The Russian-Ukrainian conflict broke out on February 24, 2022. Afterwards, there was a sharp struggle between Russia and Europe and the United States. Energy sanctions and counter-sanctions were one of the important forms of the struggle, and the energy conflict broke the EU's original energy supply and demand balance. This summer's extreme heat has also had an impact on European energy supply and demand. Today, as winter approaches, people's heating demand will rise, but the contradiction between Europe and Russia has not eased, and the EU's energy prospects will receive more attention in the near future.
Over the years, EU countries have been actively developing clean energy such as wind and photovoltaics. They are the vanguards of the clean and low-carbon transformation of global energy, and they are also praised by many people. However, after the energy shortage in 2022, many people may enjoy watching jokes such as Europeans "can't afford air conditioning in summer and heating in winter", "relying on down jackets and electric blankets for winter", or cynical about European energy , ridicule Europe's development of clean energy is "fancy", and so on.
Obviously, this kind of sudden change in attitude from smashing to slaughtering is not desirable. So, how should we correctly understand the current energy shortage in EU countries, and how to objectively evaluate the EU's energy transition?
Energy shortages expose EU policy flaws
Among the 27 EU member states, the energy and other policies of the senior member states of Western Europe and the new member states of Central and Eastern Europe are quite different, and the former tends to attract more attention from the world. Based on this and for the convenience of writing, the "EU countries" in this article mainly refer to the "Old European" countries in the EU such as France, Germany, Italy, Spain, and Denmark.
The reasons for the EU's energy shortage are complex, including both abnormal weather and the EU's own policy mistakes.
The development scale of nuclear energy, wind energy, solar energy, water energy and other clean energy in EU countries ranks among the top in the world. However, in recent years, Europe has suffered from extreme weather, which has seriously affected the operation of its clean energy projects.
Among them, there will be a windless summer in the North Sea and other regions in 2021, resulting in a year-on-year decrease in wind power generation in Germany, Denmark and other countries. The effects of extreme weather in 2022 will be even more pronounced. Europe has suffered a severe drought not seen in a century. Prolonged heat has hit hydropower hard.
Under the sweltering heat, precipitation is scarce, and water evaporation greatly increases, resulting in a significant decrease in river runoff and reservoir water storage, resulting in a reduction in hydropower generation. In the summer of 2022, the electricity generation of major EU hydropower countries such as France, Italy and Spain will be greatly reduced.
The extreme heat this summer has also hit nuclear power generation in EU countries, as many nuclear power plants in France and other countries use river water for cooling. In addition, when the river water is already hot, the cooling water discharged from the nuclear power plant will heat the river water further, which will threaten the fish and other species in the river. Because of this, at one point about half of France's nuclear power plants stopped operating.
The scorching heat also affects solar power generation. Full sun is good for solar power, but hot summer and full sun are not the same thing. Photovoltaic power generation panels are "afraid of the sun", and high temperature will lead to power loss of power generation panels, decreased power generation, and shortened service life.
In 2021, the nuclear, hydro and solar power generation in EU countries will be 732.2 billion kWh, 344.4 billion kWh and 160.6 billion kWh respectively. The three together account for 43% of the EU's total electricity generation. Extreme heat in the summer of 2022 will reduce the output of all three and adversely affect electricity and energy supplies in the EU.
However, this year's EU energy shortage, "man-made disaster" is the main reason. After the outbreak of the Russia-Ukraine conflict, the energy struggle between Europe and Russia emerged and intensified. As a result, Russia's oil, gas and coal supplies to EU countries have been greatly reduced, which is the main direct cause of the EU's energy shortage at this stage. However, the deeper reason is the failure of EU national energy security strategies and policies.
Since the 1970s, European oil and gas coal supply has been heavily dependent on the former Soviet Union/Russia. Before the outbreak of the Russia-Ukraine conflict, the EU countries' dependence on Russia for oil, natural gas and coal consumption was as high as 30%, 40% and 46% respectively. The EU relies heavily on Russia for its energy supply, and apparently there are very good reasons: the oil and gas transportation system between Europe and Russia is well developed, and the prices of energy products supplied by Russia to Europe are very competitive. Importing large amounts of relatively cheap energy from Russia each year has benefited Europe's economy and society without major trouble for decades.
However, for net energy importing countries, an important rule of energy security is to ensure the diversification of energy imports at all times. Over the years, EU countries have obviously not paid enough attention to energy diversification, and its harm has been fully exposed after the outbreak of the Russian-Ukrainian conflict.
It is not appropriate to completely negate the EU energy policy
Despite the recent difficulties in EU energy, we cannot completely deny the EU's energy strategy and policies. Overall, the EU's national energy policy system remains the most advanced in the world and represents the right direction for the world's energy development.
The EU has a mature clean energy market and carbon market, and it has rich experience in developing clean energy, advanced technologies and systems. Denmark is the first country in the world to commercialize wind power. In the 1980s, sunny Mediterranean countries such as Spain, Portugal and Italy began to develop solar power generation and were the world's forerunners. Over the years, EU countries have accumulated rich successful experience in the development of clean energy, and European companies have also mastered a large number of related advanced technologies.
Even after the Russian-Ukrainian conflict broke out and triggered energy shortages in Europe, the European Commission announced in May 2022 an action plan called "Re-Empowering the EU", in which it was determined to increase the EU's 2030 target for renewable energy from 40% % is raised to 45%, and the renewable energy generation capacity will rise to 1.236 billion kilowatts in 2030.
In 2005, the European Union established the world's first carbon market. The EU carbon market is the largest in the world, accounting for 90% of the global carbon market in 2021. The well-developed carbon market in the EU has strongly promoted its clean and low-carbon energy transition, and promoted the development of carbon trading markets in other parts of the world.
In the process of continuing to promote the clean and low-carbon transformation of energy, advanced enterprises such as Framatome, Vestas and Siemens Gamesa have emerged in EU countries. The businesses of these companies spread all over the world, thus promoting the development of the world's low-carbon energy industry.
EU countries have also been relatively successful in curbing energy waste, and their economic development and social progress have been initially decoupled from energy consumption growth. Over the years, EU countries have insisted on using fiscal and taxation policies to actively guide the public to reduce energy waste.
For example, Europe has long been a highland for gasoline and diesel prices in the world, mainly due to high government taxes. The latest data shows that among the 10 countries and regions with the highest gasoline and diesel prices in the world in early October 2022, 4 are EU countries. Gasoline prices in Germany, France, Italy and Spain are 178%, 144%, 156% and 159% of those in the US, respectively. Under high oil prices, oil waste is reduced.
In addition, EU countries have higher requirements for vehicle fuel economy and carbon emission limits, which also effectively inhibits their oil consumption. As a result, oil consumption in EU countries peaked in 1979. Oil consumption in 2021 has fallen by about a quarter from its historical peak. In contrast, the United States, which is also a developed country, has yet to reach its peak oil consumption.
Not only oil, but EU countries' primary energy consumption also peaked around 2006. Although EU GDP in 2021 will increase by 35% compared to 2006, its energy consumption will fall by 12%. The "Re-Empowering the EU" further proposes that the energy consumption of EU countries in 2030 needs to be reduced by 13% on the basis of 2020.
The clean and low-carbon transition of energy in EU countries enjoys a profound social foundation, which is rare in the world. Europeans have taken active actions to push governments and companies to accelerate emissions reductions. For example, Shell is one of the largest oil companies in Europe and the world. In April 2019, seven environmental groups including Friends of the Earth, Greenpeace and 17,000 Dutch citizens jointly launched a lawsuit against it, asking it to raise its emissions reduction targets. In May 2021, the Dutch court in The Hague ruled that Shell should step up its emissions reductions, reducing its carbon dioxide emissions by 45% from 2019 levels by the end of 2030. Driven by civil society, the pace of green development of companies in EU countries is significantly faster than that of companies in other parts of the world.
It is advisable to adopt an attitude of abandoning the EU energy policy
For the wrong energy choices of the EU, China should take a lesson and avoid making the same or similar mistakes. For the success of EU energy, China should continue to learn humbly.
On the one hand, the EU's energy choices are not all right, and China must learn from the EU countries' neglect of energy import diversification and other lessons. The current energy shortage in EU countries is mainly due to their over-reliance on Russian energy. China should take this as a lesson and continue to diversify its oil and gas imports, avoiding over-reliance on one or a few countries for oil or gas imports, no matter how reliable that country or countries were and seem to be.
On the other hand, in many fields of energy, China should continue to use Europe as a teacher.
This year, even if the EU countries encounter serious energy shortages, they still said they will insist on developing clean energy. Such an attitude stems not only from concerns about climate change and environmental degradation, but also from their determination to ensure their own sustainable energy security. The fossil energy endowments of EU countries are generally poor, and their consumption has to rely heavily on imports. For example, the oil consumption of EU countries in 2021 is 10.42 million barrels per day, while its production is only 370,000 barrels per day, which is not even a fraction of the consumption. In the same year, the consumption and production of natural gas in EU countries were 396.6 billion cubic meters and 44 billion cubic meters respectively. The consumption gap is also very large and needs to be filled by imports.
Unlike fossil energy, clean energy such as wind energy and solar energy are local energy sources for EU countries, and there is almost no problem of external dependence. If the clean energy in its territory is fully exploited, then EU countries can not only contribute to global climate governance, but also hope to achieve their own sustainable energy security. Therefore, for them, the development of clean energy is not only a moral issue involving intergenerational fairness, but also a security and political issue of great practical significance.
Similar to EU countries, China's oil and gas consumption is also heavily dependent on imports, and there is also enormous pressure to ensure its own energy security. Likewise, China also needs to promote its own sustainable energy security by developing its own clean energy sources. In the development and utilization of clean energy, China needs to continue to learn the relevant advanced technologies and legal systems of EU countries, as well as effective business models.
The EU's energy storage technology, system and business model are also worth learning from China. EU countries have developed natural gas storage systems, which can play a role in the natural gas market. The maximum storage capacity of European gas storage is 107.7 billion cubic meters. Through the efforts of European countries, the natural gas inventory level has exceeded 90% of the storage capacity by the beginning of October, which basically guarantees that there will be no gas shortage in Europe this winter. The gas storage system of EU countries is not only large in scale, but also established and operated in accordance with the laws of market economy, with excellent resource allocation and high operating efficiency. All these are worthy of the Chinese government and related enterprises to study and learn from.
In addition, some EU countries have established and maintained oil reserves equivalent to more than 90 days of net imports, as required by the International Energy Agency. In April this year, the European member states of the International Energy Agency decided to release their oil reserves in large quantities together with the United States, which played an important role in stabilizing the international oil market this year. China needs to learn from the successful experience of the EU, expand the scale of energy reserves and optimize the energy reserve system. (Source: WeChat public account "Energy New Media" article | Wang Haibin, professor-level senior economist of Sinochem Energy Co., Ltd.)
