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Germany’s Coal Commission Won’t Solve Europe’s Power Struggles

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By the end of this year, the German government’s “Commission on Growth, Structural Change and Employment” (known more simply as the coal exit commission) has been given a unenviable task. The thirty or so individuals who will sit on it must map out the end of coal power in Germany, determine how the German economy can cut emissions to meet climate targets, and find ways to soften the blow to German coal regions.

This would qualify as a monumental remit under any circumstances. As the recent controversy over commission co-chair Ronald Pofalla’s proposal shows, overcoming the influence of the German coal sector will be no easy task. Germany, however, presents one additional challenge that will make it far more difficult for this commission to find an optimal solution for the nation’s energy security: an irrational fear of (and opposition to) nuclear energy that Berlin has transformed into official policy and is now trying to impose on the rest of Europe.

From a purely domestic perspective, Angela Merkel’s 2011 decision to shut Germany’s nuclear plants and rely on coal instead (ostensibly on safety grounds) has made her countrymen less safe, not more. Two years after the decision, in 2013, over 3,600 people in Germany died for reasons related to coal – a higher rate than any other EU member state. Just over half of those deaths were attributable to coal use in Germany itself, but nearly 1,800 of them could be traced back to coal burned in other EU countries.

While that human cost is tragic, it should hardly have come as a surprise. In that same year, a NASA study co-authored by James Hansen (a pioneering figure in the science of global warming) found that use of nuclear energy over fossil fuels had saved 1.8 million lives worldwide between 1971-2009. While the German public fears the theoretical danger of a (highly unlikely) nuclear accident, the lignite and hard coal that together provide 36.6% of their country’s energy mix are responsible for thousands of premature deaths every year.

Instead of pushing its own industries and its neighbors towards less polluting power sources, the German political class has spent the past several years sheltering domestic coal interests while Merkel’s government pressures other EU member states to follow its now militantly anti-nuclear lead. Their most immediate target: the Czech Republic.

Germany is currently trying to bloc Prague from expanding its Temelin nuclear power plant, working in tandem with Austria – which is so anti-nuclear it sued Britain over state aid to Hinkley Point C and is suing the EU for letting Hungary move ahead with its Paks II plant. The Czech Republic, already behind on its emissions targets, has limited renewable energy potential and would be forced to resort to burning more fossil fuels without nuclear energy. The 2015 State Energy Policy calls for nuclear power to provide somewhere between 46-58% of Czech electricity by 2040. To reach that target, however, Prague will need to overcome opposition from Berlin and Vienna to obtain exemptions from the EU laws governing government bids.

Temelin is just one of several European nuclear energy projects that have transformed into lightning rods of interstate tensions, and Germany and Austria are not the only EU member states subtly advocating for fossil fuels. The polemic surrounding the Astravets nuclear energy plant on the Lithuania-Belarus border offers another example of how European debates over nuclear energy often have only tangential links with reality.

Lithuanian lawmakers have sought EU support to block Astravets, built with Russian technology, on the grounds it constitutes a threat to their national security. Vilnius consistently raises the spectre of Russia using the plant as a geopolitical weapon. Not only has Lithuania vowed to prohibit energy exports from Astravets to counter this perceived threat, but also seeks to disconnect from the BRELL agreement governing its electric grid entirely. BRELL has regulated the Lithuanian grid – along with those of Estonia, Latvia, Russia, and Belarus – since the end of the Soviet Union.

The three Baltic countries now plan to join a more “European” network, which is to say reinforcing existing links with the Nordic countries and Poland. Desynchronizing from BRELL will cost €800 million, and the EU will have to bear much of the cost.

The countries justify this transition by raising the specter of Russian “energy blackmail” leveraging their shared electric grid. As one expert recently made clear in the National Interest, however, Lithuania has more than enough installed power capacity (counting both domestic capacity and imports from its neighbors in Sweden and Poland) to provide a healthy security margin in the event of any disruption. Lithuania’s peak winter load is estimated at no more than 2.3 GW. Between its own generation capacity and the power provided by the LitPol and NordBalt, it has 3.2 GW of capacity entirely independent of its eastern neighbors.

Lithuania’s complaints that Astravets cut nuclear safety corners follow a similar pattern. The plant recently passed EU stress tests and has also gotten the green light from a number of IAEA missions. In 2016, the IAEA’s director Yukiya Amano singled Belarus out as one of the most advanced “newcomer” countries developing nuclear energy.

Most importantly, staunch Lithuanian opposition to Astravets – like the German public’s opposition to their domestic nuclear capacity – ignores the benefits of the plant’s low-carbon energy to the benefit of polluting fossil fuels. Lithuania closed its own Ignalina nuclear plant (which provided 70% of the country’s electricity) at the EU’s behest in 2009. To make up for the resulting shortfall, Lithuania has since launched a liquefied natural gas (LNG) terminal at Klaipeda and is now supporting importing LNG from the United States to ensure a diversified supply.

Between them, Germany, Austria, and Lithuania form three members of a growing European club whose efforts, if successful, will effectively torpedo one of the EU’s best clean energy bets. While policymakers in Berlin, Vienna, and Vilnius may claim they are acting in the name of safety, their discreet advocacy of fossil fuels has direct human costs that far outweigh the hypothetical threats they are supposedly protecting Europe against.

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U.S. Government Likely Perpetrated Biggest-Ever Catastrophic Global-Warming Event

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On September 28th, the AP headlined “Record methane leak flows from damaged Baltic Sea pipelines” and reported that “Methane leaking from the damaged Nord Stream pipelines is likely to be the biggest burst of the potent greenhouse gas on record, by far. … Andrew Baxter, a chemical engineer who formerly worked in the offshore oil and gas industry, and is now at the environmental group EDF …  said, ‘It’s catastrophic for the climate.’” The article pointed out that methane “is 82.5 times more potent than carbon dioxide at absorbing the sun’s heat and warming the Earth.”

Russian President Vladimir Putin had been aiming ultimately (and maybe soon) to get the gas to Europe flowing again, and said to EU nations on September 16th, “Just lift the sanctions on Nord Stream 2, which is 55 billion cubic metres of gas per year, just push the button and everything will get going.”

Here is what U.S. President Joe Biden had already promised about that on February 7th:

If Germany — if Russia invades — that means tanks or troops crossing the — the border of Ukraine again — then there will be — we — there will be no longer a Nord Stream 2.  We will bring an end to it. 

Q    But how will you — how will you do that exactly, since the project and control of the project is within Germany’s control?

PRESIDENT BIDEN:  We will — I promise you, we’ll be able to do it

He had promised to cause permanently the end of Nord Stream if Russia invaded, which it did on February 24th. He fulfilled on that promise on September 27th.

Radek Sikorsky, who is a Member of the European Parliament and had been Poland’s Foreign Minister and is the husband of the famous writer against Russia Anne Applebaum, and has been affiliated with Oxford Universisty, Harvard University, and NATO, tweeted on the day of the explosions, “Thank you, USA.” He also tweeted explanations: “All Ukrainian and Baltic sea states have opposed Nordstream’s construction for 20 years. Now $20 billion of scrap metal lies at the bottom of the sea, another cost to Russia of its criminal decision to invade Ukraine.” And: “Nordstream’s only logic was for Putin to be able to blackmail or wage war on Eastern Europe with impunity.”

Furthermore on September 27th, Germany’s Spiegel magazine reported that, as Reuters put it, “The U.S. Central Intelligence Agency (CIA) had weeks ago warned Germany about possible attacks on gas pipelines in the Baltic Sea” 

On September 28th, SouthFront headlined “No Way Back for Europe” and reported

It is reasonably suspected that the pipeline was blown up by the special services of the United States in order to finally stop the gas supplies to Germany from Russia.

On September 27, a detachment of warships led by the US amphibious assault ship USS Kearsarge reported on the completion of their tasks in the area of the alleged sabotage in the Baltic Sea and headed for the North Sea.

Since the beginning of September, suspicious activity by anti-submarine helicopters of the US Navy has been observed in the area. In the last few days, reconnaissance activities of NATO aircraft have significantly intensified in the Baltic Sea area. In particular, a US Boeing E-3 Sentry reconnaissance aircraft was on constant patrol over the Baltic States, and a US Joint STARS was spotted over Germany and Poland.

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Solar Mini Grids Could Power Half a Billion People by 2030 – if Action is Taken Now

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Solar mini grids can provide high-quality uninterrupted electricity to nearly half a billion people in unpowered or underserved communities and be a least-cost solution to close the energy access gap by 2030. But to realize the full potential of solar mini grids, governments and industry must work together to systemically identify mini grid opportunities, continue to drive costs down, and overcome barriers to financing, says a new World Bank report.

Around 733 million people – mostly in Sub-Saharan Africa – still lack access to electricity. The pace of electrification has slowed down in recent years, due to the difficulties in reaching the remotest and most vulnerable populations, as well as the devastating effects of the COVID 19 pandemic. At the current rate of progress, 670 million people will remain without electricity by 2030.

Now more than ever, solar mini grids are a core solution for closing the energy access gap,” said Riccardo Puliti, Infrastructure Vice President at the World Bank. “The World Bank has been scaling up its support to mini grids as part of helping countries develop comprehensive electrification programs. With $1.4 billion across 30 countries, our commitments to mini grids represent about one-quarter of total investment in mini grids by the public and private sector in our client countries. To realize mini grids’ full potential to connect half a billion people by 2030, several actions are needed, such as incorporating mini grids into national electrification plans and devising financing solutions adapted to mini grid projects’ risk profiles.”

The deployment of solar mini grids has seen an important acceleration, from around 50 per country per year in 2018 to more than 150 per country per year today, particularly in countries with the lowest rates of access to electricity. This is the result of falling costs of key components, the introduction of new digital solutions, a large and expanding cohort of highly capable mini grid developers, and growing economies of scale.

Solar mini grids have become the least-cost way to bring high-quality 24/7 electricity to towns and cities off the grid or experiencing regular power cuts. The cost of electricity generated by solar mini grids has gone down from $0.55/kWh in 2018 to $0.38/kWh today. Modern solar mini grids now provide enough electricity for life-changing electric appliances, such as refrigerators, welders, milling machines or e-vehicles. Mini grid operators can manage their systems remotely, and paidsmart meters enable customers to pay as they use the electricity.  Connecting 490 million people to solar mini grids would avoid 1.2 billion tonnes of CO2 emissions.

Further acceleration is needed, however, to meet Sustainable Development Goal 7 (SDG7). Powering 490 million people by 2030 will require the construction of more than 217,000 mini grids at a cumulative cost of $127 billion. At current pace, only 44,800 new mini grids serving 80 million people will be built by 2030 at a total investment cost of $37 billion.

Produced by the World Bank’s Energy Sector Management Assistance Program (ESMAP), the new book, Mini Grids for Half a Billion people: Market Outlook and Handbook for Decision Makers, identifies five market drivers to set the mini grid sector on a trajectory to achieve full market potential and universal electrification:

  1.  Reducing the cost of electricity from solar hybrid mini grids to $0.20/kWh by 2030, which would put life-changing power in the hands of half a billion people for just $10 per month
  2. Increasing the pace of deployment to 2,000 mini grids per country per year, by building portfolios of modern mini grids instead of one-off projects
  3. Providing superior-quality service to customers and communities by providing reliable electricity for 3 million income-generating appliances and machines and 200,000 schools and clinics
  4. Leveraging development partner funding and government investment to “crowd in” private-sector finance, raising $127 billion in cumulative investment from all sources for mini grids by 2030.
  5. Establishing enabling mini grid business environments in key access-deficit countries through light-handed and adaptive regulations, supportive policies, and reductions in bureaucratic red tape.

The handbook is the World Bank’s most comprehensive and authoritative publication on mini grids to date.

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Price Cap on Russian Oil: The Mechanism and Its Consequences

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G7 countries are working hard to coordinate a sanctions regime to cap prices on Russian oil and oil products. The United States is already drafting a mechanism for applying these sanctions, which its allies and partners will use as a guideline. The new sanctions in the form of legal arrangements are expected to be formalised very soon. How will this mechanism work, and what consequences can this lead to?

An unprecedented range of economic sanctions has been used against Russia since the beginning of the special military operation in Ukraine in February 2022. Their primary aim was to deal the largest possible economic damage to force Moscow to revise its policy and to undermine its resources provision. Since energy exports are extremely important for funding the Russian economy, sanctions against its oil and gas sector were more than just predictable. However, the United States, the EU and other initiators had to act cautiously, because Russia is a major player on the global market. US restrictions on the export of Iranian oil had little impact on the global market, whereas blocking sanctions against Russian oil companies could lead to uncontrollable price hikes. This could accelerate inflation, which was growing fast on the back of COVID-19 and other factors.

Nevertheless, the sanctions noose on the oil sector was tightening. Some sectoral sanctions have been applied since 2014, such as restrictions on loans and on the supply of products, services, technologies and investment in the Arctic shelf oil projects. Blocking sanctions were adopted against a number of co-owners, owners and top managers in the fuel and energy sector. In March 2022, Washington prohibited the import of Russian energy resources to the United States. Canada acted likewise. The EU started with banning Russian coal imports and later spread the ban, with a few exceptions, to oil and oil products. The bans are to come into force on December 5, 2022, and February 5, 2023, respectively. The UK plans to stop the import of Russian oil this year. Overall, Western countries are working to gradually banish Russian oil and oil products from their markets.

However, Moscow has quickly redirected its deliveries to Asian markets, where Western countries cannot easily impose similar restrictions, especially since Russian companies are selling their products with large discounts. The idea of a price cap has been proposed to be able to influence Russian oil prices outside Western countries.

The essence of the proposed mechanism is very simple. The United States, G7 and any other countries that join the coalition will legally prohibit the provision of services which enable maritime transportation of Russian-origin crude oil and petroleum products that are purchased above the price cap. The US Treasury has issued a Preliminary Guidance to explain the essence of the forthcoming bans, to be formalised in a determination pursuant to Executive Order 14071 of April 6, 2022. Section 1 (ii) of the executive order empowers the US Treasury and the Department of State to prohibit the export or re-export of “any category of services” to Russia. The upcoming Determination will explain the ban for American parties to provide services which enable the transportation of Russian-origin crude oil and petroleum products above the price cap. The US administration plans to enforce the ban on oil on December 5, 2022, and the ban on oil products on February 5, 2023, simultaneously with the EU bans on Russian oil imports.

But what is the exact meaning of the phrase “services which enable maritime transportation”? The US will most likely offer an extended interpretation. In other words, such services will include transportation, related financial transactions, insurance, bunkering, port maintenance and the like. This would allow Washington to influence a broad range of service providers outside the United States. For example, the US administration might consider dollar-denominated transactions on oil transportation to fall under US jurisdiction, so that very many players outside the US will face fines or prosecution. Punishment for avoiding the price cap, as well as for using deceptive shipping practices, have been set out in the new Guidance.

It is another matter how strictly the other coalition countries will implement this guidance and how large this coalition can be. The level of coordination within the initiator countries will likely remain very high, which means that the allied countries will do this in accordance with their national legislations. The coalition will include the countries that have already adopted sanctions against Russia.

The biggest question is whether the countries that have not adopted such sanctions, including Russia-friendly countries, can be convinced to join the coalition. The answer is most probably negative, but this will not settle the problem. Despite the official position of the friendly countries, their businesses could surrender to the US demand to avoid the risk of persecution.

The G7 statement and the new Guidance of the US Treasury imply that the sanctions are being imposed out of concern for the international community rather than solely for the purpose of punishing Russia. They say that the price cap is designed to stop the growth of oil prices that have been artificially inflated by the conflict in Ukraine. However, this “concern” can lead to unpredictable consequences.

To begin with, the latest attempt at the political mandating of prices will increase uncertainty, which will further drive the prices up. Prices can grow on expectations of problems with signing deals on the delivery of Russian oil and oil products over excessive compliance, which will lead to temporary shortages. Another problem is that the other oil producers will have to lower prices as well. They will not like this.

In fact, the sellers’ market is being changed into the buyers’ market by artificial political methods rather than for economic reasons.

And lastly, Russia is being forced to become the leader of dumping. Demand for its oil could be higher than for the products of other suppliers, and Moscow can make up for its profit shortfall by increasing deliveries. If the Western countries that prohibit the import of Russian oil and oil products buy other suppliers’ oil at higher prices while Asian countries continue to buy Russian products, this will artificially increase the competitiveness of Asian economies.

It is time for Russia to start thinking about adjusting to the Western restrictions, including by developing its own tanker fleet and abandoning the US dollar in oil deals. The latter is the prevalent task of Russia’s foreign trade in the new political conditions.

From our partner RIAC

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