European electricity grid hurtling towards disaster, Swiss commodities expert warns
A new paper from the Global Warming Policy Foundation shows that the European electricity grid is hurtling towards disaster, with its constituent nations closing reliable nuclear and fossil-fuelled power stations and hoping that interconnectors will make up the deficit.
According to the paper’s author, Alexander Stahel, a Swiss-based commodities expert, the European grid has relied on French and German power surpluses for many years. However, with nuclear power in both countries being wound down and likely to soon become net power importers, and with fierce international competition for scarce gas supplies, the whole continent is now left hoping for Scandinavian hydro power and occasional surpluses of UK wind to save them.
According to Stahel, the numbers just don’t add up, and he warns that restrictions on fossil fuel investment are making things dramatically worse.
“Fossil fuels are currently vital for keeping the lights on, but we are undermining the industry’s viability. It needs US$300 billion of re-investment every year, for oil and gas alone, just to maintain current production levels.
"However, convinced by policymakers that investments in production will become ‘stranded’, it is not even investing half this amount.”
Stahel says that Europe must simply accept that its decarbonisation targets are not achievable.
Alexander Stahel: “The Crisis of the European Energy System” (pdf)
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Adverse Energy Taxes in the Inflation Reduction Act
The process of political meddling in energy markets is endless, an eternal truth that will not prove different for the energy provisions of the Inflation Reduction Act. Most public attention has been directed at the massive subsidies and favoritism directed at unconventional electricity — wind and solar power in particular — and electric vehicles, rather than the tax provisions, less prominent but deeply problematic.
Both sets of policies expand the effort to increase the use of uncompetitive energy expensive, unreliable, and environmentally destructive in place of conventional energyproven, reliable, efficient, and with environmental effects that have been addressed effectively by decades of regulation authorized by past legislation. Such a forced turn toward uncompetitive energy will continue to engender huge adverse effects with few benefits, a reality that policymakers in Europe, California, and elsewhere now have been forced to confront.
The tax provisions of the IRA have received less attention, but are likely to prove equally perverse. First, there is a reinstatement of the Hazardous Substance Superfund Financing tax (section 13601) on crude oil and petroleum products, the previous imposition of which ended in 1995. Put aside the fact that it is not the fossil energy producers or their customers who are responsible for pollution and cleanup problems at the Superfund sites; nor are they to blame for the massive mismanagement of the program over four decades. This tax — 16.4 cents per barrel — will cost energy producers about $1.2 billion per year, an outcome not consistent with the need to expand the availability of reliable energy.
Second, the IRA imposes two new taxes on methane emissions from crude oil and natural gas production. Section 60113 imposes per-metric ton fees ($900 in 2024, rising to $1500 in 2026) for methane emissions exceeding 0.2 percent of natural gas sold from a facility or 10 metric tons of methane per million barrels of oil produced. Section 50263 imposes the (new, higher) royalty rate for natural gas produced from future leases on federal land or the outer continental shelf on all such gas, even that lost because of necessary venting or flaring, with a few exceptions.
Put aside the reality that fossil producers have powerful incentives to minimize losses of natural gas that otherwise could be sold. The central justification for the tax on methane emissions is “climate” policy. U.S. methane emissions are 11 percent of all U.S. greenhouse gas emissions (on a CO2 equivalent basis). Were all U.S. methane emissions — not merely those from oil and gas production — reduced to zero, the global temperature reduction by 2100, using the Environmental Protection Agency climate model, would be 0.015 degrees C, an effect that would not be measurable in that the standard deviation of the surface temperature record is 0.11 degrees C.
Accordingly, the taxes on methane emissions cannot satisfy any plausible benefit/cost test. They are little more than a money grab, with little economic or environmental justification. Moreover, they create perverse political incentives: More methane emissions yield more revenue for the federal government, and so provide a disincentive to reform permitting and other policies so as to facilitate the improvement and modernization of the energy infrastructure, and thus reduce emissions.
Finally, section 50262 increases the royalty rate for oil and gas leases on federal lands and the OCS from 12.5 percent to 16.67 percent, increases the oil and gas minimum acceptable bid from $2 per acre to $10 per acre, and increases fossil fuel rental rates for reinstated oil and gas leases to 20 percent rather than 16.67 percent.
Notwithstanding Beltway rhetoric about “ensur[ing a] fair return for the American taxpayer,” these cost increases will have the opposite effect, by reducing the amount that the fossil producers will be willing to bid initially for the leases. This means that the net effect of the increase in the royalty rate and the obvious attendant decline in the initial bids is a shift of risk from the fossil producers onto the taxpayers, because the initial bids are certain, while the future royalty payments will be determined by future fossil energy prices and other conditions that are subject to substantial uncertainty.
Moreover, the royalty payments are analogous to an excise tax on fossil energy production, while the initial bid is analogous to a lump-sum tax that does not affect production decisions once the bidder obtains a lease. Accordingly, the combination of the increase in the royalty rate and the decline in the initial bids will have the effect of reducing fossil production from the leases that actually are granted, an outcome inconsistent with the goals of a rational energy policy and with the interests of taxpayers.
There simply is no rationale for these tax provisions that can withstand scrutiny. They will reduce the production of conventional energy, which is reliable, concentrated per unit of weight, and complementary with efficient capital investment. They will increase energy costs and reduce economic growth and national wealth, even as they yield no benefits in terms of environmental improvement. Let us hope that a future Congress is led to repeal them.
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Experts question environmental and economic value of wind power
“The biggest failure of wind energy, oddly enough, is environmental.”
Wind farms continue to pop up like mushrooms across Michigan’s landscape, and with them, plenty of backlash from energy, economic and environmental public policy experts.
Michigan ranks 15th for total wind generation nationwide, according to a 2021 study released by Commodity.com, which was updated last May. The study reports wind provides 8% of the total electricity consumed by the nation’s homes, government entities and businesses, while contributing 7% to Michigan’s electricity grid.
While proponents tout the environmental benefits of wind over other energy sources, it typically takes 18 months after its full installation before a turbine truly can be said to “have paid off its carbon debt,” according to Kevon Martis, a certified land use planner and zoning administrator for Lenawee County’s Deerfield Township.
Martis explained to The Center Square that the manufacturing and transportation of turbines to their destination typically requires overseas shipping to U.S. ports, followed by over-the-road transport requiring several diesel-fueled 18-wheel semi-trucks per turbine.
“The biggest failure of wind energy, oddly enough, is environmental,” Martis told The Center Square. “Not only do low-energy density devices like wind turbines have an outsized impact on the landscape due to the sheer mass of the machines and the quantity required, wind energy is a very expensive means of CO2 avoidance,” he said.
Martis referenced a study conducted by grid operator MISO “with respect to the Obama-era Clean Power Plan, which showed that wind energy reduces CO2 emissions at a cost of $237/ton while the Obama administration itself only valued the social cost of carbon at roughly $40/ton.”
He also referenced a paper released by the center-left Brookings Institute showing wind energy and solar are not the low-cost means of avoiding CO2.
“Replacing coal with natural gas and nuclear is far cheaper,” Martis said. “So it leaves a serious policy question: If you have $1 billion of ratepayer money to play with, do you want to avoid one unit of CO2 with wind or six or eight units by fuel switching from coal to natural gas or building nuclear power? In fact, the reason the U.S. leads the Western world in CO2 reduction in the electricity sector is precisely because of fuel switching rather than renewable energy development.”
A study released this week reveals that wind turbines pose their own set of reliability and economic problems.
“The High Cost of 100 Percent Carbon-Free Electricity by 2040” details issues related to the complete adoption of carbon-free, renewable energy provided by wind and solar technologies.
The Minnesota-based Center for the American Experiment study was authored by CAE’s Policy Fellow Isaac Orr, Policy Analyst Mitchell Rolling, and Economist John Phelan. Although the study is specifically focused on Minnesota, Orr told The Center Square its conclusions also apply to other states such as Michigan that have adopted carbon-free energy mandates. Michigan-based Consumers Energy, for example, is proposing to generate 63% of all the state’s electricity from renewable sources by 2040.
“Our report found that attempting to power the state of Minnesota using primarily wind, solar, and battery storage would cost a staggering $313 billion through 2050 and cause blackouts in two of the three years we investigated,” Orr said. “Prices would rise, reliability would fall; in essence, it would be the worst of both worlds. This proposal is gambling with the electric grid, which is an incredibly irresponsible thing to do.”
The CAE writers also conclude the state’s renewable mandates would result in the loss of 79,000 jobs and reduce Minnesota’s state gross domestic product by more than $13 billion annually.
“Renewable advocates often claim that wind and solar are the cheapest forms of energy, but our analysis found the true cost of meeting electricity demand with wind and solar was $272 per megawatt hour (MWh) and $472/MWh, respectively, when the cost of battery storage and overbuilding and curtailment costs were factored in,” Orr said. “This means wind turbines and solar panels are much more expensive than the power plants they replace.”
The additional costs of transmission, property taxes, load balancing and other embedded costs would drive wind-generated energy above $270 per MWh, according to the report.
“One of the key failures of the push to so-called green energy is a refusal to accurately account for any associated negatives of using wind or solar,” Mackinac Center for Public Policy Environmental Policy Director Jason Hayes told The Center Square. “While renewable energy advocates strive to track even the most minuscule costs associated with fossil fuels or nuclear energy, they appear to happily ignore many of their benefits, such as being a reliable and affordable source of electricity and transportation fuels.”
Hayes said renewable advocates focus on “claims of reduced emissions from wind and solar, while ignoring or downplaying the growing string of human rights and supply chain issues associated with transition minerals, or how they are eating up ever more acres of land,” he said. “Having a full accounting for the emissions associated with wind and solar is every bit as important as accounting for the emissions from fossil fuels. That full accounting would likely change more than a few minds on the actual value of renewables.”
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Tyrannical pseudo-science
As if we haven’t had enough of politicians in our faces in the Peoples Republic of Victoria in the last two and a half years, we now have Dr Monique Ryan in the Federal Parliament courtesy of the Woke and bespoke voters of Kooyong. Dr Ryan is a neurologist and says she is a woman of science; therefore (presumably) she cannot be questioned on her views on Climate Change, after all, she is a scientist and the science is settled
I live outside Melbourne on the edge of the western plains in a tiny town called Toolern Vale, where there are more horses and rabbits than humans. We are 70km from Ballarat and the westerly wind in winter blowing from Ballarat is infinitely colder than any mother-in-law’s kiss. We are very much aware of, and exposed to, climate change, but out here we call it the weather.
I have had a gutful of being hammered with the new climate religion which appears to have little basis in science. Its adherents are a group of virtue-signalling, privileged elites who, in their delirium and zealotry, use selective climate data and extreme language to spread the word via propaganda and are brainwashing our young, infecting our Parliament, and slowly destroying our prosperity.
At present I am paying at least four times the amount I should for electricity despite having a bank of solar panels. In the near future, I can look forward to a completely random electricity supply which will interrupt my ability to earn an income and put me in third-world living conditions. My taxes are propping up the renewables market thereby deliberately sabotaging the supply of essential fossil fuels.
Chris Bowen is hell-bent on forcing me to sell my V8 ute, replacing it with a not-fit-for-purpose EV and, to top it off, wind turbine transmission lines are coming through my neighbour’s property. I hear our Prime Minister thinks the changing climate is a threat to the ‘survival of our way of life’; well Prime Minister, it is not the weather that threatens my way of life, it is your bizarre, delusional, religion-based reaction to it.
News from the UK and Europe informs us that their citizens are soon to enter the winter from hell – not because of the weather per se, but because of a shortage of baseload power and the available power they do have is astronomically expensive. Many people will be unable to afford both food and heating and people will die. Already governments are telling their citizens how they can use the available power.
Is Dr Ryan aware of this situation? If so, does she think the science differs in the southern hemisphere, or that we live in a parallel universe?
Not being a woman of science, I will put it in layman’s terms. Let’s say you walk into a pub and sit down at the bar; the bloke next to you orders a drink, he takes a swig of it and falls to the floor – dead. Would you turn to the barmaid and say I’ll have what he’s having, but make it a double? That is what Dr Ryan wants you to do; despite having already seen the first season of the blockbuster series European Dream – No Electricity, No Industry, No Future, she appears to want us to follow the UK and Europe over the edge of a cliff.
Make no mistake, this is not about saving anything – this is about an entire class of privileged zealots in wealthy seats forcing their religious beliefs onto us. If you question them and ask for a reliable energy source, you’ll be cast out and called a heretic. If you object to following UK/Europe into third-world chaos and misery you’ll be told the science is settled.
In the spirit of science Dr Ryan, I propose an experiment.
The electorate of Kooyong goes off the grid. Wind turbine transmission lines will be run along the Yarra River in Kew and Hawthorn. Solar farms will be built in the parks and golf courses of Balwyn, Canterbury, Deepdene, Hawthorn, Mont Albert, Camberwell, Glen Iris, Kew, and Surrey Hills. The electorate is to function solely on wind and solar-generated power. Limited battery storage will be permitted – baseline domestic batteries, the type the government would install in public housing. In my electorate of Hawk – I volunteer to go off the grid, no renewables, no batteries and I will have a small modular reactor installed in my back paddock.
It’s about time Dr Ryan and the rest of these self-righteous, puffed-up toffs made a real sacrifice on the altar of Climate Change. Money means nothing to the virtue-signalling green electorates, so they should feel some Climate Change piousness by turning their green spaces into wastelands of solar panels and transmission lines; they should live with the result of relying on 100 percent renewables.
Dr Ryan, charity starts at home, lead by example; get out of my face and out of my environment.
https://www.spectator.com.au/2022/09/get-your-science-out-of-my-face/
***************************************My other blogs. Main ones below
http://dissectleft.blogspot.com (DISSECTING LEFTISM )
http://edwatch.blogspot.com (EDUCATION WATCH)
http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)
http://australian-politics.blogspot.com (AUSTRALIAN POLITICS)
http://snorphty.blogspot.com/ (TONGUE-TIED)
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Jim Hansen and his twin
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