An Energy Response to Climate Change and Putin

The quest for the energy system of the future -  clean, cheap, reliable

Summary.  In this paper I describe the main challenges the world faces in terms of energy supply in the wake of Russian president Vladimir Putin’s decision to invade Ukraine, and connect them with the Paris Agreement’s decarbonisation goals and other deficiencies in world energy systems. I then outline a “wishlist” of characteristics that are desirable for the design of a modern energy system that allows countries to decarbonise their economies, reduce pollution, while reducing dependence on imported fuels. Finally, I look at the implications for the EU’s energy plans, especially its ambitious decarbonisation strategy.

The invasion of Ukraine launched by Russian president Vladimir Putin on February 24 will have a profound impact on the future of energy in Europe, America and the world, and adds a new twist to humanity’s efforts to divest from fossil fuels in order to reduce CO2 emissions. In Europe, Putin’s act is already producing far-reaching consequences in reaction to the continent’s exposure to Russia’s fossil fuel imports.

A geopolitical crisis that comes on top of a climate one

The new energy crisis caused by the invasion of Ukraine compounds the complexities of the energy transition that world countries have launched in response to the threat of climate change.

With the Paris Agreement of 2015, world governments set ambitious goals to stop adding CO2 to the atmosphere by the middle of this century. For that to happen, the largest economies would all have to largely stop using coal, oil and gas within a few decades and switch to zero-carbon energy sources. 

Government action has so far been slow, and it is questionable whether under current policies the world will get any closer to meeting the target. Progress from civil society has been more promising.  Environmental activists have succeeded in launching a vast movement to push major investors to meet strict environmental, social and governance (ESG) criteria when placing new investments. The EU is even publishing legislation in that sense. As a result, many major banks, funds and other financial institutions have stopped financing new coal mines or coal plants, and until the Ukraine war, were on the path of pulling out of new petroleum investments, too.

The activists’ idea is that such divestment from fossil fuels would be accompanied by new investments in zero-carbon technologies, especially wind and solar power. This, however, comes with its own set of problems. Wind and solar produce electricity intermittently - solar produces no power when the sun is not shining, and wind turbines need wind to operate. Thus, for such technologies to replace coal, gas and oil, massive investments in energy storage and/or grid infrastructure is needed. This comes on top of rising concerns about the environmental impact of the manufacture, use and replacement of solar panels and wind turbines. Recently, wind power has been facing further challenges relating to its financial viability and its safety.

While there are other readily available zero-emission technologies - most notably hydro and nuclear - these are not in favour within sectors of the environmental community: large hydropower dams cause serious environmental problems for rivers and their wildlife, while nuclear power is often feared for causing dangerous radioactive waste and the risk of major casualties in case of an accident. Wave power, tidal power and geothermal are all technologies that have had promising futures for the past three or four decades, but have had limited success in achieving large scale deployment.

Because of these constraints and the focus on wind and solar generation, progress towards decarbonisation has so far been quite slow. The vast majority of energy used today by humans on this planet is still derived from coal, oil and natural gas. In 2020, wind and solar accounted for a mere 1.4% of world energy consumption. If we add hydro and biomass (a word that encompasses a range of activities from wood burning to ethanol addition to gasoline), renewables still count for less than 15% of total consumption.

The German experience tells us what mistakes to avoid

The country where the contradiction between environmental ambition and the difficulties in changing course are most jarring is Germany. Since the late 1990s the country embarked on the Energiewende, a very ambitious strategy to replace all its nuclear and fossil fuel power plants with renewable energy sources. Under the plan, the last nuclear reactor in the country is due to be shut later this year, while electricity generation from coal is to stop by 2038 at the latest. Given the size of Germany’s economy, this is arguably the most ambitious energy transition plan worldwide. Almost a quarter of a century since launching this strategy, the statistics show that in 2021 renewables provided no more than 16% of the total energy used in the country - the rest coming from fossil fuels and a dwindling share of nuclear power. This is not much higher than the world average, and has come at immense cost to the taxpayer and electricity user - German households pay among the highest electricity bills in the world. This is very different from the scenario that many Germans had imagined: a world where windmills and solar panels would produce abundant, clean, pollution-free electricity to citizens and companies. 

Most worryingly, since renewables have not been able to fully replace the nuclear power and coal plants being shut down, to fill the gap Germany has increasingly relied on natural gas, most of which it imports from various countries, especially Russia. Gas emits less CO2 than coal, so its growing use allows Germany to claim it is making regular progress towards its decarbonisation goals. More worryingly, as the Ukraine crisis has shown, it has exposed the country to dangerous foreign influence. Today, it is estimated that Russian gas provides upwards of 13% of Germany’s total energy use, while Russian oil makes up over 10%. While over the coming months the country should be able to find alternative sources for most of its oil imports from Russia, it will have a harder time finding alternatives to Russian gas. In the short term, it will not be easy for Germany to find alternative sources for a quarter of its energy needs.

What went wrong? The main mistake was incorrect planning - Germany adopted sweeping legislation to close down nuclear and coal plants without a specific vision for what would replace them. There was a vague idea that the impending closures would focus minds and lead to new, creative ideas to develop alternatives, mainly solar and wind power. What instead happened is that companies simply used more of the last traditional fuel that was available to them - natural gas. The result is that Germany today uses a similar share of renewables as Italy and France, both countries with more cautious energy transition strategies.

From Germany to Europe, and the world

While the case of Germany’s dependence on Russian energy sources is particularly severe, several other European countries are also heavily dependent on their large Eastern neighbour. Stepping up sanctions against Russia is likely to have serious consequences for Europe. Prices of heating fuel have already increased dramatically, and there are signs that Europe and the world should brace for serious diesel shortages. The US offer in March to provide Europe with 15 billion cubic metres of gas will go somewhere towards replacing the 50 billion cubic metres the continent currently imports from Russia. But finding gas to supply the rest of the shortfall will not be simple.

In search for globalisation 2.0

Russia's invasion of Ukraine Comes on top of the global supply problems unleashed by the COVID-19 pandemic. Globalisation as we know it is probably dead - the result of a process that started with the election of Donald Trump as US president with his “America first” rhetoric. Countries all over the world are thinking about how to reduce long term dependence on imports for their vital resources. This does not mean an end to globalisation per se, but will imply a serious course correction compared to current trends.

In the field of energy, a correction in world supply lines is long overdue - the first major sign of regional overdependence on imported fuel came with the oil shock of 1973. Today, regional imbalances over resource distribution have actually become greater and more serious than they were then. Besides being polluting, fossil fuels are no longer a reliable source of energy for the world given the unreliable regimes in many of the supplying countries - whether it is murderous crown princes (Mohammed Bin Salman of Saudi Arabia), former secret service agents turned presidents (Putin of Russia), or former truck drivers running impoverished countries (Maduro of Venezuela). 

Where Russia’s war and climate change meet

In this broad context, Putin’s warmongering might end up providing the extra push that many industrialised countries need in order to finally start weaning themselves off fossil fuels.

In the short term, those goals might be delayed, as European countries will need time to replace Russian energy with whatever alternatives they can find, irrespective of the environmental impact. Germany has indicated it might delay its planned phase out of coal-fired electricity plants, though its leaders appear to be still unable to develop an alternative energy plan to exclude Russian imports.

Looking at the longer term, the combination of the challenges of climate change, Russia’s subversion of the international order, plus the supply chain deficiencies highlighted during the COVID-19 pandemic, all require the world’s largest countries to rethink their energy policies.

A vision for our energy future - an all-electric world?

Following news of the Russian invasion, Germany has performed a rapid and dramatic U-turn in its foreign and defence policies, pledging higher military spending and suspending the Nord Stream 2 pipeline. Other European countries have also taken action, and the EU is doing its best to show a common front to this unprecedented challenge. Europeans have reached a sudden understanding that Russia can no longer be trusted as a trade partner, and it is imperative for the continent to find alternative energy sources as soon as practically possible. While short term solutions like increasing gas and oil storage can help it through the next winter, in the longer term some serious changes will have to happen. And the long term direction of change will inevitably be towards clean and local energy sources. Both Europe and the US need to spend considerably more on research and development with the goal of finding new, game-changing technologies. 

A future-proof energy system will have to be environmentally sustainable, but also flexible and resilient. A model to follow would be the internet, which in the Ukrainian war has once again shown an ability to remain in operation even under massive bombing and infrastructure destruction. The internet achieves this because of its highly decentralised and diversified nature.

Our energy future needs to learn from the internet. Electrification can provide a major step in that direction - most domestic, industrial and transport energy use should switch from burning heating oil, coal or gas to electricity. More electric motors and more electric heating and cooling will require more electricity production. The electricity system will have to be reinvented, in a diversified manner where no country depends on one single source of electricity production (as Germany was doing with its increasing reliance on Russian gas). As long as electricity is produced from zero-CO2 sources, electrification enables the greening of the whole economy. 

In praise of diversity

Current energy technologies all have advantages but also serious drawbacks. Coal and gas plants are very flexible - they can be ramped up or down according to changes in electricity demand -  but they emit CO2 and in Europe’s case, are imported from various countries, many of which are not politically reliable. Nuclear reactors are not so flexible - once one is fired up, it keeps producing electricity until the fuel rods need to be changed - but the industry has yet to solve the nuclear waste issue, and fears of a new Chernobyl remain high in most countries. Solar panels produce no electricity at night and are heavily dependent on weather conditions. Wind is also dependent on the weather. Both wind and solar equipment are resource-intensive: wind turbines use very large amounts of steel per MW of power, while solar panels are getting more efficient but also increasingly dependent on rare minerals, and are hard to recycle. While proponents of wind and solar claim that they can overcome these drawbacks with energy storage, the technology isn’t there yet.  Batteries can store electricity, but use a lot of raw materials, including rare earth minerals, and risk causing major waste problems at the end of their lifecycle.

New energy technologies need to combine the advantages of gas, coal, nuclear and renewables without their drawbacks. Distributed energy sources will probably never fully replace the electricity grid, and transmission lines will remain crucial for the reliability of the whole system.

A hydrogen future?

Policy makers in Europe are showing growing interest in hydrogen as a storage medium. Hydrogen can be used to generate electricity virtually CO2-free with fuel cells, though so far it has been difficult to produce hydrogen in an environmentally responsible manner. But if the electricity used to make hydrogen comes from renewable sources, this “green” hydrogen can provide crucial support in weaning the world off fossil fuels. 

The vision of a hydrogen economy would see a variety of zero-emission energy sources producing hydrogen, which would be stored until needed. At time of use, the hydrogen would be fed into fuel cells for generation of electricity. 

While currently we are far from being able to produce remotely sufficient amounts of green hydrogen to replace coal,  gas and nuclear, a second-best, temporary option would be “blue” hydrogen, produced by splitting natural gas into hydrogen and CO2 via industrial processes, with the CO2 being captured and then stored. Such a process would emit far less CO2 than current fossil fuels, and would allow the development of hydrogen-based supply networks, while engineers will be busy figuring out ways of producing larger volumes of green hydrogen.

Another promising technology where there have been recent encouraging developments is nuclear fusion, which if realised would provide abundant amounts of energy, potentially cheap, green, and reliable. This energy would rely on the existing electricity grid, which would make it easier to deploy.

A largely electrified energy system of the future should tackle the “electricity trilemma” that dominates classic electricity policy doctrine, whereby electricity should be

1. Environment friendly
2. Reliable
3. Affordable

Energy and the environment

The new energy technologies that are needed should meet the following environmental criteria:

• Very low or zero CO2 emissions
• Low dependence on mineral resources
• Low environmental impact during their whole lifecycle 

The evaluation of the environmental impact of a technology should be based on the emissions it produces or resources it consumes per MWh of electricity produced. That is the best way to ensure that we develop electricity systems with the lowest possible overall impact on the environment. 

Applying the above criteria, new nuclear technologies such as small modular reactors and nuclear fusion would get a higher rating compared to most renewable technologies  rated high since they produce much more electricity per tonne or raw material used. Wind turbines consume very large  amounts of steel per MWh of generated electricity. Photovoltaic panels need large amounts of water to be kept clean and efficient, require significant raw materials for their manufacture, and produce significant electronic waste at the end of their life cycle. Hydro power causes significant impacts on river basins. Batteries are massive consumers of rare earth minerals, and have low yield per pound of weight. It is true that existing nuclear technologies generate radioactive waste and carry a small risk of a Chernobyl-style nuclear disaster, but new technologies can minimise those significant drawbacks.

Coal or gas plants fitted with carbon capture and storage (CCS) offer the prospect of abundant zero-emission power, though for Europe and Southeast Asia they would require imported fuel, thus exposing those regions to the vagaries of international trade and geopolitics.

Local, decentralised energy for resilience

Besides producing zero carbon emissions, many renewable power sources have the major advantage of being locally sourced, thus less subject to the vagaries of the global commodity markets. This would greatly limit the damage of a crisis such as Putin’s invasion of Ukraine.

Nuclear fusion could also provide energy that does not depend on imported fuel, at least for some countries.

An electricity system should include a diversity of sources. This reduces dependency on any single source of power - like was becoming the case in Germany with its decision to rely on Russian gas imports for most of its power generation.

Diversity of energy sources would also contribute to a more robust and resilient electricity system by reducing dependency on any one technology domestic or imported - that might one day reveal an unforeseen weakness. 

Affordable electricity for all

Finally, electricity must remain affordable. Along with food, healthcare and housing, energy should be ranked as a basic human need. 

This is because in a future all-electric world, electricity will provide

• heating and cooling to protect people’s health. 
• light to extend the productive hours in a person’s day.
• information via the internet, radio, television. 
• power for washing machines and other household appliances that can unshackle people - especially women - from their daily chores. 

Getting from here to there

The transition to a more secure and environment-friendly energy system will not be easy. Current plans merely scratch the surface of what is truly needed. Plans need to take into account the necessary lead-in times associated with new investments: if future deadlines are set for phasing out fossil fuels, investors will not want to spend money building new plants to replace the ones that reach the end of their productive lives, which could expose countries to the risk that if they fail to develop alternatives in time, they will suffer  from insufficient electricity supply.

If governments are serious about the need to eliminate CO2 emissions immediately, they need to consider more than wind and solar - new nuclear power plants will be essential as a bridging technology. It takes ten years to build a new nuclear reactor, a timeframe that would meet the warning in the latest IPCC report that governments need to do much more now to meet their Paris commitments by mid-century. 

Europe, climate change and Putin

The EU has adopted arguably the most ambitious climate targets in the world: it is adopting its fit for 55 strategy to reduce its greenhouse gas emissions by at least 55% by 2030, and is working to further increase this ambition with a new proposed approach to actually achieve full climate neutrality by that date. Until recently, such a goal would have appeared highly doubtful and impossible to achieve.

But Putin’s invasion of Ukraine might change all this. By dramatically exposing Europe’s unhealthy dependence on fuel imports, in particular from inherently unreliable trading partners - whether they be Russia or murderous theocracies in the Middle East - the new crisis is putting EU leaders under unprecedented pressure to develop new energy strategies.

The double pressure of climate and geopolitics could finally push Europe to become a “first mover” in new energy technologies. Unlike the US, Europe lacks significant domestic sources of coal, gas or oil. It thus needs to come up with  new solutions. Hydrogen is only one example.

In practical terms, the immediate response to the Ukraine crisis will require the EU to resort to shifting fossil fuel imports from Russia to other suppliers. At the same time, it must start to find ways of beginning a massive transition towards alternative sources. 

Europe’s high level of energy vulnerability gives it an edge over the United States, where vested interests in the fossil fuel industries, and its low dependence on imported fuels, are making an energy transition to green energy more difficult, as witnessed with the Biden Administration’s difficulties in getting its “green new deal” off the ground. In the wake of the turmoil on world energy markets caused by the Ukraine war, any talk of reducing US development of its oil, gas or coal resources sounds far-fetched at least in the short term.

But although the challenge of Putin’s aggressiveness is offering the EU an opportunity to introduce sweeping reforms, the bloc still suffers from some chronic energy policy weaknesses of its own. The EU lacks the legal mandate to set common European energy policies - Germany remains free to phase out nuclear power just as France is increasing its already high commitment to nuclear power. This is a major flaw in the EU system, one that is unlikely to change in the near term despite all the claims of increased European solidarity in the wake of the Ukraine war. It is not clear how the EU will be able to navigate around it to achieve its energy goals.

One way to perhaps exploit this lack of coherent energy policy is to transform the EU into a major playground for competing approaches to the energy system of the future. The German experiment has so far been a failure, with slow progress in renewables, high dependency on imported fuel and high electricity prices. The French approach results in very low CO2 emissions, cheap electricity prices, and low dependence on imports, but is highly reliant on a single source of energy - nuclear power. Italy has a tradition of innovating in energy saving policies. Maybe from this diverse mix a new energy blueprint for the future will one day emerge