous as CO2 or force wholesale technological shifts in industries.
A 5-4 High Court majority stayed the rule in 2016. The Trump EPA then rescinded and replaced it with a narrower one regulating CO2 from coal plants. The Trump EPA found the Clean Power Plan “significantly exceeded” its authority, and the law “unambiguously” forbids the EPA from requiring generation shifting—e.g., coal to renewables.
Democratic states sued to block the Trump repeal and replacement. A 2-1 D.C. Circuit majority on Jan. 19, 2021—a day before President Biden’s inauguration—vacated both, thus resurrecting the Clean Power Plan. The Environmental Defense Fund called it “the perfect Inauguration Day present.”
In the D.C. Circuit’s opinion, “Congress imposed no limits on the types of measures the EPA may consider” to reduce CO2 emissions as long as EPA considers the cost, air health and environmental impact, and energy requirements. The Trump repeal-and-replacement was unlawful, the judges held, because EPA perceived its authority too narrowly. Take that, Supreme Court.
The D.C. Circuit ruling would let the EPA re-engineer the grid and force businesses to replace gas-powered appliances with electric. The Biden EPA ironically argues the case is moot because emissions reductions that the Clean Power Plan was projected to achieve have already been met, and it’s redoing the rule.
Yet Mr. Biden’s goal is to eliminate carbon emissions from the economy. His unlawful vaccine mandate and eviction moratorium have shown that regulators will exceed their statutory authority unless courts stop them. Here’s the chance to send that message to the EPA.
The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.
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