The cost of a slow energy transition –


After a summer of heatwaves and forest fires in Europe, it’s strange to think this winter could be uncomfortably cold for many, writes Timur Tillyaev.

Timur Tillyaev is an international investor in renewable energies.

This time, it is not the extreme weather conditions that are in question but the surge in energy prices, which have reached record levels across Europe and the UK in September and are expected to increase further as winter approaches.

There are several reasons for this surge in prices. At the same time, the problem can also be seen more simply as demand greater than supply. Economies emerging from the pandemic have seen their energy consumption increase, while different factors have created a perfect storm to reduce supply.

Natural gas inventories are lower than usual due to the unusually freezing winter of last year. The maintenance and reconstruction of natural gas infrastructure in Russia and Norway further reduced storage capacity.

At the same time, the wind speed in the North Sea has been among the lowest in the past 20 years, leading to a slowdown in wind power generation. The closure of coal factories around the world has also made these shortages more severe.

This presents a dilemma. Fossil fuels are rightly phasing out to alleviate the climate crisis, but evidence suggests that renewable alternatives cannot reliably take over yet.

The resulting price hike comes as the European Union embarks on the world’s most ambitious climate plan with its Green Deal, and the UK, one of the hardest hit countries, prepares to welcome the United Nations COP26 climate conference at the end of October.

Governments across Europe appear united in seeing the current situation as further evidence of the need to shift to a low carbon future. “The solution, in the longer term, is the accelerated deployment of renewable energies and the improvement of energy efficiency,” said Lukasz Kolinski, responsible for the integration of renewable energies and energy systems at the European Commission.

UK business secretary Kwasi Kwarteng adopted the same tone when he said the UK’s exposure to high gas prices “underscores the importance of our plan to build a strong and local renewable energy sector. “.

Less clear is how this goal of an accelerated transition to renewable energies will be achieved.

One step within immediate reach of governments is to cut red tape when it comes to investing in renewables. Too complex authorization procedures in Germany, wind farms with a total capacity of over 10 GW are still awaiting approval.

The same problem in Italy saw the Minister of Ecological Transition Roberto Cingolani promise “brutal” reforms to simplify the permitting process for renewable energy projects.

Nonetheless, the bureaucracy that hinders the much needed development of renewable assets remains a serious problem that plays a role in the current energy crisis.

The current energy crisis also invites a more controversial question: should nuclear power play a greater role in the energy transition?

There are success stories for nuclear power. In France, for example, 70 percent of its electricity already comes from green nuclear power. But this has not been widely reproduced.

Historically, the main deterrent has been concerns about security. But the evidence suggests that nuclear power is much safer than fossil fuels. Air pollution from fossil fuels killed up to 8.7 million people in 2018, according to a recent study.

This far exceeds all estimates of direct and indirect deaths caused by nuclear energy. The Chernobyl merger, the worst nuclear accident to date, could have indirectly claimed the lives of up to 4,000 people through radiation exposure, according to a UN report. It is a tragic loss of human life that ignores the disruption caused to thousands more. At the same time, the risks associated with fossil fuels represent a different order of magnitude.

Another problem with nuclear power is the high cost. Nuclear power plants can cost billions to develop. But if the proposed carbon taxes are introduced, it could well make nuclear power more competitive. Given the urgent need to radically change our energy mix, some in the industry suggest nuclear should at least become more of the conversation.

The conversation itself is the key. Governments and businesses need to engage more closely to find the right solutions. Anja-Isabel Dotzenrath, the new head of BP’s gas and low carbon business, is just one of many prominent leaders in recent months at call for greater dialogue with policies to accelerate the energy transition and avoid unnecessary investments.

There is clearly a growing desire across the world to lead the energy transition and bring about real change. The problem, it seems, has been the way the investments have been channeled and managed.

The looming energy crisis in Europe this winter shows why governments and businesses must work together to quickly find ways to accelerate the energy transition and diversify our energy mix.

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