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6 January 2022

Euro “green” crisis is political lobbying that will change nothing

Like many political storms, the one brewing now around the European rule book for what is and is not green, is merely a storm in a teacup. Rethink Energy agrees entirely with the point of view that building gas plants, even where they replace more polluting coal plants, is replacing one evil with another, but that is not the point here.

This is nothing more than the oil companies lobbying European governments, and it is the same old argument – that natural gas can be a “bridge” to green investments. This is only possible because fugitive emissions from gas are being disregarded, and if they were counted in correctly, as shown by satellite data, gas plants would be just as polluting, if not worse, than coal plants.

The nuclear argument is purely France trying to get its way in Europe and while nuclear is no more green than gas, it is a diverse problem that might be solved in the long term – on the one hand how do you store depleted fuel safely, and on the other how do you ensure that nuclear is safe. In the light of the Fukushima disaster it became clear that many nuclear plants in the west were in just as bad shape as Fukushima was before the Tsunami.

But the arguments for both are bound to end in economic tears, because once the politicians have or have not agreed to include them among Green solutions, investors will have to invest in them, and that is simply only going to happen where governments pave the way for guaranteed financial success – and pay a pretty penny for it.

Future nuclear Small Modular Reactors will remain too expensive to build without government backing, just as the current range of giant nuclear reactors are. Given that none in Europe will get a license for 5 years, renewables will be so much more ensconced in Europe by this date, and while have fallen in price so far, that a handful of government backed deals is all that can be expected, and that will make little or no difference.

Gas projects, on the other hand, could easily find funding from the oil giants, who love them so. However, what right minded government is going to ransom the future to the high price of natural gas, along with a dependency on Russian imported gas. That high price has been brought about by the same argument being put forward throughout Asia, increasing the global demand for gas. Again the answer is the same, no investor will back these projects without a guarantee from either the government or oil companies or both, because right now across Europe those gas based generating companies are going bust, and investors have long memories.

Right now it looks like Germany will abstain from the voting and let nuclear be dubbed green, and that under “some” conditions natural gas electricity plants will be seen as green. However such legislation will not change the course of history one jot.

The rules, which are being reported are that nuclear projects will have to be given permits by 2045 to count, and only gas plants will be allowed that produce less than 270g of CO2 per KWh, which also replace existing fossil fuel plants, which get a construction permit by the end of 2030. Expect a huge backlash from the increasingly ardent green activists around Europe, which could create a much bigger political problem going forwards. Also existing plans to phase out coal, gas and nuclear in countries like Germany, will still be on track to be achieved by 2030, as much for economic reasons as for emissions reduction.