Germany: A Cautionary Tale

Richard Fernandez recently wrote about Germany's famous (and infamous) Energiewende policy program, whose object was to transition the country away from low-carbon natural gas and effectively zero-carbon nuclear energy, but whose consequence has been to replace them with carbon-intensive coal while getting the country addicted to Russian oil and gas. The irony of this is something we've touched on before at The Pipeline, as when we pointed out the fact that Germany, an inspiration to environmentalists the world over, has been "bulldozing forests for the purposes of mining coal," at the same time as the purportedly evil empire of America, governed by a cabal of grasping oil executives in smoke-filled rooms, has led the world in total emissions reduction since the year 2000.

In a more just world, tree-huggers everywhere would be celebrating the fracking revolution rather than obsessing over environmentally questionable solar panels and biomass. But, as Fernandez discusses, while we could all see how badly the Energiewende was going -- the Wall Street Journal called it the "world’s dumbest energy policy" years ago -- the war in Ukraine upped the ante considerably. Read his piece for the key details, but one point worth emphasizing is the tremendous economic bind German environmentalism has put the country in. While well-intentioned bleeding hearts the world over have been calling for a total embargo of Russian energy exports, the German government's economic advisors have been pointing out that such an action would lead to a significant contraction of the German economy. Reuters:

Germany would face a sharp recession if gas supplies from Russia are suddenly cut off, the country's leading economic institutes said on Wednesday, and the government said the war in Ukraine poses "substantial risks" for Europe's largest economy. A sudden stop in Russian energy supplies... would slow economic growth to 1.9 percent this year and result in a contraction of 2.2 percent in 2023, they said.... "If gas supplies were to be cut off, the German economy would undergo a sharp recession," said [the Kiel Institute's] Stefan Kooths.... The cumulative loss of gross domestic product (GDP) in 2022 and 2023 in the event of a such supply freeze would likely be around 220 billion euros ($238 billion), or more than 6.5% of annual economic output, the five institutes said.

All you need is a little
Latvian blend."

In fact, it has been reported that for all of their anti-Russian rhetoric, energy starved European nations have been looking for ways to get around the sanctions imposed on Russia in the wake of the invasion. One popular loophole involves the blending of Russian petroleum products in foreign ports with those sourced from other countries. If less than 50 percent of a barrel comes from Russia, it can be sold under a different flag. "Latvian blend" oil has become the euphemism of choice for this product, as Ventspils, a port city Latvia, is where much of this mixing takes place.

There's a take-away from all of this for the United States, Canada, and any other free (or relatively free) nation blessed with natural resources. That is: if you want to control your own destiny, don't follow Germany down this road. It was laid out for them by anti-human, anti-civilization nihilists, and the cost has been astronomical. They exist in our nations too, and they have amassed considerable power. But if we care about our future, it is imperative that we give them the cold shoulder. We need to start putting our interests first, and not empowering "humanitarians" whose efforts inevitably benefit the bad actors of the world.

Germany's 'Renewable Energy' Policy: Who's Laughing Now?

In 2019 Germany announced an ambitious "climate change" goal: by 2022, it would close its last nuclear power plant and by 2038, stop burning coal altogether. The Wall Street Journal called it at the time the "world’s dumbest energy policy," but the Germans said it was all part of the Energiewende (German for 'energy turnaround') the ongoing transition to a low carbon, environmentally sound, reliable, and affordable energy supply. Then an event occurred in 2022 which demonstrated how much Green energy was politics. Russia invaded Ukraine.

The repercussions of the invasion rippled like hydrostatic shock through the whole fabric of the European "climate change" agenda. At a stroke the war made natural gas from Moscow on which Germany was dependent politically toxic and killed sacred cows like the Nordstream 2 gas pipeline overnight. Chancellor Olaf Scholz, addressing Germany’s parliament, promised he would "create strategic energy reserves while shifting energy purchases away from Russia." Germany took steps to revive its nuclear power industry by extending the life-span of its remaining nuclear power plants. Even coal was back on the table for Europe, as politicians mooted keeping anything that could produce power going. "All options must be on the table," said the German Economic Affairs and Energy Minister.

Biking may be your best bet, Germany.

But sheer habit and inertia die hard. From the start the Green agenda fought back. John Kerry warned the Russian invasion of Ukraine would worsen climate change. "The top White House climate official said a negative impact of a Russian invasion of Ukraine would be that it sidelines efforts to curb emissions worldwide." Despite the fact that fuel was a basic necessity and Europe's immediate problem was how to get energy from anywhere, such was the power of Green that U.N. Secretary General António Guterres specifically warned against quickly replacing Russian oil if it would "neglect or kneecap policies to cut fossil fuel use."

Trapped between Scylla and Charybdis, Europe's compromise strategy was to "diversify gas supplies to reduce reliance on Russia in the short term... but ultimately to boost renewables and energy efficiency as fast as technically possible."  In effect Europe would try to solve the energy shortage caused by its renewables policy without politically abandoning the climate change ideology.

The first step to walking this tightrope is European energy rationing. Although no specifics have been announced, proposals include include lowering speed limits and introducing car-free Sundays in large cities.  Rationing is being sold as both good for the planet and bad for Putin -- a win-win. "This point is about trying to bring down demand for fossil fuels — this is our true and effective weapon against Vladimir Putin,” a Cambridge University academic said.

But on the supply side there were few quick fixes to the problem of storing the output of wind and solar energy, even assuming that enough could be generated by these means. "The ability to cheaply generate, transport and store a clean replacement fuel like hydrogen to power trucks, cars and airplanes remains years away... [the] chief technology officer of the offshore wind unit at Siemens Gamesa, said that companies like his 'are now forced to do investments based on the prosperous future that we are all waiting for'."

A similar challenge faces the electric grid for it to universally replace the internal combustion engine. By dint of emergency efforts Europe hopes to have a hydrogen infrastructure in place by 2030 -- eight years from now -- a gargantuan task. Green requires a complete overhaul of how people live -- digitalization, smart grids and meters, flexibility markets, the electrification of transport, charging points -- the works. All of it is necessary to store wind and solar power and get it to the consumer.

The triumph of hope over experience.

However exhilarating this transformative vision is, not every country is willing to put all its eggs into the Green basket. Britain and France, perhaps harboring secret doubts, plan to invest in small, new technology nuclear reactors. The normally left wing Guardian ran an op-ed proclaiming "we need to revive the U.K.’s nuclear industry." But even with a change of heart plants take time to build and in the short term Europe has no choice but to import fossil fuels from non-Russian sources, principally the U.S. and the Middle East if it is to avoid economic catastrophe.

From Angola to the U.S. gas is heading for Europe. "Toby Rice, who runs the U.S. largest natural gas producer EQT, told the BBC the U.S. could easily replace Russian supply... He estimated the U.S. has the potential to quadruple its gas output by 2030... U.S. Energy Secretary Jennifer Granholm urged the country's fuel industry to pump more oil. 'We are on a war footing. That means you producing more right now, where and if you can'." Energiewende may not be "world’s dumbest energy policy" but only because it can repudiate itself.

The nearly comic irony of progressives being in the "drill baby drill" situation is hardly ever pointed out, it being considered bad form to do so. But it may be useful to recall that Germany's delegation at the U.N. General Assembly once laughed during then-President Trump's speech when he suggested that Germany was becoming “totally dependent” upon Russian energy, as shown in this video from the Washington Post. With the benefit of hindsight there's no denying that mistakes were made regarding Russia's suitability as a Green energy partner. Even Mitt Romney pointed out the growing threat posed by Putin during his 2012 presidential campaign against Obama but he too was laughed to scorn. It's fair to say that nobody's laughing now.

European Decline '22: Gradually, Then Suddenly

Two stories dominate the headlines this week in Britain and Western Europe: Will Boris Johnson survive in Downing Street and power? And will the Russians invade Ukraine? They’re very different stories, but both are interwoven with the longer and ultimately larger story of the growing energy crisis in Europe and the world. It’s a larger story because economic growth, living standards, and even civilization itself depend on the availability of reliable cheap energy. It’s a longer story because the current crisis is the delayed outcome of feckless and irresponsible energy policies (camouflaged by dreams of Green utopianism) that European governments have been increasingly pursuing since the end of the Cold War.

A few days ago, Bloomberg’s energy correspondent, Javier Blas, tweeted out that day’s snapshot of the European energy situation:

Shocked? Alarmed? But wait. Maybe the Irish who pride themselves on their Green and European virtues tell a better tale? Alas, Blas continued:

Ireland is quite shocking: coal is accounting for 20 percent of power production this cold, windless morning; natural gas is doing another 45 percent, and fuel-oil (yes, you read that right) an extra 16 percent. In total fossil fuels are accounting for almost 90 percent of the country’s electricity now.

There were unhappy responses from the Green twitterati to these home truths along the lines of: Why not tell us about the days on which the sun shone and the winds blew and “renewables” generated lots of cheap energy? But they were missing the point. Renewables, natural gas, oil, coal, hydro, all generate cheap energy (nuclear does not). Except for renewables, however, the energy they provide is also reliable. That’s why they have to be on-stream when wind and sun fail and the energy that renewables then don’t generate has to come from other sources. That’s been happening in Europe a lot in the last few months.

Failure is, in fact, an option.

Why? Europe’s central problem is that its collective policy of switching from cheap fossil fuels to unreliable renewables can work only if the latter get large subsidies. These can be financed either honestly from the taxpayer in higher taxes or sneakily from the consumer in higher electricity bills. Either way they add to the cost of living. In addition, as economists used to know, planning such complex interventions to manipulate market signaling invariably goes wrong at some point and produces either a glut or scarcity. At present it’s scarcity. and therefore energy prices are soaring across the continent afflicting both the wise and the foolish virgins.

Almost all European countries are complicit in these failures. As often happens, though, the biggest countries are the most complicit because they are the most influential. They cause the problems from which everyone suffers.

Take Germany. Former German Chancellor Angela Merkel retired from politics in November last year amid glowing tributes as, in the words of the Economist magazine, “the indispensable European.” In reality she is the European most responsible for the wretched state of Europe’s energy market. She was responsible for five massive policy errors in her years in power, including refugee policy and opposition to reforming the Euro, but her two errors that  concerned energy now look the most damaging and the most consequential.

First, her decision to close down Germany’s nuclear power program—which she took “almost alone”—and replace it with energy from renewables has meant that coal-rich Germany uses more “dirty” coal to handle the problem that renewables don’t provide energy on schedule. It has also ensured that German energy prices are now the highest in Europe. According to one German source, household energy costs will rise by 37 percent by the end of 2022.

Auf Wiedersehen and good riddance.

Second, her determined support of the Nord Stream pipelines under the Baltic Sea over the objections of both Washington and Brussels, increased Germany’s and Europe’s over-reliance on Russian energy. And as we see in the current crisis, that enables Putin to use energy pricing and supplies as weapons against Poland and Ukraine—and to create a European political crisis by setting German economic interests (and now even needs) in opposition to NATO’s strategic unity and dividing the alliance.

It’s difficult to decide which of the two decisions has had the worse consequences.

By comparison French President Emmanuel Macron has a much easier problem to solve because his country “went nuclear” under previous presidents. As a result France has a far more reliable domestic source of energy in nuclear-power stations and is far less vulnerable to shortages of supply and price shocks in the international energy market.

But when prices are rising so sharply in those markets, as they are, France is not entirely invulnerable either. Its finance minister, Bruno Le Maire, warned that without official intervention of some kind, energy prices to the French consumer would rise by 37 percent this year which, inconveniently for the French president, is an election year. Macron has therefore imposed an energy price cap of four per cent.

It’s “naked unashamed populism” according to the Telegraph’s Ben Marlow who goes on to point out that Macron doesn’t want rising fuel prices to invite riots from the gilets jaunes in an election year—the election is due in April.

More to the point, it's a bad economic decision since it will encourage excessive use of energy, build up popular support for the price cap, and make it difficult to abolish it, even after the election, because that would mean accepting responsibility for a large rise in electricity prices. As long as it lasts, however, its huge costs will be borne by the state-supported nuclear supplier, EDF, its investors, the taxpayers, and ultimately by France’s nuclear industry which needs more capital investment to update the very ageing power stations that give France its energy advantage over other European countries. But Macron can afford it, and since he might win an election by doing it, he didn’t hesitate.

Suicide, she wrote.

Boris Johnson can only envy him. He is facing the political crisis of a lifetime amidst an economic crisis of rising energy prices and shrinking energy supplies. That  is the cumulative result of successive governments which pursued the dream of total decarbonization while failing to invest in an energy security guaranteed by many sources of supply, in particular domestic sources of reply as in France. Theresa May inherited the policy of Net-Zero decarbonization but she then made it worse—more expensive and requiring greater sacrifices from the voters.

Boris himself is similarly culpable because, having originally supported the fracking of natural gas—which is plentiful in Britain and the surrounding seas, the greenest fossil fuel, and possesses numerous other advantages—he junked the commitment to license its development in 2019 to win Green votes. He needs his government to reverse that decision if the lights are to stay on and the gas heaters to warm Britons through the winter. If not, he'll be out in the cold himself, perhaps as soon as next week when the Gray Report is slated to be released.

The larger lesson was delivered by Lord Frost, the cabinet minister who negotiated a mainly favorable Brexit deal for Boris, via an interview with the London Times this week: Boris needs to immediately clear out “all the neo-socialists, green fanatics and pro-woke crowd” in Downing Street if he wants to save his premiership. Lesson? Personnel is policy.

And if Boris doesn't keep in Number Ten, the same lesson will need to be read to his successor. Europe's energy policies are a recipe for destroying governments. So far the governments don't seem to have realized that.

Unlike Trump, Biden Puts Moscow First

Over at Newsweek Josh Hammer has a good piece on the Biden Administration's capitulation on Putin's Nord Stream 2 pipeline which, among other things, highlights the American Left's Russian schizophrenia.

We all remember the Obama years which brought us the Hillary Clinton "Russia Reset'" button; then- President Obama's famous debate smack down of Mitt Romney for his pugnacious attitude towards Moscow, "The 1980s are now calling to ask for their foreign policy back;" and Barack's assuring Dmitry Medvedev that he would have “more flexibility” in dealing with his country once the election was over. Things were all candy and flowers.

Then came the 2016 election, which saw Trump, like every U.S. president going back to Reagan, indicating a preference for improving relations between the two powers. The Left lost its collective mind in response, to the point that watching Rachel Maddow's nightly show got to be like hanging out with Joe McCarthy while he was on a bender, only a lot less fun.

Hammer does a good job of illustrating how little their accusations actually matched the facts on the ground:

The irony is that Trump, on the actual substantive merits, toed a very hawkish line on the Russian Federation. He shored up missile defense in Central and Eastern Europe, which the Obama administration had undermined.... He repeatedly stood strongly with America's ex-Iron Curtain allies, delivering a powerful, Reagan-esque 2017 foreign policy speech in Warsaw that was aimed squarely at Moscow. He unilaterally withdrew the U.S. from certain bilateral and multilateral accords... that buttressed Russia due to the simple fact that it did not comply and America did. Trump also adamantly opposed and issued strong sanctions to try to prevent the construction of the Nord Stream 2 pipeline."

That was because Nord Stream 2 would, as I wrote in May, increase Germany's addiction to Russian energy (since their own electricity rates have skyrocketed due to their foolish Energiewende program), replenish the Kremlin's coffers that had been hurt by several years of low energy prices as well as Covid, and alienate our Eastern European allies who are understandably anxious about Russian domination.

Hammer calls Biden's decision to greenlight the project "a stunning about-face." After all, the president never shied away from the Dems' constant assertion that when Trump said "America First" he really meant "Moscow First." Biden frequently calls Putin a "KGB thug," and claims to have once looked him in the face and said "I don't think you have a soul." And on Nord Stream 2 specifically, the Biden administration frequently reiterated that their position is essentially that of the last administration, right up until the day before it changed completely.

So who does this benefit? Putin, obviously, as well as the Merkel government, whose energy failures can be papered over with Russian oil and gas. And who loses out? Aside from America's allies in the region, the biggest losers are America's natural gas exporters, who are effectively locked out of a key European market.

So tell me again, which president actually puts Moscow first?