Europe’s Energy Crisis Will Be Short-Lived & Reap Benefits

Energy independence is one of those phrases that’s casually thrown around that gets right up my nose. In the 21st Century, it’s a meaningless concept. Vast amounts of energy cross borders constantly, just as iPhones, cars, and jelly beans do. Further, it’s frequently used in arguments against renewables, as if oil, gas, and coal are somehow magically different. And in the context of Europe, it’s being heavily abused by many of the usual suspects.

But let’s start with the European energy crisis. It’s a perfect storm. About 2.5 years ago I predicted that natural gas would end its dozen years of low-priced stability. At the time, the Saudi Arabian-Russian price war was clearly aimed at high-cost oil extraction, and a great deal of natural gas in the world was being pumped from shale oil deposits as a side effect of unconventional oil extraction. Fracking and shale oil extraction in the US and elsewhere had already been proving to be much less profitable than projected in rosy forecasts, and by the end of 2019, foreclosures on outstanding debt and actual seizing of assets by banks was under way. The combination meant that there were a lot fewer fracking firms running, and natural gas from shale oil was drying up. Less supply and less ability to ramp up supply quickly as needed was obviously going to combine to create higher prices and a return to volatility of the commodity.

That said, while I, along with McKinsey and others, did predict natural gas prices rising above those of inflation and becoming more volatile, the degree of global volatility surprised me as did the high prices toward the end of 2021. And, of course, my cracked, milky crystal ball didn’t account for the Russian invasion of Ukraine and the dangerous dependency Europe had formed on natural gas from what has become a pariah state.

But this summer’s European energy crisis is about more than just Russia’s gas. After Fukushima and its likely trillion USD economic cost, Germany looked at the amazing growth of renewables, the very strong grid reliability that they were maintaining, and decided that it was finally time to let nuclear go. It closed some reactors immediately, and scheduled more for additional closure. At the time and subsequently my opinion has remained the same: I wish that it had closed coal plants instead, but that it is at over 40% reduction in total national annual GHGs since peak gives the country a pass. I live in Canada, after all, and we have done nowhere near that well. Glass houses and all that.

Naturally nuclear advocates have been pointing at Germany’s closure of its nuclear fleet as a major problem in recent months. And, of course, they point to intermittency of renewables as a problem. However, as late as 2017, nuclear-heavy France was a net importer of 14 TWh of electricity from Germany, and Germany was a net exporter to several other countries as well. France was a net exporter to Germany in 2019 and 2020 as Germany reduced its coal generation and stopped exporting as much electricity.

But now France is facing a perfect storm. First, its reactors are getting old, with a mean age of over 36 years. Only seven of the 56 reactors are under 30 years old. Reactors typically require a very substantive refurbishment around 40 years of age, and that refurbishment is being compared in cost to much cheaper wind and solar in many jurisdictions, with nuclear plants being retired instead of given a hip replacement and put back to work for another 20 years.

Older reactors require increasing amounts of maintenance. A variety of critical components degrade due to heat and radiation, and must be replaced. Various forms of steel embrittlement are a concern that must be monitored. And maintenance on reactors is a big deal. It’s not like driving your car in for an oil change. Standard maintenance is scheduled years in advance. Many of France’s reactors are offline due to required, scheduled maintenance that was budgeted and planned long before the energy crisis. Refueling is a requirement every 18–24 months, as an example.

COVID-19 disrupted a bunch of scheduled maintenance, and it was deferred until 2022, with no expectation that Ukraine would be invaded by Russia, leading to destabilization of Europe’s gas heavy energy system. Two strategic disruptors exposed the challenge of the nuclear fleet.

France has 56 nuclear reactors, and many of them were offline for scheduled refueling. Some were offline for refueling and maintenance. One was offline for 10-year refurbishment. 18 of 56, a third of the fleet, are offline on pre-existing and COVID deferred schedules.

However, that problem with aging reactors I mentioned is kicking the French fleet’s butt. A group of France’s reactors, the N4 series, has experienced unexpected corrosion on critical pipes. That’s taken another 12 reactors offline unexpectedly this year. 30 of France’s 56 reactors are currently offline, some of them due to deferred work from 2020 and 2021, and over a third is unplanned due to corrosion.

That’s adding substantially to Europe’s energy crisis. It’s not just that natural gas was very expensive and that was hitting energy prices, but the relatively stably priced (and low carbon) French nuclear was down for the count.

Naturally, this led to a lot of renewables advocates to point out the intermittency problem of nuclear, and to lay the blame for the energy crisis in Europe at France’s feet.

That’s just as wrong-headed.

European energy strategists were seduced by cheap natural gas flowing through massive pipelines from an increasingly rogue state even though natural gas was still a major global warming problem. Instead of concentrating on building a lot more renewables a lot more quickly, they built a lot of gas plants instead, asserting that gas was a major win over coal in terms of greenhouse gas emissions.

Except it isn’t. There’s been a lot of work done on upstream methane emissions in the past few years, with two major lifecycle cost assessments on ‘blue’ hydrogen with both noting upstream methane emissions. The Bauer, et al., paper uses a median of 1.5% upstream emissions while the Howarth/Jacobson one, relying more on US data, uses 3.5%. Given that methane has a global warming potential from 20-82 times that of CO2, those upstream emissions add up.

A MWh of electricity generated with natural gas in modern higher efficiency gas plants emits about 0.4 metric tons of CO2. The upstream emissions of methane using the 1.5% upstream emissions and the 20 year GWP equates to another 0.4 tons of CO2e. Total CO2e is 0.8 tons for a MWh, which is much closer to coal generation per MWh than most realize. Using 3.5%, of course, upstream emissions is about 0.93 tons of CO2e resulting in 1.33 tons CO2e for a MWh of gas generation, even worse than coal. Europe’s average is better than the United States on this, but neither looks remotely like a climate solution.

The natural-gas-as-bridge-fuel crowd have some explaining to do, as do the blue hydrogen crowd.

And so we have fingers pointing wildly in all directions among advocates for one technology or the other. As I’ve written many times, I’m pleased with every new nuclear plant China commissions, while being very clear that it is building a lot more wind and solar a lot more quickly and cheaply, and that its nuclear program isn’t meeting its targets while wind and solar are vastly exceeding theirs. And I would prefer existing nuclear plants in jurisdictions like the US be bridged to retirement, preferably through regulatory changes that enable them to be used more flexibly on grids.

My argument against nuclear is that we have now 8 years to massively decarbonize our grids, and modern nuclear plants take 10 years to build once started, at least in the west. South Korea did better, but of course it also had massive corruption, substandard parts installed in its nuclear fleet surrounded by tens of millions of citizens, and major political and corporate figures jailed due in part to their nuclear malfeasance.

Many jurisdictions are reconsidering nuclear at present, something I consider mostly ill advised given how fast we have to decarbonize the majority of our electricity. I know that Jigar Shah, head of the US DOE loans program office, considers the newly experienced nuclear construction workers who worked on Vogtle and the abandoned Summer nuclear plants to be an advantage out of those deeply expensive failures, as trained nuclear construction resources are very thin on the ground in the west, but I also know that many of them are heading up to Ontario to work on the likely-to-fail-differently small modular reactor design and construction project at Bruce Nuclear. The ability to train up a new generation of highly skilled, deeply educated, and security clearance enabled workers for nuclear construction is a major headwind for the technology.

But let’s return to energy independence. It’s being bandied about in the European context right now, even as the new German Chancellor is on a global tour, hat in hand, begging for LNG and hydrogen.

No country is capable of being fully developed with a high standard of living at present without trading massive amounts of virtually everything across borders. And yet, energy independence remains a term considered a reasonable one to use, or even a strategic thing to strive toward.

Oil and gas flow in all directions today. Electricity crosses the imaginary lines on maps on every continent in the world. Electrons flow from northern Quebec to New York, and from Morocco to Portugal. China’s Supergrid is massive and expanding. Serious proposals exist for undersea cables from Australia to Singapore and Morocco to the UK. China proposed a trans-polar HVDC grid.

Any yet, a fairly regular refrain I hear from anti-renewables types, whether they are promoting nuclear energy or fossil fuels, is that electricity transmission across borders can’t be relied upon and hedged for risks. This was annoying even before the invasion of Ukraine and the isolation of Russia started, but it’s even more annoying now. Some of it, of course, is simply because they are stuck on the primary energy fallacy, where they assume that we have to replace all primary energy used in our economy at the same scale, instead of electrifying everything possible so that we only have to replace energy services.

The better term is “strategic energy interdependence.” In that context, a full set of factors including geopolitics, emerging kleptocracies, and oil and gas regions threatened by climate disruptions starts to reshape how energy should be considered. Let’s look at the examples of Europe, France, and Germany through that lens.

First, if France is considered in isolation, it has too much nuclear power in its mix, 75% of demand. As soon as it’s considered as a strategically interdependent entity well-linked to the rest of Europe with transmission and electricity markets, its nuclear generation, relatively inflexible due to economics and technology, is not a concern. In 2020, France generated about 340 TWh of electricity from its nuclear fleet, while Europe as a whole generated 2,664 TWh. France was a solid provider of about 13% of Europe’s low-carbon energy, an amount easily balanced on the interdependent grid.

Similarly, Germany’s massive expansion of renewables, now over 40% of annual demand with wind energy being the largest component, is trivially easy to balance with hydropower from Scandinavia, nuclear from France, and wind energy from Spain. (As a side note, France’s nuclear proponents tend to downplay Germany’s GHG emission reductions compared to France’s lower ones, but Germany has a bigger economy and a bigger industrial sector, so it has about 1.8 times the industrial emission as France, a serious consideration in its decarbonization results.)

Germany, France, Norway, Sweden, and in fact every western European country with the possible exception of Britain are solid, reliable, and stable trading partners. Strategic energy interdependence among these countries is very reasonable.

While France’s nuclear woes are a problem, France is acting quickly to get many of these reactors on line again, something fairly straightforward for ones being refueled or undergoing minor maintenance, although not the dozen reactors in the N4 series. And Europe’s natural gas reserves are 82.5% refilled already, above the 80% target for October 1, the beginning of heating season. All of Europe’s states are working on efficiency programs to reduce demand.

None of the European countries could have stabilized their energy demands vs supply without the rest of them. Energy independence is a myth, and strategic energy interdependence is the norm. Jurisdictions like Texas and Ontario that are still trying to maintain energy independence are wasting money, emitting more CO2 than necessary and putting their citizens at unnecessary risk (especially Texas).

And so, I ask you for the following favor. Anytime anyone uses the term ‘energy independence’, correct them to ‘strategic energy interdependence’, and if necessary, explain why. Even people who know better fall into using the archaic and unhelpful term.

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