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Thursday, October 18, 2018

The Energy Disconnect

'A Compendium of Political Rhetoric v Energy Realities' by Michael Economides, Editor-in Chief of the Energy Tribune, and Peter C Glover, Europe Associate Editor of the Energy Tribune.

You couldn't make it up even if you tried. One day the UK Energy Secretary Ed Milliband sets out his proposed expansion of the UK's wind power-led alternative energy revolution, the next, Vestas, the UK's largest wind turbine manufacturer, closes for business citing "low demand" and public opposition to onshore wind farms.

Just bad luck or bad PR? Not quite. Simply another blatant example of the on-going 'disconnect' over energy between those suffering from WTS (Wishful Thinker Syndrome) and the hydrocarbon-fuelled present and future energy realities.

In 2006 Germany's Angela Merkel was hailed as the 'Green Chancellor' for promising to rid her country of coal and nuclear power in its bid to give a clean energy "world lead".  Three years on and Merkel's government actively supports the construction of a new generation of 26 coal-fired power plants as well as keeping Germany's nuclear power stations open. In addition she wants special protection for German heavy industry via free cap and trade permits.  A powerful German industry, the need to remain competitive and a desire to work with the lights on, all combined to help Ms. Merkel 're-connect'.

In 2008, Italy, to everyone's surprise, reversed its decades long 'no nuclear power stations' policy in the interest of their power needs. And Italy's PM Silvio Berlusconi, along with leaders from Austria, Poland and a rolling bandwagon of other countries, also now demands protection for its heavy industry when it comes time to handing out free cap and trade permits. 

Across in the UK, the government has been wriggling out of its 'clean energy' commitments for years as the country inches towards building an urgently needed new generation of coal-fired power plants. To help critics swallow the bitter pill of yet more coal usage, the UK Government is subsidising 'clean coal' technology strategies via CCS (Carbon Capture Sequestration). But adding USD 1 billion to the cost of each plant for a hugely speculative unproven technology has already created a politically paralysing impasse in the UK energy strategy. The spectre of the UK facing "South African-style power cuts" and being plunged into "third world darkness" now looms. Hence the UK's grand wind power plan.

Unfortunately, last December, the British Wind Energy Association (BWEA) was forced to scale down its calculation of harmful CO2 emissions "displaced", from 860 to 430 grams for every kilowatt hour of electricity produced. In fact, with less than 2400 wind turbines in operation across Britain currently, the UK would still require a further 100,000 to meet its targets. Plenty of scope for massive wind turbine growth we might think. So why the Vestas pull-out?

Not that Eurocrats are easily deflated by wind power facts on the ground. Speaking at a key European wind power conference in March 2009, EU Energy Commissioner Andris Piebalgs, claimed, "Wind energy can replace a large proportion of the polluting and finite fuels we currently rely on. It makes good sense to invest in indigenous sources of power which hedge against unpredictable fossil fuel prices and in which Europe has a real competitive advantage." He added: "Wind energy is Europe's contribution to peace, progress and prosperity."

Mr Piebalgs' claims entirely epitomise the energy disconnect. As Michael J. Trebilcock has shown, wind power is a complete disaster with the much-vaunted 'Danish green energy miracle' turning out to be a well-worn myth in an industry that would blow out tomorrow without on-going and massive public subsidy. And all this is for an energy source that will, in the next few decades, provide only a tiny amount of the world's power.  


For all the political bluster, the best energy estimates suggest that by the year 2030 energy demand will rise by a further 50 percent and that oil, gas and coal will still fulfill more than 85 percent of the world’s energy needs.  Shell has dumped its alternative energy programme (except for biofuels) in part of a broader trend of European alternative energy companies already heading their ‘wagons’ West, drawn by the far richer cash pickings in prospect on the new frontier of President Obama’s stimulus billions.  Germany’s Repower US subsidiary has just relocated its US HQ to Denver, Colorado to take full advantage of the “supportive business climate” – read government cash – along with (surprise, surprise) Vestas, late of the UK.

The UK's Prince of Wales ruminates that, "Capitalism and consumerism have brought the world to the brink of economic and environmental collapse". The Prince adds, "The age of convenience is over." As international columnist Mark Steyn comments, "The Prince then got in his limo and was driven to his other palace." 

Today, the Obama White House is recycling all the same European political energy rhetoric so familiar to Europeans.  Much of the Administration’s energy rhetoric seems to worry about the one percent solution that wind and solar may provide, in perhaps 20 years, and not about the 85 percent question: how is America’s energy supply of oil, gas and coal will be secured?  


Not to be outdone in slogan-style exaggeration, Secretary of the Interior Ken Salazar, on April 6 in Atlantic City to discuss America’s offshore energy resources, in what the Wall Street Journal characterised, “raised eyebrows when he said offshore wind farms could replace 3,000 coal-fired plants.” We have only 600. He also claimed that offshore Atlantic could deliver wind electricity equal to 1,000 gigawatts. That’s the entire electricity generation capacity of the United States. Yet, the US has its own instructive case study. One day billionaire T. Boone Pickens has a Grand Wind Plan for Texas, with further plans to forest the nation with turbines "from Canada to Mexico." The next, T. Boone drops his wind plan in favor of ... a hydrocarbon (natural gas) solution instead.   


There is another important issue. With multiple, multi-billion dollar oil and gas deals that the Chinese have struck in just the past several months from Russia, to Argentina to Australia and Iran, almost overnight, the United States and the European Union are been reduced to mere bystanders while in front of their very eyes China moves into the big geopolitical leagues. This, without a fight, will lead to a transfer of political and economic power that the modern world has rarely seen.

There may be hope. As we have seen, national leaders will ultimately refuse to impoverish their industries even to "save the planet." The still 'disconnected' flower power generation and its idealistic offspring would do well to grasp that the energy future is not green it is hydrocarbon, and will continue to be for another century, at least. Perhaps it's just that we have yet to learn a language they'll understand?  Maybe we should run the energy stats past them one more time, make a peace V-sign and (gently) ask: "Re-connected yet, man?".


Contact: Bill Box