Hello! Amy is enjoying some sunny weather and nice time off in Hawaii (jealous!), but Anca is here to guide you through what’s important this week. Reach out at @AncaGurzu or anca@ciphernews.com.
In the face of Russia’s invasion of Ukraine, European leaders have vowed to shed their dependence on Russian gas and charge full speed into tapping renewable energy.
The plan is there, the momentum is high and the potential is promising.
But how quickly and how decisively the European Union will follow through will be the fundamental test of this newfound political unity.
“We’re not standing here to say this is going to be in any way easy,” Frans Timmermans, the European Commission’s vice president, said last week. “Even if it’s going to be hard, it’s something we need to do because now it’s also intimately linked to our security.”
The EU’s biggest challenge will be to show it genuinely will change its energy habits after this crisis in a way it failed to do before—despite similar promises.
“Putin has spurred in less than two weeks a historical U-turn in European foreign and energy policy axioms,” said Simone Tagliapietra, senior fellow at Brussels-based think tank Bruegel. “Regrettably, it took a full-fledged Russian invasion of Ukraine for Europe to finally make up its mind and move forward.”
But there are already signs it will be easier said than done.
Following a summit in Versailles, France, on Friday, EU leaders stated they want “to phase out our dependency on Russian gas, oil and coal imports as soon as possible.” But they failed to commit to a specific date—a testament of diverging views as to how quickly this can be done and how expensive it will be. The European Commission had proposed a deadline of 2027. It will present a detailed plan by the end of May with that deadline in mind.
In 2021, the EU imported 155 billion cubic meters of gas from Russia, more than 40% of what it uses. Total energy imports from Russia last year, which also include oil and coal, amounted to about €99 billion.
Bureaucrats have crunched the numbers to see how fast the bloc can wean itself from Russian gas and speed up its green energy transition. In guidance released last week, the European Commission said the EU can slash its dependency by two-thirds this year and to zero “well before 2030.”
In the short term, that means relying on more shipped liquefied natural gas from the United States or Qatar to diversify supplies. In the long term, it means speeding the uptake of renewable energy, including low-emission gases such as hydrogen, and increasing energy savings.
Most of these are already part of the EU’s ambitious European Green Deal, meant to cut the bloc’s greenhouse gas emissions to net zero by 2050. What’s significant are the tools this guidance gives EU countries to accelerate their implementation and to deal with potential disruptions in the short term.
The success of the EU’s green makeover won’t be measured today—and not via plans or in the hallways of EU institutions. It will be measured on the ground and over years and even decades after the crisis subsides.
What’s needed is a long-lasting political will to act that can percolate through the dense EU legislative machinery and clashing national interests down to the innovators, investors and regulatory agencies that can speed up permitting for solar and wind farms and beef up renovation efforts.
Lessons learned?
“EU energy policies (on renewable sources, greater efficiency, shale gas and interconnection of energy grids) could also play a role in reducing—if not completely eliminating—Europe’s dependence on Russian gas,” according to a European Parliament study.
It may read like it’s taking a page from today’s playbook, but the study is from October 2014, a few months after Russia annexed Crimea. Reducing reliance on Russian gas shot to the top of the agenda immediately after, especially through the 2015 Energy Union initiative.
As we previously reported the EU has increased, not decreased, its dependence on the fossil fuel from Moscow since then.
“It would be very good in politics if you could turn back time … and take better decisions than you’ve taken,” Timmermans said when asked if the Commission’s plan is not coming too late. “But we are where we are and now we need to move much quicker than we’ve done in the past to reduce our dependency on imports of energy from Russia.”
The good news is that the mass and speedy deployment of clean technologies today is much more realistic than it was eight years ago when the energy crisis left the EU scrambling.
“This last decade changed completely the technology landscape,” Tagliapietra said. “We didn’t have the solar and wind capacity of today, so today we can really deliver. That’s the big difference between now and then.”
He added: “In the longer term, Europe is likely to emerge from this crisis much greener than before.”
Lunchtime Reads and Hot Takes
ECB accuses eurozone banks of ‘white noise’ on climate risks — Financial Times (paywall) Anca’s take: As the article points out, the European Central Bank is beginning to lose patience with banks, after finding that none of the 109 lenders it oversees meet its climate risk disclosure expectations. This adds to the general challenge we’ve noticed with climate disclosures in the corporate world, but which is set to change once they become compulsory.
Investors push 10,000 companies to disclose environmental data to CDP — Reuters Amy’s take: Sticking with the theme. Key stat: “Current disclosures cover over 13,000 companies covering around 64% of global market capitalisation.” That’s why the forthcoming U.S. Securities and Exchange Commission rule is so important, despite the explosive growth in disclosures already.
US says $100 billion soon to help poor nations with climate — AP News Anca’s take: News that wealthier nations could finally meet their delayed pledge to poorer countries by next year is good. This isn’t only because the cash is fundamental for low-income countries to cope with climate change, but also because developing countries are calling for trillions of dollars in help.
How an Electric Truck Factory Became a Lightning Rod in Georgia — The New York Times Amy’s take: This is unfortunate, but not surprising. That sentence could be increasingly written for almost any type of NIMBYism over the countless energy projects that need to get built. The story was lacking a lot, including discussion of whether this opposition could lead to the facility not being built.
The politics behind Ukraine’s alarming nuclear warnings —Politico Europe Anca’s take: The main point here is right at the top: “Kyiv is grasping at every possible lever in its efforts to persuade the West that it too is threatened by Russia’s invasion—including repeated and at times exaggerated warnings of nuclear calamity for the rest of Europe.” The situation is serious and very fragile—but also very complicated. It shows how hard it is to gauge risk (and its scale) during wartime conditions.
Climate change is scary, but don't let it put you off having children — INews Amy’s take: This is an important, nuanced take on a what is ultimately a very personal decision. I found the last point the most compelling: We need to combat climate change for future generations, so let’s make sure we have future generations!
More reading:
EU sanctions Russia’s energy sector but exempts coal, gas, oil and nuclear imports — Politico Pro (paywall)
Electric delivery vans set to take off in the US — Canary Media
Gazprom says gas exports outside ex-Soviet Union down 28.5% year over year so far in 2022 — Reuters
Deadly climate change-fueled floods inundate Australia's east coast — Axios
Germany vetoes nuclear power extension, aims for LNG terminal in 2024 — Reuters
Carbon dioxide emissions are up again—and increased coal use is the main culprit.
That’s the key takeaway from a report released last week by the International Energy Agency, which found that global energy-related CO2 emissions rose by 6% in 2021 to 36.3 billion tons.
It’s the highest-ever level, as the world rebounded from the Covid-19 crisis and relied more heavily on coal to power that growth, the IEA said. The fossil fuel accounted for more than 40% of the overall growth in global CO2 emissions last year, reaching an all-time high of 15.3 billion tons.
The chart above shows the pandemic-induced CO2 emissions decline in 2020, the strong rebound in 2021 and the net annual change.
The biggest increase in CO2 emissions by sector was in electricity and heat production, which represented 46% of the global increase. China accounted for almost all the global increase in this sector between 2019 and 2021.
Overall, the CO2 emissions increase in the power and heat sector was driven by the biggest ever year-on-year increase in global electricity demand, which stood at 5.9%, the IEA said. This was more than 15 times the size of the drop in demand in 2020.
But there’s good news here as well. Despite the rebound in coal use, renewable energy sources and nuclear power provided a higher share of global electricity generation than coal in 2021.
Transport was the only sector in which global CO2 emissions remained well below 2019 levels, the IEA said. However, the emissions reduction impact of record electric car sales in 2021 was cancelled out by the parallel increase in the sales of SUVs.
These numbers show that the world has not recovered sustainably from the pandemic.
“The world must now ensure that the global rebound in emissions in 2021 was a one-off—and that an accelerated energy transition contributes to global energy security and lower energy prices for consumers,” the IEA said.
AND FINALLY...
Filling up on Russian gas
Anca snapped this photo of cars pulling in at a Lukoil gas station in Brussels over the weekend. Lukoil, the Russian-owned petroleum giant, has a distribution network that includes more than 180 gas stations across Belgium.
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
