In this newsletter:
1) Tesla moves battery production from Germany to Texas
Electrek, 14 October 2022
2) UK 'gigafactory' faces collapse if it can't raise £200 million before Christmas
The Times, 15 October 2022
3) Soaring energy costs could threaten future of electric cars
The Guardian, 12 September 2022
4) Green Europe: High energy prices ‘impacting EU clean energy supply chains’
reNews, 4 October 2022
5) Europe is in the middle of a brutal energy crisis. Next year could be much, much worse
Tristan Bove, Fortune, 15 October 2022
6) Germany turns to coal to replace Russian gas
The New York Times, 13 October 2022
reNews, 4 October 2022
5) Europe is in the middle of a brutal energy crisis. Next year could be much, much worse
Tristan Bove, Fortune, 15 October 2022
6) Germany turns to coal to replace Russian gas
The New York Times, 13 October 2022
7) Francis Menton: Some banks and energy companies finally starting to get some backbone
Manhattan Contrarian, 14 October 2022
Manhattan Contrarian, 14 October 2022
8) Emmet Penney: Why Greens love Putin
Compact Magazine, 13 October 2022
Compact Magazine, 13 October 2022
Full details:
1) Tesla moves battery production from Germany to Texas
Electrek, 14 October 2022
Tesla is reportedly running into problems establishing battery cell production at Gigafactory Berlin, and it is moving battery manufacturing equipment to Texas.
For over two years now, Tesla has been working to build its own battery cells with a new 4680 format. The plan is critical to the company’s long-term growth as it powers its next generation of electric vehicles using a new structural battery pack architecture.
Tesla is currently building the cells at its pilot plant in Fremont, California, but the automaker’s goal was to achieve volume production of the 4680 battery cell by the end of the year at Gigafactory Texas. The automaker also planned to establish battery cell production at Gigafactory Berlin on a similar timeline.
Now a report from Germany’s Handelsblatt suggests that Tesla is putting the plan on hold in Berlin:
"The fact that Tesla will not start full battery cell production in its German plant in Grünheide for the time being apparently has other reasons than lower energy costs and new tax incentives in the USA worth billions. Several sources close to the electric car manufacturer report a significant delay in a crucial but highly complex production technique."
The publication had previously reported that Tesla planned to move some battery cell manufacturing equipment from Gigafactory Berlin to Gigafactory Texas.
The move was suspected of having something to do with the new tax credit for electric vehicles in the US that forces automakers to use battery cells produced locally.
Now they report that only the machines for electrode production are going to remain on site and everything else is going to be moved to the US.
Full story
2) UK 'gigafactory' faces collapse if it can't raise £200 million before Christmas
The Times, 15 October 2022
The company building Britain’s first battery “gigafactory” is in emergency talks with investors including a major carmaker amid fears it could run out of money before the end of the year.
Britishvolt, a government-backed developer of battery cell technologies, is reportedly holding talks with seven potential investors after recent market turmoil led to prospective backers pulling out of its latest funding round.
The company yesterday admitted its plans had been “refocused and sharpened given the negative global economic situation”.
According to the Financial Times, the Jaguar Land Rover owner Tata Motors is among those involved in talks, with options including the sale of a minority stake or a full takeover. It said Britishvolt faced collapse if it was unable to raise fresh funds before Christmas, with £200 million needed to get it to next summer, when it expects to begin receiving orders from electric carmakers.
Full story
3) Soaring energy costs could threaten future of electric cars
The Guardian, 12 September 2022
Soaring energy costs are threatening the future of the electric car, industry bosses in Germany have warned.
A rise in electricity prices as well as in raw material costs and availability, a chronic shortage of parts, and a widespread reduction in disposable income are having a considerable impact on the production and sales of cars.
If the trend continues, there is also concern that there will be a knock-on effect on investors who will lack incentives to build charging facilities, making electric cars less attractive – because they would be more impractical – to run.
Until recently ownership of electric cars had been gaining in attractiveness as the cost of petrol rose. But since recent rises in electricity prices – in Germany of around a third compared with a year ago – the price differential has shrunk.
Electric car owners, whether charging their cars at home or through contracts with charging operators, have seen price rises of 10% or more. Further price rises are expected, owing to the fact that the price of electricity is linked to that of gas, which has become ever scarcer since Russia turned off its gas supplies to Germany almost two weeks ago.
Allego, one of Germany’s largest charging station operators, raised its prices at the start of this month from 43 cents a kilowatt hour to 47 cents. Express charging, via a continuous current, has risen from 65 to 70 cents a kilowatt hour while the fastest, so-called ultra-fast charging, has gone up from 68 cents to 75 cents a kilowatt hour.
Discount supermarkets, DIY chains and furniture stores which had until recently offered customers free charging while they shopped are now introducing charges.
According to the automobile economist Stefan Bratzel, the development is an immediate threat to the industry.
“The electricity price explosion could end up being an acute danger for vehicle transition, and we need to be damn careful about it,” he told German media.
“If electric cars become more expensive to use, the surge in electric mobility is in danger of collapsing, because hardly anyone is going to buy an electric car,” Bratzel, who is also founder of the Center for Automotive Management (CAM), said. He and other electric car advocates are now calling on the German government to ensure that the electricity price remains under the price of petrol, which they say is crucial to the future of electric cars.
Full story
Electrek, 14 October 2022
Tesla is reportedly running into problems establishing battery cell production at Gigafactory Berlin, and it is moving battery manufacturing equipment to Texas.
For over two years now, Tesla has been working to build its own battery cells with a new 4680 format. The plan is critical to the company’s long-term growth as it powers its next generation of electric vehicles using a new structural battery pack architecture.
Tesla is currently building the cells at its pilot plant in Fremont, California, but the automaker’s goal was to achieve volume production of the 4680 battery cell by the end of the year at Gigafactory Texas. The automaker also planned to establish battery cell production at Gigafactory Berlin on a similar timeline.
Now a report from Germany’s Handelsblatt suggests that Tesla is putting the plan on hold in Berlin:
"The fact that Tesla will not start full battery cell production in its German plant in Grünheide for the time being apparently has other reasons than lower energy costs and new tax incentives in the USA worth billions. Several sources close to the electric car manufacturer report a significant delay in a crucial but highly complex production technique."
The publication had previously reported that Tesla planned to move some battery cell manufacturing equipment from Gigafactory Berlin to Gigafactory Texas.
The move was suspected of having something to do with the new tax credit for electric vehicles in the US that forces automakers to use battery cells produced locally.
Now they report that only the machines for electrode production are going to remain on site and everything else is going to be moved to the US.
Full story
2) UK 'gigafactory' faces collapse if it can't raise £200 million before Christmas
The Times, 15 October 2022
The company building Britain’s first battery “gigafactory” is in emergency talks with investors including a major carmaker amid fears it could run out of money before the end of the year.
Britishvolt, a government-backed developer of battery cell technologies, is reportedly holding talks with seven potential investors after recent market turmoil led to prospective backers pulling out of its latest funding round.
The company yesterday admitted its plans had been “refocused and sharpened given the negative global economic situation”.
According to the Financial Times, the Jaguar Land Rover owner Tata Motors is among those involved in talks, with options including the sale of a minority stake or a full takeover. It said Britishvolt faced collapse if it was unable to raise fresh funds before Christmas, with £200 million needed to get it to next summer, when it expects to begin receiving orders from electric carmakers.
Full story
3) Soaring energy costs could threaten future of electric cars
The Guardian, 12 September 2022
Soaring energy costs are threatening the future of the electric car, industry bosses in Germany have warned.
A rise in electricity prices as well as in raw material costs and availability, a chronic shortage of parts, and a widespread reduction in disposable income are having a considerable impact on the production and sales of cars.
If the trend continues, there is also concern that there will be a knock-on effect on investors who will lack incentives to build charging facilities, making electric cars less attractive – because they would be more impractical – to run.
Until recently ownership of electric cars had been gaining in attractiveness as the cost of petrol rose. But since recent rises in electricity prices – in Germany of around a third compared with a year ago – the price differential has shrunk.
Electric car owners, whether charging their cars at home or through contracts with charging operators, have seen price rises of 10% or more. Further price rises are expected, owing to the fact that the price of electricity is linked to that of gas, which has become ever scarcer since Russia turned off its gas supplies to Germany almost two weeks ago.
Allego, one of Germany’s largest charging station operators, raised its prices at the start of this month from 43 cents a kilowatt hour to 47 cents. Express charging, via a continuous current, has risen from 65 to 70 cents a kilowatt hour while the fastest, so-called ultra-fast charging, has gone up from 68 cents to 75 cents a kilowatt hour.
Discount supermarkets, DIY chains and furniture stores which had until recently offered customers free charging while they shopped are now introducing charges.
According to the automobile economist Stefan Bratzel, the development is an immediate threat to the industry.
“The electricity price explosion could end up being an acute danger for vehicle transition, and we need to be damn careful about it,” he told German media.
“If electric cars become more expensive to use, the surge in electric mobility is in danger of collapsing, because hardly anyone is going to buy an electric car,” Bratzel, who is also founder of the Center for Automotive Management (CAM), said. He and other electric car advocates are now calling on the German government to ensure that the electricity price remains under the price of petrol, which they say is crucial to the future of electric cars.
Full story
4) Green Europe: High energy prices ‘impacting EU clean energy supply chains’
reNews, 4 October 2022
Investments in solar PV and battery cell production could be mothballed unless electricity costs fall, says Rystad
Research from Rystad Energy reveals that 35GW of solar manufacturing and more than 2000 gigawatt hours of battery cell manufacturing capacity in the EU could be mothballed unless power prices return to normal.
The energy intensive nature of these manufacturing processes is leading some operators to temporarily close or abandon production facilities as the cost of doing business escalates.
Rystad stated that unless prices turn around soon, Europe’s plans to cut dependence on imported fossil fuels by boosting installed renewable generation capacity and electric vehicle (EV) usage could be derailed.
Although Europe’s solar manufacturing capacity is relatively modest on a global scale – making up only 2% of total capacity – any shutdowns or abandonment of projects would have significant long-term negative consequences.
The EU has targeted 20GW of production capacity by 2025, and although 35GW of projects is currently planned, many have not secured funding, increasing the risk that these projects will fall through if high power prices continue.
Battery cell manufacturing – crucial in the EV and battery storage supply chain – is even more energy intensive than solar manufacturing, and Europe is a major global player.
The EU currently boasts about 550GWh of capacity, representing 27% of global operational capacity.
Announced projects under development are set to boost that total significantly, increasing capacity to 2.7 terawatt-hours, positioning the EU as a global leader.
However, those are now at risk and the car manufacturing and battery storage sectors could struggle to source Europe-made batteries as a result, stated Rystad.
Full story
5) Europe is in the middle of a brutal energy crisis. Next year could be much, much worse
Tristan Bove, Fortune, 15 October 2022
With no new supply on the horizon, and more competition for existing natural gas, the 2023-24 winter is looking increasingly dire for Europe.
Eight months after the Russian invasion of Ukraine, Europe’s transition away from Russian energy imports has not been an easy one. Last year, Europe imported 99 billion euros ($117 billion in 2021 dollars) in energy from Russia, which included around 40% of Europe’s natural gas consumption and 30% of its crude oil. The result, at least in the short term, has been a mounting energy crisis across the continent, marked by record-high natural gas prices and utility bills tripling in many places.
Governments have successfully scrambled to fill up underground natural gas storage reserves in preparation for the colder winter months ahead—when energy demand is at its highest. This week, Germany reached a critical milestone by filling its gas reserves to 95% over two weeks ahead of schedule, while gas storages across the EU are now nearly 92% full, far exceeding an earlier target to have storages 80% full by November 1.
But while full storages might soften the blow this winter, they won’t last forever. Experts warn that European gas storages are only designed to last a few months, regardless of whether it will be a cold winter or a mild one. And between increasingly limited flows from Russia, no new natural gas projects coming online in the next year, and more competition from Asian markets, Europe’s energy crisis looks likely to get much worse in winter 2023-24.
“Most likely all of the gas from underground storages will have been utilized by the end of the heating season in spring, and there are no significant potential additions visible in 2023 for European supplies,” Tatiana Mitrova, a research fellow with Columbia University’s Center on Global Energy Policy, told Fortune.
“It seems to be nearly guaranteed next year will be worse,” she added. “I’m afraid it will be really tough next year.”
No new supply
Since the invasion of Ukraine, European nations have worked hard to diminish their reliance on Russian energy sources, including with an EU-wide ban on most Russian oil imports, set to begin in December.
But until recently, Europe was still receiving ample amounts of natural gas from Russia mainly through the Nord Stream pipeline, much of which was being redirected to fill the continent’s reserves. Those flows finally came to a halt in late August, when Russian energy companies unilaterally cut off natural gas flows to the continent in response to Western sanctions.
Any hope that flows along the Nord Stream could resume before next winter were effectively dashed at the end of September when the pipeline was damaged and began leaking hundreds of thousands of tons of methane into the North Sea. No natural gas was flowing along the pipeline at the time of the damage, but operators have so far been restricted from accessing the site and carrying out repairs.
“After this exposure of the Nord Stream, there is really no physical ability to restore historical flows, even if we could imagine theoretically some settlement between Russia and Ukraine and the West,” Mitrova said.
Other pipelines connecting Russia to Europe are still in operation, although the Kremlin has recently issued threats that these may follow the same fate as Nord Stream and be shut down. The TurkSteam pipeline, running from Russia to southern Europe via Turkey, remains operational, although its Russian operator hinted in September that maintenance work and deliveries could be suspended in response to EU sanctions. Finally, some of these pipelines also pass directly through Ukraine, and their capacity to deliver gas supplies to Europe could easily be hindered by the war, Mitrova said.
Any of these pipelines could go down the same road as Nord Stream, which would make restocking in preparation for next winter extremely difficult for Europe.
“The main fear is also whether flows via Ukraine and TurkStream get cut, in which case it could intensify the energy crisis over the coming and next winter,” Ryhana Rasidi, gas analyst at energy consultancy Kpler, told Fortune.
The absence of Russian flows leaves Europe with few options to restock its reserves before next winter. The continent has turned to importing large volumes of more easily transportable liquified natural gas (LNG) from the U.S. and the Middle East, but these large producers have made it abundantly clear that there are no new natural gas projects slated to break ground next year, meaning supply will stay tight.
“We know that there are actually no big new LNG projects coming online globally in 2023. So LNG supply is not expected to increase,” Mitrova said.
Global natural gas supply is expected to stay tight in 2023 due to reduced Russian flows and a lack of new projects worldwide, according to a forecast from the Paris-based International Energy Agency earlier this month.
But crunched natural gas supply could become an even bigger problem for Europe next year, as the continent will likely have to deal with a lot more competition.
Gas bidding wars
In its quest to fill up gas reserves this year, Europe has benefited from a steep decline in energy demand from usually profligate spenders in Asian markets.
Last year, China was the world’s leading LNG importer, buying large amounts from countries including the U.S. and Qatar. But in 2022, China’s LNG imports have fallen by 14%, according to energy consultancy Wood Mackenzie, largely due to an economic slowdown, COVID-19 lockdowns, and a warmer-than-expected winter.
Experts say a revival of natural gas demand from China will depend on the country’s economic recovery next year, and on the possibility of a cold winter. Regardless, Europe is sure to keep an eye on East Asian weather forecasts just as much as its own.
“The extent of LNG imports to Europe would also be dependent on demand from Northeast Asia,” Rasidi said.
“It is very difficult to predict what will happen with COVID In China, but there is a rather high probability that there will be some economic recovery which will lead to higher LNG demand,” Mitrova said.
China’s LNG demand could rebound by 14% in the 2023-24 season, according to a recent forecast from Morgan Stanley, as lockdowns become less commonplace and economic recovery in the country picks up.
Long-term demand fixes
With no new supply on the horizon, and more competition for existing natural gas, the 2023-24 winter is looking increasingly dire for Europe.
Ideally, the continent will be able to count on more non-fossil fuel energy sources, including renewables and nuclear power, which have not been able to meet demand this year. For instance hydropower—Europe’s leading renewable energy source—has been in short supply this year after a series of crippling droughts over the summer. As for nuclear power, Europe has historically relied on France’s large nuclear capacity as a stable energy source, but worker strikes and required maintenance work has taken many power plants offline this year.
France’s nuclear fleet should be back online next year, but that is not a guarantee, according to Mitrova, who added that it will be years before any new investments in nuclear power would start being helpful. The ability of renewables to make up for lower gas capacity, meanwhile, will largely depend on next summer’s weather.
With energy uncertainty seemingly the name of the game for the foreseeable future in Europe, experts say that reducing energy demand will likely have to become a habit.
Full post
6) Germany turns to coal to replace Russian gas
The New York Times, 13 October 2022
A poll taken this summer found that 56 percent of Germans were in favor of turning coal plants back on, with just 36 percent against.
LÜTZERATH, Germany — For months, die-hard environmental activists have camped in the fields and occupied the trees in this tiny farming village in western Germany, hoping that like-minded people from across the country would arrive and help stop the expansion of a nearby open-pit coal mine that threatened to swallow the village and its farms.
They had reason to be optimistic. Mass protests led the German government to step in and save an old-growth forest from coal expansion just two years ago. And the Green party notched its best showing ever in elections last year, a sign of how fighting climate change had become a winning political issue in Europe’s largest economy.
“If there were 50,000 on the street, politicians would have to do something,” said Eckardt Heukamp, 58, the last farmer remaining in Lützerath, who put up some of the protesters in apartments on his property. Others built tree houses, pitched tents or moved into abandoned houses in the village.
But the hoped-for surge in protesters never materialized. And last week, the government effectively sealed Lützerath’s fate by announcing that RWE, Germany’s largest energy company, needed the coal under the village — to make up for gas that had stopped flowing in from Russia.
The war in Ukraine, and the looming prospect of a winter without cheap Russian fuel, has cooled enthusiasm in Germany for greener policies, at least for now. In a nation that has pledged to wean itself off coal entirely by 2030, it has been an abrupt retreat — and for some, a difficult one.
“Putin’s war of aggression is forcing us to temporarily make greater use of lignite so that we save gas in electricity generation,” said Robert Habeck, the German economy minister and a former leader of the Green party, referring to the low-grade coal under the village. “This is painful but necessary in view of the gas shortage.”
Russia once supplied more than half of Germany’s gas imports — a major source of fuel for heating. After the Russian invasion of Ukraine set off a chain reaction of European sanctions and Russian countermeasures, that flow was shut off. From the start of the war, the German government knew it would have to scramble for fuel to get through the coming winter.
In June, Mr. Habeck announced the reopening of some coal plants — a bitter pill after the Greens’ success, just months earlier, at getting the new government to speed up its exit from coal by eight years. When a drought this summer compounded energy jitters by slowing coal transport on rivers, the government gave cargo trains carrying coal and other fuels priority over passenger ones.
A poll taken this summer found that 56 percent of Germans were in favor of turning coal plants back on, with just 36 percent against. That compares to the 73 percent of the population who supported ending coal use “as soon as possible” in a 2019 poll.
Full story
reNews, 4 October 2022
Investments in solar PV and battery cell production could be mothballed unless electricity costs fall, says Rystad
Research from Rystad Energy reveals that 35GW of solar manufacturing and more than 2000 gigawatt hours of battery cell manufacturing capacity in the EU could be mothballed unless power prices return to normal.
The energy intensive nature of these manufacturing processes is leading some operators to temporarily close or abandon production facilities as the cost of doing business escalates.
Rystad stated that unless prices turn around soon, Europe’s plans to cut dependence on imported fossil fuels by boosting installed renewable generation capacity and electric vehicle (EV) usage could be derailed.
Although Europe’s solar manufacturing capacity is relatively modest on a global scale – making up only 2% of total capacity – any shutdowns or abandonment of projects would have significant long-term negative consequences.
The EU has targeted 20GW of production capacity by 2025, and although 35GW of projects is currently planned, many have not secured funding, increasing the risk that these projects will fall through if high power prices continue.
Battery cell manufacturing – crucial in the EV and battery storage supply chain – is even more energy intensive than solar manufacturing, and Europe is a major global player.
The EU currently boasts about 550GWh of capacity, representing 27% of global operational capacity.
Announced projects under development are set to boost that total significantly, increasing capacity to 2.7 terawatt-hours, positioning the EU as a global leader.
However, those are now at risk and the car manufacturing and battery storage sectors could struggle to source Europe-made batteries as a result, stated Rystad.
Full story
5) Europe is in the middle of a brutal energy crisis. Next year could be much, much worse
Tristan Bove, Fortune, 15 October 2022
With no new supply on the horizon, and more competition for existing natural gas, the 2023-24 winter is looking increasingly dire for Europe.
Eight months after the Russian invasion of Ukraine, Europe’s transition away from Russian energy imports has not been an easy one. Last year, Europe imported 99 billion euros ($117 billion in 2021 dollars) in energy from Russia, which included around 40% of Europe’s natural gas consumption and 30% of its crude oil. The result, at least in the short term, has been a mounting energy crisis across the continent, marked by record-high natural gas prices and utility bills tripling in many places.
Governments have successfully scrambled to fill up underground natural gas storage reserves in preparation for the colder winter months ahead—when energy demand is at its highest. This week, Germany reached a critical milestone by filling its gas reserves to 95% over two weeks ahead of schedule, while gas storages across the EU are now nearly 92% full, far exceeding an earlier target to have storages 80% full by November 1.
But while full storages might soften the blow this winter, they won’t last forever. Experts warn that European gas storages are only designed to last a few months, regardless of whether it will be a cold winter or a mild one. And between increasingly limited flows from Russia, no new natural gas projects coming online in the next year, and more competition from Asian markets, Europe’s energy crisis looks likely to get much worse in winter 2023-24.
“Most likely all of the gas from underground storages will have been utilized by the end of the heating season in spring, and there are no significant potential additions visible in 2023 for European supplies,” Tatiana Mitrova, a research fellow with Columbia University’s Center on Global Energy Policy, told Fortune.
“It seems to be nearly guaranteed next year will be worse,” she added. “I’m afraid it will be really tough next year.”
No new supply
Since the invasion of Ukraine, European nations have worked hard to diminish their reliance on Russian energy sources, including with an EU-wide ban on most Russian oil imports, set to begin in December.
But until recently, Europe was still receiving ample amounts of natural gas from Russia mainly through the Nord Stream pipeline, much of which was being redirected to fill the continent’s reserves. Those flows finally came to a halt in late August, when Russian energy companies unilaterally cut off natural gas flows to the continent in response to Western sanctions.
Any hope that flows along the Nord Stream could resume before next winter were effectively dashed at the end of September when the pipeline was damaged and began leaking hundreds of thousands of tons of methane into the North Sea. No natural gas was flowing along the pipeline at the time of the damage, but operators have so far been restricted from accessing the site and carrying out repairs.
“After this exposure of the Nord Stream, there is really no physical ability to restore historical flows, even if we could imagine theoretically some settlement between Russia and Ukraine and the West,” Mitrova said.
Other pipelines connecting Russia to Europe are still in operation, although the Kremlin has recently issued threats that these may follow the same fate as Nord Stream and be shut down. The TurkSteam pipeline, running from Russia to southern Europe via Turkey, remains operational, although its Russian operator hinted in September that maintenance work and deliveries could be suspended in response to EU sanctions. Finally, some of these pipelines also pass directly through Ukraine, and their capacity to deliver gas supplies to Europe could easily be hindered by the war, Mitrova said.
Any of these pipelines could go down the same road as Nord Stream, which would make restocking in preparation for next winter extremely difficult for Europe.
“The main fear is also whether flows via Ukraine and TurkStream get cut, in which case it could intensify the energy crisis over the coming and next winter,” Ryhana Rasidi, gas analyst at energy consultancy Kpler, told Fortune.
The absence of Russian flows leaves Europe with few options to restock its reserves before next winter. The continent has turned to importing large volumes of more easily transportable liquified natural gas (LNG) from the U.S. and the Middle East, but these large producers have made it abundantly clear that there are no new natural gas projects slated to break ground next year, meaning supply will stay tight.
“We know that there are actually no big new LNG projects coming online globally in 2023. So LNG supply is not expected to increase,” Mitrova said.
Global natural gas supply is expected to stay tight in 2023 due to reduced Russian flows and a lack of new projects worldwide, according to a forecast from the Paris-based International Energy Agency earlier this month.
But crunched natural gas supply could become an even bigger problem for Europe next year, as the continent will likely have to deal with a lot more competition.
Gas bidding wars
In its quest to fill up gas reserves this year, Europe has benefited from a steep decline in energy demand from usually profligate spenders in Asian markets.
Last year, China was the world’s leading LNG importer, buying large amounts from countries including the U.S. and Qatar. But in 2022, China’s LNG imports have fallen by 14%, according to energy consultancy Wood Mackenzie, largely due to an economic slowdown, COVID-19 lockdowns, and a warmer-than-expected winter.
Experts say a revival of natural gas demand from China will depend on the country’s economic recovery next year, and on the possibility of a cold winter. Regardless, Europe is sure to keep an eye on East Asian weather forecasts just as much as its own.
“The extent of LNG imports to Europe would also be dependent on demand from Northeast Asia,” Rasidi said.
“It is very difficult to predict what will happen with COVID In China, but there is a rather high probability that there will be some economic recovery which will lead to higher LNG demand,” Mitrova said.
China’s LNG demand could rebound by 14% in the 2023-24 season, according to a recent forecast from Morgan Stanley, as lockdowns become less commonplace and economic recovery in the country picks up.
Long-term demand fixes
With no new supply on the horizon, and more competition for existing natural gas, the 2023-24 winter is looking increasingly dire for Europe.
Ideally, the continent will be able to count on more non-fossil fuel energy sources, including renewables and nuclear power, which have not been able to meet demand this year. For instance hydropower—Europe’s leading renewable energy source—has been in short supply this year after a series of crippling droughts over the summer. As for nuclear power, Europe has historically relied on France’s large nuclear capacity as a stable energy source, but worker strikes and required maintenance work has taken many power plants offline this year.
France’s nuclear fleet should be back online next year, but that is not a guarantee, according to Mitrova, who added that it will be years before any new investments in nuclear power would start being helpful. The ability of renewables to make up for lower gas capacity, meanwhile, will largely depend on next summer’s weather.
With energy uncertainty seemingly the name of the game for the foreseeable future in Europe, experts say that reducing energy demand will likely have to become a habit.
Full post
6) Germany turns to coal to replace Russian gas
The New York Times, 13 October 2022
A poll taken this summer found that 56 percent of Germans were in favor of turning coal plants back on, with just 36 percent against.
LÜTZERATH, Germany — For months, die-hard environmental activists have camped in the fields and occupied the trees in this tiny farming village in western Germany, hoping that like-minded people from across the country would arrive and help stop the expansion of a nearby open-pit coal mine that threatened to swallow the village and its farms.
They had reason to be optimistic. Mass protests led the German government to step in and save an old-growth forest from coal expansion just two years ago. And the Green party notched its best showing ever in elections last year, a sign of how fighting climate change had become a winning political issue in Europe’s largest economy.
“If there were 50,000 on the street, politicians would have to do something,” said Eckardt Heukamp, 58, the last farmer remaining in Lützerath, who put up some of the protesters in apartments on his property. Others built tree houses, pitched tents or moved into abandoned houses in the village.
But the hoped-for surge in protesters never materialized. And last week, the government effectively sealed Lützerath’s fate by announcing that RWE, Germany’s largest energy company, needed the coal under the village — to make up for gas that had stopped flowing in from Russia.
The war in Ukraine, and the looming prospect of a winter without cheap Russian fuel, has cooled enthusiasm in Germany for greener policies, at least for now. In a nation that has pledged to wean itself off coal entirely by 2030, it has been an abrupt retreat — and for some, a difficult one.
“Putin’s war of aggression is forcing us to temporarily make greater use of lignite so that we save gas in electricity generation,” said Robert Habeck, the German economy minister and a former leader of the Green party, referring to the low-grade coal under the village. “This is painful but necessary in view of the gas shortage.”
Russia once supplied more than half of Germany’s gas imports — a major source of fuel for heating. After the Russian invasion of Ukraine set off a chain reaction of European sanctions and Russian countermeasures, that flow was shut off. From the start of the war, the German government knew it would have to scramble for fuel to get through the coming winter.
In June, Mr. Habeck announced the reopening of some coal plants — a bitter pill after the Greens’ success, just months earlier, at getting the new government to speed up its exit from coal by eight years. When a drought this summer compounded energy jitters by slowing coal transport on rivers, the government gave cargo trains carrying coal and other fuels priority over passenger ones.
A poll taken this summer found that 56 percent of Germans were in favor of turning coal plants back on, with just 36 percent against. That compares to the 73 percent of the population who supported ending coal use “as soon as possible” in a 2019 poll.
Full story
7) Francis Menton: Some banks and energy companies finally starting to get some backbone
Manhattan Contrarian, 14 October 2022
There’s nothing like a good energy crisis to bring a dose of reality to climate change and renewable energy fantasies.
It seems like it was barely a few months ago that every big financial institution and every big energy company was completely on board with the crash program to eliminate carbon emissions from the world. In 2021, in the run-up to the Glasgow climate conference, a large group of banks and other financial institutions formed something called the Glasgow Financial Alliance for Net Zero, or GFANZ, with the mission of using their financial leverage to force the net zero transition on the world. From the GFANZ website:
GFANZ brings together independent, sector-specific alliances to tackle net-zero transition challenges and connects the financial community to the Race to Zero campaign, climate scientists and experts, and civil society.
All the cool kids raced to join up. A list of GFANZ members includes more than 500 major institutions, including essentially all of the largest banks in the world (U.S. members include JP Morgan Chase, Citibank, Morgan Stanley, Bank of America, Wells Fargo, etc., etc.), not to mention asset managers, insurers, and on and on.
Even more absurd were the pledges of the big oil companies to eliminate their carbon emissions. (From SP Global, September 20, 2021: “Oil majors pledge net zero target, update goals to cut methane, carbon intensity.” Pledgers included all the biggest companies: Exxon, Chevron, BP, Shell, etc., etc.). It’s like they had no idea they are in the oil business. Who us?
Well, now we’re heading into the inevitable energy crunch resulting from this folly (along with lots of destructive government policies), and reality is catching up. At Bloomberg News today the headline is “Banks Try Quiet Quitting on Net Zero.” Suddenly it’s become safe to admit that this was all a big mistake:
"Several of the largest banks, including JPMorgan, Bank of America, and Morgan Stanley, headed into the 2021 United Nations Climate Change Conference (COP26) as members of [GFANZ], a group of roughly 500 financial sector entities [that were] publicly committed . . . to reach net-zero carbon emissions by midcentury. [But] by September [2022][JPMorgan, Bank of America and Morgan Stanley] were [all] among a faction ready to quit, according to sources familiar with the matter."
What happened? Well, with intentionally-created scarcity, fossil fuel prices are now up, and there is lots of money to be made developing resources to sell at high prices:
The revived fortunes of fossil fuels, especially coal, may explain some of the weakened resolve for decarbonization. Global bank lending to fossil fuel companies is up 15%, to over $300 billion, in the first nine months of this year, from the same period in 2021, according to data compiled by Bloomberg. This is Wall Street just doing its job: making money. Banks earned more than $1 billion in revenue from fossil lending during the first three quarters, in line with 2021. Why quit business with a booming sector over a distant climate goal?
And then there is the prospect of shareholder lawsuits if you just thumb your nose at profitable business:
"Banks may not have originally understood the full litigation risks tied to signing net-zero commitments."
Some of the executives of these companies may have even figured out that intermittent renewable energy sources don’t really work to power a modern economy, although I haven’t seen any of them say exactly that. The one who has gotten closest is Jamie Dimon of JP Morgan, who was asked by Representative Rashida Tlaib at a Congressional hearing on September 22 whether he would “commit to stop funding new fossil fuel projects.” He responded: “Absolutely not, and that would be the road to hell for America." Finally, a little backbone.
Full post
Manhattan Contrarian, 14 October 2022
There’s nothing like a good energy crisis to bring a dose of reality to climate change and renewable energy fantasies.
It seems like it was barely a few months ago that every big financial institution and every big energy company was completely on board with the crash program to eliminate carbon emissions from the world. In 2021, in the run-up to the Glasgow climate conference, a large group of banks and other financial institutions formed something called the Glasgow Financial Alliance for Net Zero, or GFANZ, with the mission of using their financial leverage to force the net zero transition on the world. From the GFANZ website:
GFANZ brings together independent, sector-specific alliances to tackle net-zero transition challenges and connects the financial community to the Race to Zero campaign, climate scientists and experts, and civil society.
All the cool kids raced to join up. A list of GFANZ members includes more than 500 major institutions, including essentially all of the largest banks in the world (U.S. members include JP Morgan Chase, Citibank, Morgan Stanley, Bank of America, Wells Fargo, etc., etc.), not to mention asset managers, insurers, and on and on.
Even more absurd were the pledges of the big oil companies to eliminate their carbon emissions. (From SP Global, September 20, 2021: “Oil majors pledge net zero target, update goals to cut methane, carbon intensity.” Pledgers included all the biggest companies: Exxon, Chevron, BP, Shell, etc., etc.). It’s like they had no idea they are in the oil business. Who us?
Well, now we’re heading into the inevitable energy crunch resulting from this folly (along with lots of destructive government policies), and reality is catching up. At Bloomberg News today the headline is “Banks Try Quiet Quitting on Net Zero.” Suddenly it’s become safe to admit that this was all a big mistake:
"Several of the largest banks, including JPMorgan, Bank of America, and Morgan Stanley, headed into the 2021 United Nations Climate Change Conference (COP26) as members of [GFANZ], a group of roughly 500 financial sector entities [that were] publicly committed . . . to reach net-zero carbon emissions by midcentury. [But] by September [2022][JPMorgan, Bank of America and Morgan Stanley] were [all] among a faction ready to quit, according to sources familiar with the matter."
What happened? Well, with intentionally-created scarcity, fossil fuel prices are now up, and there is lots of money to be made developing resources to sell at high prices:
The revived fortunes of fossil fuels, especially coal, may explain some of the weakened resolve for decarbonization. Global bank lending to fossil fuel companies is up 15%, to over $300 billion, in the first nine months of this year, from the same period in 2021, according to data compiled by Bloomberg. This is Wall Street just doing its job: making money. Banks earned more than $1 billion in revenue from fossil lending during the first three quarters, in line with 2021. Why quit business with a booming sector over a distant climate goal?
And then there is the prospect of shareholder lawsuits if you just thumb your nose at profitable business:
"Banks may not have originally understood the full litigation risks tied to signing net-zero commitments."
Some of the executives of these companies may have even figured out that intermittent renewable energy sources don’t really work to power a modern economy, although I haven’t seen any of them say exactly that. The one who has gotten closest is Jamie Dimon of JP Morgan, who was asked by Representative Rashida Tlaib at a Congressional hearing on September 22 whether he would “commit to stop funding new fossil fuel projects.” He responded: “Absolutely not, and that would be the road to hell for America." Finally, a little backbone.
Full post
8) Emmet Penney: Why Greens love Putin
Compact Magazine, 13 October 2022
For his “achievement,” the Russian strongman earned the No. 1 spot in Politico’s Green 28 rankings.
Is Vladmir Putin Europe’s secret savior? Has his invasion of Ukraine finally forced Europe to make the transition to green energy and away from planet-destroying fossil fuels? According to a recent Politico Europe feature, the answer is yes. “It took a war criminal to speed up Europe’s green revolution,” the magazine states. It was only once Russian tanks rolled into Ukraine that clean energy became more than a climate-policy aspiration — it became a security necessity.
For this “achievement,” the Russian strongman earned the No. 1 spot in Politico’s Green 28 rankings.
The dubious honor reflects a wider elite consensus. Soon after Russia launched its invasion, The Guardian’s environment correspondent interviewed a number of climate experts who agreed that it “could mark a turning point for the world’s efforts to decarbonize.” Shortly after that, McKinsey released a report suggesting the fallout of the war could “accelerate progress” toward net-zero emissions in the medium term. And just a few days ago, Petteri Taalas, secretary-general of the UN World Meteorological Organization, remarked that “from a climate perspective, the war in Ukraine may be seen as a blessing.”
European leaders have taken such thinking to extremes. Sure, they concede, Europe might have a few hard winters triggering emission spikes. After all, the European Union’s coal consumption jumped 10 percent in the first half of this year with no signs of abating. And more Europeans are burning wood, which is more carbon intensive than burning coal, to keep their houses warm. If, of course, they can afford it.
But ultimately, Politico assures us, in decoupling from Russian fossil fuels, no one in Brussels harbors any more doubts about the need for renewables: “In the days after the invasion, German Finance Minister Christian Lindner—a free-market liberal who is no great friend of the climate agenda—declared renewable energy to be ‘the energy of freedom.’” And that’s why the European Union now wants to increase its renewable energy targets from 32 percent of its power to 45 percent of its power by 2045.
It’s easy to be seduced by such silver linings. Maybe Europe will go green and be the climate envy of the world with wind, solar, and batteries replacing outmoded hydrocarbons. But if that’s true, what does it mean for Europe? Put another way, what will that cost?
To answer the question, we can start by tallying the costs of the transition so far.
The over-investment in renewables and underinvestment in fossil fuel or nuclear infrastructure have added entropy to the European energy system. Think of it this way: Wind and solar operate less than half of the time, and you don’t get to pick which half of the time that is. It’s like running your electricity system on a bunch of rigged coin tosses.
The work it takes to integrate disorganized energy into a system that relies on round-the-clock balance and harmony adds overall costs. Back in the 1990s, most renewable energy in Europe was hydropower, which is reliable and clean. It made for 10 percent of the Continent’s electricity mix. By 2020, renewables reached 17 percent of the mix, with the vast majority of the additions being wind and solar. How much is Europe paying for that 7 percent gain?
The dollars and cents are pretty straightforward. Between 2008 and 2021, renewable energy subsidies have cost consumers in the EU about $746 billion. They will continue to add about $67 billion a year to people’s bills. Compared to non-EU countries within the G20, household EU electricity prices are 80 percent higher than average. Industrial-electricity costs are about 30 percent higher. (These disparities roughly hold when it comes to natural-gas and transport-fuel prices, too.)
What I’m describing above are the good times. These are the costs before the energy crisis, which began last year, and came to a head once Putin invaded Ukraine. These were the times when European countries like Germany could shut down nuclear energy plants willy-nilly and still rely on cheap Russian gas to guarantee overall system reliability. That was the basic logic of Germany’s so-called energy turnaround, or Energiewende: Shut down nuclear, build renewables, import gas. And given that nuclear still isn’t considered green in the European Union, Germany’s plan has been the default option for decarbonization.
“This is a world that is no longer there,” EU foreign-policy chief Josep Borrell told the annual gathering of EU ambassadors this week. Europe is rapidly decoupling from Russian fossil fuels. European prosperity will go with it. And that’s frightening, because the European grid needs $300 billion in re-investment every year for oil and gas alone just to maintain current levels of production.
The costs aren’t just high bills and blackouts. Europe will lose some of its manufacturing base as firms flee the Continent in pursuit of more secure, less expensive hydrocarbons elsewhere. Horror director John Carpenter once said that whenever he reads about a reboot of his original Halloween movie coming out, a funny thing happens: He reaches out his hand, and someone puts a check in it. The United States similarly benefits every time Europeans impose new green diktats on themselves: As European natural-gas prices have climbed 400 percent this year, manufacturers have made landfall in America to spare themselves. Factories are taking jobs, wealth, and institutional knowledge with them. Renewables can’t provide these manufacturers with the inputs they need to keep running. It would be like trying to put firewood in your gas tank.
What about that vaunted security surplus renewables supposedly provide? Hasn’t Europe once and for all freed itself of the Russian yoke? After all, wind and solar don’t require Putin’s cooperation. The earth itself provides, no?
True, but renewables do require other inputs, over which China has nearly complete dominion. The Middle Kingdom has a lock on nearly every single critical mineral needed for the energy transition, from cobalt to manganese.
But what about manufacturing renewables? Can’t Europe create jobs doing that? The short answer is no. Between 2012 and 2021, Europe’s share of renewables manufacturing jobs dropped from 20 percent to 13 percent. International Energy Agency chief Faith Birol recently warned that China produces 80 percent of the world’s solar cells today, a share he projects will rise to 95 percent in three years. According to a recent report, 25 percent of Europe’s current renewables-manufacturing capacity is at risk due to high energy prices. It looks more and more like Europe will own none of the supply chain for renewables—and it will be unhappy.
Lastly, the energy transition is premised on the idea that renewables will remain cheap. And there has been good reason to think they will: After the last few decades, the cost of building wind and solar has plummeted severalfold. But will that stay the case? Not likely. Growth in wind has been flat over the last year, and the input costs have soared, putting the screws to the entire industry. As executives from SSE, Vestas, and Siemens Gamesa warned the G20 in an open letter, “at the current pace of growth, we are only on-track to reach less than two-thirds of the global wind capacity required by 2030 for a net-zero and Paris-compliant pathway,”
General Electric just cut 20 percent of its onshore-wind unit. The troubled unit is adversely affecting the “performance of its overall renewable-energy business,” reports Reuters. “In July, the company blamed its North American onshore-wind business for two-thirds of the decline in its second quarter renewable revenue.”
Supply-chain problems have likewise dogged solar over the last year or so, troubling the assumption that its costs will only drop over time. Plus, things like the incipient copper crisis spell hard times for renewables’ affordability.
If Europeans continue on a trajectory of building renewables and “greening” their economy at any cost, they will be poorer, weaker, and less secure than they are right now. As the energy analyst John Constable put it, “Europe will simply become a theme park of its own cultural past.”
Hail Putin, I guess.
Compact Magazine, 13 October 2022
For his “achievement,” the Russian strongman earned the No. 1 spot in Politico’s Green 28 rankings.
Is Vladmir Putin Europe’s secret savior? Has his invasion of Ukraine finally forced Europe to make the transition to green energy and away from planet-destroying fossil fuels? According to a recent Politico Europe feature, the answer is yes. “It took a war criminal to speed up Europe’s green revolution,” the magazine states. It was only once Russian tanks rolled into Ukraine that clean energy became more than a climate-policy aspiration — it became a security necessity.
For this “achievement,” the Russian strongman earned the No. 1 spot in Politico’s Green 28 rankings.
The dubious honor reflects a wider elite consensus. Soon after Russia launched its invasion, The Guardian’s environment correspondent interviewed a number of climate experts who agreed that it “could mark a turning point for the world’s efforts to decarbonize.” Shortly after that, McKinsey released a report suggesting the fallout of the war could “accelerate progress” toward net-zero emissions in the medium term. And just a few days ago, Petteri Taalas, secretary-general of the UN World Meteorological Organization, remarked that “from a climate perspective, the war in Ukraine may be seen as a blessing.”
European leaders have taken such thinking to extremes. Sure, they concede, Europe might have a few hard winters triggering emission spikes. After all, the European Union’s coal consumption jumped 10 percent in the first half of this year with no signs of abating. And more Europeans are burning wood, which is more carbon intensive than burning coal, to keep their houses warm. If, of course, they can afford it.
But ultimately, Politico assures us, in decoupling from Russian fossil fuels, no one in Brussels harbors any more doubts about the need for renewables: “In the days after the invasion, German Finance Minister Christian Lindner—a free-market liberal who is no great friend of the climate agenda—declared renewable energy to be ‘the energy of freedom.’” And that’s why the European Union now wants to increase its renewable energy targets from 32 percent of its power to 45 percent of its power by 2045.
It’s easy to be seduced by such silver linings. Maybe Europe will go green and be the climate envy of the world with wind, solar, and batteries replacing outmoded hydrocarbons. But if that’s true, what does it mean for Europe? Put another way, what will that cost?
To answer the question, we can start by tallying the costs of the transition so far.
The over-investment in renewables and underinvestment in fossil fuel or nuclear infrastructure have added entropy to the European energy system. Think of it this way: Wind and solar operate less than half of the time, and you don’t get to pick which half of the time that is. It’s like running your electricity system on a bunch of rigged coin tosses.
The work it takes to integrate disorganized energy into a system that relies on round-the-clock balance and harmony adds overall costs. Back in the 1990s, most renewable energy in Europe was hydropower, which is reliable and clean. It made for 10 percent of the Continent’s electricity mix. By 2020, renewables reached 17 percent of the mix, with the vast majority of the additions being wind and solar. How much is Europe paying for that 7 percent gain?
The dollars and cents are pretty straightforward. Between 2008 and 2021, renewable energy subsidies have cost consumers in the EU about $746 billion. They will continue to add about $67 billion a year to people’s bills. Compared to non-EU countries within the G20, household EU electricity prices are 80 percent higher than average. Industrial-electricity costs are about 30 percent higher. (These disparities roughly hold when it comes to natural-gas and transport-fuel prices, too.)
What I’m describing above are the good times. These are the costs before the energy crisis, which began last year, and came to a head once Putin invaded Ukraine. These were the times when European countries like Germany could shut down nuclear energy plants willy-nilly and still rely on cheap Russian gas to guarantee overall system reliability. That was the basic logic of Germany’s so-called energy turnaround, or Energiewende: Shut down nuclear, build renewables, import gas. And given that nuclear still isn’t considered green in the European Union, Germany’s plan has been the default option for decarbonization.
“This is a world that is no longer there,” EU foreign-policy chief Josep Borrell told the annual gathering of EU ambassadors this week. Europe is rapidly decoupling from Russian fossil fuels. European prosperity will go with it. And that’s frightening, because the European grid needs $300 billion in re-investment every year for oil and gas alone just to maintain current levels of production.
The costs aren’t just high bills and blackouts. Europe will lose some of its manufacturing base as firms flee the Continent in pursuit of more secure, less expensive hydrocarbons elsewhere. Horror director John Carpenter once said that whenever he reads about a reboot of his original Halloween movie coming out, a funny thing happens: He reaches out his hand, and someone puts a check in it. The United States similarly benefits every time Europeans impose new green diktats on themselves: As European natural-gas prices have climbed 400 percent this year, manufacturers have made landfall in America to spare themselves. Factories are taking jobs, wealth, and institutional knowledge with them. Renewables can’t provide these manufacturers with the inputs they need to keep running. It would be like trying to put firewood in your gas tank.
What about that vaunted security surplus renewables supposedly provide? Hasn’t Europe once and for all freed itself of the Russian yoke? After all, wind and solar don’t require Putin’s cooperation. The earth itself provides, no?
True, but renewables do require other inputs, over which China has nearly complete dominion. The Middle Kingdom has a lock on nearly every single critical mineral needed for the energy transition, from cobalt to manganese.
But what about manufacturing renewables? Can’t Europe create jobs doing that? The short answer is no. Between 2012 and 2021, Europe’s share of renewables manufacturing jobs dropped from 20 percent to 13 percent. International Energy Agency chief Faith Birol recently warned that China produces 80 percent of the world’s solar cells today, a share he projects will rise to 95 percent in three years. According to a recent report, 25 percent of Europe’s current renewables-manufacturing capacity is at risk due to high energy prices. It looks more and more like Europe will own none of the supply chain for renewables—and it will be unhappy.
Lastly, the energy transition is premised on the idea that renewables will remain cheap. And there has been good reason to think they will: After the last few decades, the cost of building wind and solar has plummeted severalfold. But will that stay the case? Not likely. Growth in wind has been flat over the last year, and the input costs have soared, putting the screws to the entire industry. As executives from SSE, Vestas, and Siemens Gamesa warned the G20 in an open letter, “at the current pace of growth, we are only on-track to reach less than two-thirds of the global wind capacity required by 2030 for a net-zero and Paris-compliant pathway,”
General Electric just cut 20 percent of its onshore-wind unit. The troubled unit is adversely affecting the “performance of its overall renewable-energy business,” reports Reuters. “In July, the company blamed its North American onshore-wind business for two-thirds of the decline in its second quarter renewable revenue.”
Supply-chain problems have likewise dogged solar over the last year or so, troubling the assumption that its costs will only drop over time. Plus, things like the incipient copper crisis spell hard times for renewables’ affordability.
If Europeans continue on a trajectory of building renewables and “greening” their economy at any cost, they will be poorer, weaker, and less secure than they are right now. As the energy analyst John Constable put it, “Europe will simply become a theme park of its own cultural past.”
Hail Putin, I guess.
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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