Europe’s Self-Made Energy Crisis – The Political Insider

By Conor Bernstein for RealClearEnergy

Europe’s energy crisis could get worse. While all eyes are on Ukraine and Russia, Europe’s energy woes are largely self-made, not due to outside forces. 

Europe is now its bed. It has closed well-operating nuclear and coal power stations, as well as dismantling dispatchable fuel diversification. This has only made Europe’s already worrying dependence upon a volatile, unstable natural gas market controlled by Vladimir Putin more dangerous. Europe has become more dependent on Russian natural gas now than in 2014, when Russia annexed Crimea.   

Meghan O’Sullivan, the director of the Geopolitics of Energy Project at Harvard University’s Kennedy School, toldThe Wall Street Journal, “For the foreseeable future, Europe will remain dependent—and possibly as dependent as ever—on Russian gas.” 

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Europe couldn’t have picked a worse bridge to its idealized energy future, and now European consumers are paying a galling price. Here are the results of 4Th quarter of 2021, the International Energy Agency reported that average European wholesale electricity prices were more than four times their 2015-2020 average. Households are set to pay an average of 54% more for energy than they did two years ago.

These are the price estimates Before Potential conflict breaks out in Ukraine, and the already tight European gas market is completely turned upside-down.  

In the U.K., higher energy prices are poised to push an estimated 2 million additional households into fuel poverty, taking the total to 6 million, the highest level of fuel poverty in more than 25 years. What’s happening in Britain is playing out across the continent. And there’s growing acknowledgement that it didn’t have to be this way. 

Europe’s renewable and natural gas obsession has paved the way for the loss of an astounding amount of coal and nuclear power capacity. As of March 2021, more than half of Europe’s coal capacity that was operating in 2016 had been retired or been scheduled for retirement by 2030. In the U.K., coal generation met 40% of power demand a decade ago – just a handful of coal plants are left on the grid today.

Nuclear retirements and phaseouts – notably the nuclear phaseout in Germany – continue despite consumers drowning under soaring power and gas prices. Germany closed half its remaining nuclear power capacity in 2021 and its remaining three plants are scheduled for retirement this year. 

Europe is stuck between two rocks. It’s stuck paying exorbitant prices for natural gas, and massive investments made in renewable power have left the E.U. It is in an endless boom-bust cycle that weather-driven generation. Some of the most cold weeks also have the lowest levels of wind and sunlight. 

Although efforts continue to remove coal’s remaining capacity, coal plays an integral role in helping us navigate the crisis. As Bloomberg reported just this week, “Coal will play a vital role in helping to keep the lights on in Europe this winter… The latest example of the fuel’s importance came on Monday as U.K.’s usage peaked at its highest level since March to help plug a gap in supplies.” 

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Germany saw coal’s importance increase in November and December with power generation increasing 16% over a previous year. And in Spain, a coal plant forced into retirement three years ago has been given new life to keep the lights on and reduce gas consumption. 

There’s no getting around it. Europe’s energy crisis is a failure of policy and a clear case study of the danger of disassembling the stability that comes with fuel diversity in a misguided, rushed and irresponsible approach to the energy transition. This is a warning that America’s energy and climate policies must heed. It will be interesting to see if policymakers are able to learn the correct lessons. 

Real Clear Wire granted permission to syndicate.

Conor Bernstein, vice president communications, is with the National Mining Association. 

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