'The Lamps Are Going Out All Over Europe'

German Chancellor Olaf Scholz was in Canada recently begging Justin Trudeau for Liquified Natural Gas. “Canada is our partner of choice,” said Scholz, adding “we hope that Canadian LNG will play a major role” in his country's attempt to wean itself off Russian energy.

Trudeau was characteristically dismissive, saying there has “never been a strong business case” for exporting Canadian LNG to Europe. Of course, he was also letting himself off the hook for his government's entrenched anti-resource-sector policies: Canada currently has not one single LNG active export terminal, and Canada's regulatory framework is responsible for the outright rejection of sixteen of the eighteen proposed terminal construction projects since Trudeau took power. In any event, Scholz had to content himself with a far less value hydrogen trade agreement.

Humiliating, but what else could he do? Beggars can't be choosers, and Germany is very much a beggar. As we've discussed before, Germany's mad environmentalist politicians pushed the country into transitioning to "renewable" energy sources which don't produce anywhere near the amount of power necessary to run a first world country, let alone the largest economy in Europe. The only way to make the transition "work" was to import large amounts of Russian gas to make up the difference. Now they're trying to break their reliance on that so as to comply with Western sanctions imposed in the wake of Russia's invasion of Ukraine, and it isn't going well.

And Russia knows it -- that's why they've cut down LNG flows to Germany by 60 percent, blaming mechanical problems while ostentatiously burning $10 million worth of natural gas per day at the mouth of the Nord Stream pipeline rather than sending it to Germany. It's their way of reminding the Germans who really needs whom. Putin can afford to cut them out because western sanctions have contributed to a worldwide energy scarcity, driving up prices significantly to nobody's benefit but Russia's.

The story is much the same throughout the continent -- in Poland people have been lining up in their cars for multiple days in the hopes of buying rationed coal to get them through the next several months (the E.U. has also embargoed Russian coal imports). The manager of Finland's power grid has begun telling the country to "prepare for shortages this winter." The British were recently informed that their heat and energy costs would increase by 80 percent as of October 1, and their national grid managers, too, have begun to talk more about shortages than cost.

Belgian Prime Minister Alexander De Croo recently said that Europe could be looking at ten years worth of tough winters, as far as heat and power were concerned. Dutch energy prices are currently sitting at "15 times the average for this time of the year," according to Bloomberg. Italy, which is also heavily dependent on Russian energy, is already on the brink of a debt crisis -- what will their economy look like after months of rolling black-outs, frozen pipes, and freezing people?

Sir Edward Grey in 1915: déjà vu vu all over again.

French President Emmanuel Macron speaking of the difficult months ahead, asked his countrymen to “accept paying the price for our freedom and our values,” referring to the cost of Europe's unreservedly supporting Ukraine in its conflict with Russia. Andrew Stuttaford rightly points out that "European voters are... entitled to wonder why they should continue to support politicians who left them so exposed to Russian blackmail in the first place." He's got that right -- this crisis has been brought about almost entirely by a western elite who cared more about rubbing elbows with Greta Thunberg and her comrades than about their national interests or the welfare of their countrymen.

It looks like they're about to get their reward.

There's No Green Way of War

When last heard from, I was pointing out that Vladimir Putin’s invasion of Ukraine, though undoubtedly a monstrous crime by every decent standard, had produced one worthwhile consequence. It had forced the political leaders of the Western world to be much more realistic about their policies on energy. The first expression of this realism was the strategic decision of several European countries, above all Germany, to reduce their dependence on Russian oil and gas.

There’s been more talk than action on this front since February 24, with commitments followed by qualifications, but European governments now seem on the verge of agreeing upon a collective plan to substantially cut their demand for cheap Russian energy. That will have a massive impact on the world’s energy markets with innumerable secondary effects that we can only dimly foresee but which we will shortly be experiencing.

Among them, however, is that this decision will complicate even further what is the invasion’s second major consequence for energy policy—namely, it has made the legally-binding commitment by Western governments to a Net-Zero policy of reducing carbon emissions by 2050 completely unrealistic so that it will have to be substantially re-thought.

Governments aren’t good at rethinking bad policies even when they’re minor policies, and Net-Zero isn’t a minor policy. Once President Biden entered office, every government in the West had committed itself to Net-Zero policies and Boris Johnson had held a vast international conference to make that commitment as dramatic and as unsayable as possible.

In happier times: David Attenborough and Boris Johnson.

You see the problem. If you nail yourself to a sinking ship, you must learn not only how to swim but also how to remove nails from planks. That’s too embarrassing for modern Western governments to admit publicly. They want to combine—and camouflage—these two exercises with lectures on the unchangeable necessity of nails remaining in planks. Accordingly, as the priorities for energy policy change in order to resist Putin’s Russia, all the secondary policies that Net-Zero requires are trundled out to establish the falsehood that energy priorities remain unchanged and unchangeable. The result is what’s known as “cognitive dissonance” or following contradictory policies simultaneously.

Here, for instance, is a recent report from the Guardian via Yahoo News that Northern Irish farmers have been instructed to cull their herds by more than 500,000 cattle and 700,000 sheep to reduce methane emissions (from cow and sheep farts) in order to meet “legally binding climate targets” required for Net-Zero. You may have missed this news. Understandably. But you are more likely to have come across two much bigger current news stories.

The first is that Britain is fighting a major diplomatic war with the European Union over the Northern Ireland protocol that imposes an internal United Kingdom customs barrier in the Irish Sea damaging to, among others, Northern Irish farmers. The second is that the British people are facing a massive “cost of living” crisis as the bills for Covid, lockdown costs, and Net-Zero regulations cascade onto the U.K. Treasury which promptly passes them onto the voters in the form of higher taxes and soaring energy bills. Both these crises will now be made worse for British people, and in particular for the farmers in Northern Ireland, by the need to abide by Net-Zero policies even though they’ve been made irrelevant by the post-Ukraine energy re-think.

The farmers will face serious loss of income, the government will be mired in a political crisis, and the hard-pressed U.K. consumer will have to pay higher prices for beef and lamb—when he or she can find them that is, since the (quietly stated) aim of the policy is to get people to eat less meat by providing less of it in supermarkets. In practice many people will reduce other purchases in order to continue eating the same amounts of meat at considerably higher prices. The cost of living crisis will be aggravated, tax revenues will fall, and market signals will be replaced by administrative commands--with the usual results. A policy of making people poorer turns out to be quite expensive—as the next news story shows in spades.

In happier times: beef on the hoof.

Britain has a National Infrastructure Commission—not many people know that—which is looking at ways to fund the change from heating homes with gas boilers to doing so with ground-based electric heat pumps. It will offer the government its advice next year, but the NIC chairman, former Whitehall mandarin Sir John Armitt, has kindly given us a preview of how its collective mind is working.

He told the Daily Telegraph that a ban on new gas boilers would have to be imposed in order to force consumers to buy heat pumps instead. In his own mellifluous words:

 Why would you move to a heat pump at somewhere between £5-£15,000 as long as you can buy or exchange for a new gas boiler for £1,500? The only way that you can make such a significant shift is by saying, well, ‘from a particular date, you will not be able to buy a new gas boiler’.

Good question—and one that the political class answered some time ago in Whitehall but that the voters are really being asked for the first time. Not unfittingly therefore Sir John replied to himself as follows:.

As long as we hold 2050 net zero targets, close to our hearts, there is going to be a tension. Because to get to that point, it’s going to require very big long-term decisions which will cost money. And then at the same time, no politician wants voters on its back because the price of energy is going up. So yes, there is a tension, which requires a very honest debate and discussion. [My italics]

The most honest response to that is that the only people in Britain who seriously hold Net-Zero targets close to their hearts are senior civil servants and the kind of radical environmentalist protesters who glue themselves to the road and obstruct traffic in preference to rational argument. Government ministers used to be in that category, but the Russo-Ukraine war is forcing them to confront the facts of life and death and of politics too.

In energy policy the facts are that the West can’t afford to sustain Ukraine in its resistance to Russia by relying either on Russian supplies of oil and gas or on renewable energy sources such as wind and sun. Both are inherently unreliable. Inevitably, therefore, we will be later in switching to renewables, using fossil fuels for longer than we had planned, and looking for new sources of fossil fuels and employing new methods such as fracking to do so.

In short we will gradually abandon—or in the softer language of bureaucracy—extend the Net-Zero targets to a later date. That being so, why do we prevent people eating what they wish and force them to spend large sums on expensive heat pumps that—final piece of honesty—don’t actually warm their homes as well as the heaters they already have. It shouldn't cost so much money simply to save a government's face.

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.