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European Energy Policy: Tramping in the Dark (Andrew MacKillop on the reality of failing public policy)

The European Energy Review has published a comprehensive article on the EU energy policy, entitled “Europe’s green energy chaos” by Andrew MacKillop (sometimes appearing as McKillop), an independent energy analyst and project advisor who has written on energy topics for over 35 years, and who worked for the European Commission’s Directorate-General of Energy as a policy expert in the 1980s.

EU policy can be summarized as 20-20-20 by 2020. Catchy isn’t it? It means 20% improvement in energy efficiency, 20% reduction in emissions, and 20% use of new renewable energy sources – all by 2020.

When publicized, the EU plan was (properly) criticized by the Economist and Dieter Helm, the chairman of the ad-hoc committee established by the EU to provide expert advice. MacKillop’s critical analysis of the current problems of government-heavy energy policy is spot on.

Government Planning in the Name of Markets

The EU energy plan inverts free markets and industrial government planning as discussed by MacKillop:

The climate and energy package makes heavy use of the notion that by preventing pipelines, power transmission lines and electric power stations being controlled by one company or entity, even if this entity is publicly owned and accountable to all democratic procedures for its control, will enable a “free market” that will create an upsurge in activity by small businesses who will gain entrance to the market. The usual way this notion is sold to voters and to the public is the claim this will automatically produce cheaper energy and more jobs, with additional climate and environment protection frills thrown in as needed.

In reality, the climate and energy package favours large industrial conglomerates in the energy sector and, as we know, Europe’s energy market liberalisation since 1996 has coincided with some of the largest energy price rises for final consumers in recent history.

The ideological basis of the energy and climate package remains highly schizophrenic: on the one hand the initiatives are rigorously federalist, integrative and convergent, on the other they are rigidly free-market oriented. The results “on the ground” are however not perceived as positive by the majority of European citizens and increasingly by European national governments, who are more and more opposed to what they see as an unholy alliance between Brussels bureaucrats and profit-gouging, subsidy-gouging private corporations.

Political capitalism writ large, very large. Shades of Enron and government!

The article reports on the failures of the key elements of the energy policy as indicated in the following sections. Extensive quotes are used because MacKillop describes the situations so eloquently.

Carbon Trading

But this whole CO2-trading scheme seems to have had very little effect so far. The basic objective of cutting CO2 emissions in Europe was in reality more easily obtained by outplacement, delocalisation and deindustrialisation, economic recession and rising unemployment.

How realistic and effective is this climate policy? First of all, it should be noted that the EU27 countries have only significantly cut CO2 emissions on a year-by-year basis during sharp economic downturns, most recently in 2008-2010. During periods of growth, most recently 2004-2007, EU27 emissions increased with economic growth ….

Green Jobs

Previously I discussed this in terms of competition from China here. The questioning of job creation with renewables has also been dealt with for Spain here, and Italy here.

All of these technologies and systems are capital intensive and generate few jobs. In addition, notably in wind power and solar power, European producers are exposed to rising competition from China and India, and Europe’s “green tech” industries are quick to shed their few employees when market conditions sour or government subsidies dry up.

Super Grid

This, or the often used other name the “smart grid,” is not realistic for the foreseeable future as previously discussed here. MacKillop says:

It is nice to talk about “power system integration and 24/7 trading of electricity across Europe”, but before this can become a reality, it is necessary to build a real world European power network, and the costs will be extremely high, if it ever happens. Large capacity on-demand and all-year power transport systems, nicknamed the “Super Grid”, are hugely expensive.

The Commission itself, and ENTSO-E (the electric power transport operators group) indicate that some 40,000 kilometres of new high capacity, low loss, “high tech” power grids are urgently needed and must be built in Europe – at costs as high as 10 million euro per kilometre, i.e. a total cost of €400 billion. Actual current work on the ground in most countries is low or zero, mainly because of the high costs.

Wind plants are the main focus for solutions. Not reviewed is the notable positive correlation in wind plant production across Europe. Even zero correlation would not help substantially. In order for one area’s wind production to offset that of another, significant negative correlation would be needed to justify the large investment required. Where is the unwanted and erratic wind production from any area going to find a willing recipient?

Costs

As with the “smart grid” issues, the matter of unmanageably high costs (multiples of $trillions) for little return has been dealt with here. MacKillop’s article says:

In the meantime governments spend massive amounts of money on renewable energy. The main pillars of the EU’s electric power programme are wind power and solar electric power, with as much as 67% of all electric power spending in Europe to 2030 (some €540 billion on a total amount presently estimated at around €900 billion) supposedly going only to these two sources and systems.

This would presumably be through the free play of market forces, but in reality will need extremely high and constant government or EU subsidies, grants, tax exemptions and other aids that have nothing to do with the free market. In particular these include feed-in tariffs (FITs), with state guaranteed prices as high as 20-25 eurocents per kWh for solar power and 16 eurocents per kWh for wind electricity being paid to producers in some countries. These FITs have become increasingly controversial in most European countries, because of their high cost, and are being cut back to a large extent – which will inevitably constrain activity in European wind power and solar power, cause job losses, and cause delocalisation and outplacement outside Europe of manufacturing activity in these two sectors.

and,

Total spending requirements to 2030, for wind power and solar electricity could easily exceed €2000 billion, including the obligatory and massive upgrading of Europe’s electric power grids, according to my analysis of the likely costs, if the policy package continues and is not heavily reformed, or simply abandoned.

Plan B

MacKillop concludes with the following and calls for a much-needed plan B.

In many countries and in the EU itself climate and energy policies and programmes are already being adjusted or abandoned. This includes the downsizing or cancellation of plans for biofuel production (especially food crop based bioethanol), reduced plans and incentives for massive offshore wind farm development, delays in investments in large-scale electricity grids and interconnections, including so-called smart grid projects, and reduced subsidies and lower feed-in tariffs for solar and wind power.

By and large, Europe has become realistic about offshore wind. To date, Germany has installed much less than 1% of the offshore wind plants projected in 2005 by dena, the German Energy Agency. After initial installations, Denmark stopped implementation in 2003. Against this weak showing by other European countries, the UK has become the leader in offshore wind. Recent stirrings in Denmark and Germany can easily be attributed to a need to stay ahead of the Chinese whose competition in onshore wind is formidable.

Internationally recognized energy experts have already provided the basis for a plan B. This is a major discussion in itself. Those wanting some insights can refer to:

  • The work of international energy expert Vaclav Smil,[i] and in particular his book, “Energy in Nature and Society”.[ii]
  • The thinking of Dieter Helm,[iii] as already mentioned, the Chairman of the Ad Hoc Advisory Group that the European Commission has established to provide expert advice. See his views on better approaches in this article in European Energy Review under “Good News”.[iv] In considering Helm’s comments on renewables, I suggest that, in the time frame he sees, the likely renewable solution will be solar technologies, not wind.
  • The analysis provided by David MacKay,[v] Chief Scientific Officer for the UK Department of Energy and Climate Change, in his online book “Sustainable Energy: Without the Hot Air”.[vi]

Conclusion

My analysis of their general theme is that we have to make the best use of our existing energy sources in the short to medium term of up to 30 years or so. In so doing, it is essential that we make substantial improvements in extraction means, efficiencies of energy conversions and intelligent use. Many others have written on similar approaches, but these are particularly notable.

In particular, the following quote is a very brief encapsulation of Smil’s views, which I strongly suggest must be understood within the broad context of his writings:

Gradual transition to a civilization running once again on solar radiation and its rapid transforms (but now converted with superior efficiency) is the most obvious solution to energy-induced global environmental change… Such a transition cannot be fast or easy because it will amount to an unprecedented test of worldwide socio-economic arrangements. [vii]

Growing awareness of the substantial flaws of the EU energy policy aside, the present wide-spread European sovereign debt default situation is likely to overwhelm these considerations. The result could be an enforced return to reality in the energy industry sectors, but this is small comfort in terms of the larger economic dislocations that will likely occur in the near term.

One has to ask how much a sensible, realistic European energy policy starting in the latter part of the 20th century might have averted some of the current financial stress, in at least some countries most at risk now, for example Spain. Further, more sensible energy policies would likely have provided more maneuvering room today for the other members of the European Union to rescue consequently fewer countries from the other causes of the current financial crisis.

It is not just the Europeans that are going to suffer the consequences.


[i] http://www.vaclavsmil.com/

[ii] Smil, Vaclav (2008). Energy in Nature and Society: General Energetics of Complex Systems, MIT Press.

[iii] http://www.dieterhelm.co.uk/

[iv] European Energy Review (2011). “The Eurovision Energy Contest 2050”. http://www.europeanenergyreview.eu/site/pagina.php?id=3006

[v] http://www.inference.phy.cam.ac.uk/mackay/

[vi] MacKay, David. “Sustainable Energy: Without the Hot Air”. http://www.withouthotair.com/

[vii] Smil (2008) page 382.

6 comments

1 Barry Sheridan { 12.23.11 at 12:58 pm }

Dear Sirs, as a UK resident already suffering under the ludicrous energy policies being pursued in this country one wonders what will make our foolish leaders reconnect with reality. Energy, affordable energy, is essential to a modern economy, just as it is necessary to sustain a reasonable standard of domestic living. Neither of these facts seems to have percolated into the minds of Britain’s energy czar Mr Chris Huhne, never mind its Prime Minister, Mr David Cameron. Doubtless they will be happy when every winter kills off a healthy slice of the population. Think of the money this will save via pension, healthcare and other costs generally associated the passing years.

2 Jon Boone { 12.26.11 at 11:19 am }

Timely article that exposes European energy policy folly as a warning for North America. But let me demur about this passage from Smil:

“Gradual transition to a civilization running once again on solar radiation and its rapid transforms (but now converted with superior efficiency) is the most obvious solution to energy-induced global environmental change….”

The more I read Smil, the less confidant I am that he really understands the basic physics behind any technology that would convert solar radiation (and its various spin-offs like wind and even fossil fuels) into modern power needs. Indeed, the issue in any such conversion is not “efficiency,” since many of these machines are now close to operating at the very threshold of their maximum potential for avoiding heat loss. Rather, the issue is the diffuse nature of their source of power, where energy concentrations are so low that it is physically impossible to convert them to modern power–without substantial supplementation. This makes for an infinite regression–the more wind and solar machines, the more need for machines that provide genuine power capacity–ad infinitum.

3 Kent Hawkins { 12.26.11 at 2:53 pm }

Jon,

I appreciate your comments and accept that there will be various views on some subjects touched on.

My intent in including this quotation from Smil is to acknowledge the possibility of perhaps one renewable energy source at some distant time in the future, thus avoiding the argument that I might be arbitrarily ignoring this consideration.

As I am quoting Smil out of context on a very complex subject, I did warn as follows, “…I strongly suggest must be understood within the broad context of his writings.” He does provide qualification, not dissimilar to your comments, in the source from which I took the quotation.

Having said that, my view is to not dismiss solar as a future energy source of some importance, especially as opposed to other renewables that are much more characterized by the restrictions you mention (e.g. wind and hydro). I cannot reject out-of-hand a future, significantly improved solar conversion technology (think in terms of up to 50-100 years) in a context of a robust presence of true distributed generation (that is for local consumption), and in company with other energy sources, conversions, infrastructures and complementary new energy storage capabilities. Such storage capabilities could be still at the distributed level, further contributing to avoiding the need to transmit the derived electrical energy from the dispersed solar source over long distances to demand centers.

But this is itself a broad topic, and this article is not just about Smil or solar. It is about the flawed European energy policy involving the massive imposition on a utility scale of ineffectual new renewables today.

4 Jon Boone { 12.27.11 at 1:01 pm }

Thanks, Kent. But I based my comments regarding Smil on his own writings, in context, specifically his “Energy Myths and Realities” and Energy Transitions”–both of which I recommend. I think Smil is dead serious when he says that radiant solar and its spin offs will be “the most obvious “solution to energy-induced global environmental change….” This is not obvious to me.

I agree that solar may play a larger role in the future, given improvements in its capture techniques as they might be embedded in various surface structures, including glass and paint. Passive solar, if used more widely in architectural planning, may also prove helpful. As you say–and as I’ve written–these can contribute to distributive power requirements. However, I can’t conceive a modern industrial society using such a technology for the bulk of its power 50 years from now. Or 500 years in the future. In general, I think storage systems are so inelegant and Rube Goldbergesque, particularly at large scale, that they will increasingly be forgotten as direct power applications with better technology are developed. Even automobile batteries, as wonderful as they’ve become, would quickly become a relic as nuclear power packs become widespread.

Of course, there is a surge in hydro projects around the world: http://www.iol.co.za/business/international/surge-in-hydropower-projects-1.1200253. And these solar derivatives will improve quality of life for millions of people. But they will degrade the environment, in ways that we in the US and even Canada understand. Hydro will continue its steady decline as a power producer in the West, although for much of the last century, it held pride of place as the grand functional renewable. Weren’t we all in thrall to the Hoover Dam!

The future no doubt will unfold with many surprises, among them new technologies, which themselves will require generations to implement throughout society. Given incredibly dense nuclear energies and our history of inventing machines using higher and higher energy densities, I think the future will rather ineluctably embrace these technologies as a “solution” for “energy induced environmental change,” whatever that might mean….

5 Kent Hawkins { 12.28.11 at 10:47 am }

Jon,

We have many points of agreement and a few where we may not be completely connecting.

I reiterate my caution about taking the Smil quote I used in context with his complete works. In one of Smil’s books that you mention, “Energy Myths and Realities”, he says with respect to nuclear, “…it may yet turn out to be one of the best choices to moderate the rate of anthropogenic climate change…”.

Continue to focus on the use of the term “obvious” in my quote if you like, but it can have a softer appreciation than you may be applying, for example, from the Oxford Concise Dictionary – easily seen or recognized or understood.

In the reference I quoted from, Smil provides adequate qualification. I suggest if any error exists, it is mine in using this particular quote in the way I did in an attempt to provide completeness to my discussion. From my previous comment, “My intent… is to acknowledge the possibility of perhaps one renewable energy source at some distant time in the future, thus avoiding the argument that I might be arbitrarily ignoring this consideration.”

Unfortunately, you may appear to be characterizing some of my comments in ways I did not intend, but perhaps this was not intentional on your part. The less-than-careful reader might conclude from your comments that I have said that solar technologies would provide THE BULK of modern industrial societies’ power 50 years from now. Capitalization has been used here for emphasis. To ensure the record is correct (and not necessarily to disagree with any of your comments), what I said was:

“I cannot reject out-of-hand a future, significantly improved solar conversion technology (think in terms of up to 50-100 years) in a context of a robust presence of true distributed generation (that is for local consumption), and IN COMPANY WITH OTHER ENERGY SOURCES, CONVERSIONS, INFRASTRUCTURES and complementary new energy storage capabilities. SUCH STORAGE CAPABILITIES COULD STILL BE AT THE DISTRIBUTED LEVEL…” Again I have used capitalization for emphasis.

In this connection you raise the important issue of energy density, which I believe my comments address in the area of distributed generation. You do not acknowledge the equally important aspect of power density, where even today solar is a leader among renewables and on a parallel of that for many houses and some industries. Technologies with “superior” conversion efficiencies will improve this critical aspect as well, allowing the application to the more urban/industrial environments (where high power density is vital), but still in a distributed generation sense, that is the electrical energy is consumed where it is generated, generally speaking.

I certainly agree with your comments on hydro as I indicated preciously.

In the interests of not unduly extending this, you may now have the last word if you wish.

6 Lionell Griffith { 01.01.12 at 9:12 pm }

Public policy as it is currently conceived is based upon the fiction that 2+2=48 when you add government dictate to the mix. Meaning you can capture 2 watts of solar energy for 2 hours and it makes 48 watt hours of energy for the full 24 hour day. It would work except for the insignificant fact of the need for a real power plant to be online as backup that is capable of delivering the 48 watts of energy per hour for over the 24 hour period. The other little, really quite minor, problem that can be ignored is that all the solar energy collected takes a hardware installation who’s cost is multiples of the backup power station. It’s all merely some small details to be glossed over by political fast talk, legislation, and subsidies. The only efficiency in the process is the efficiency of the rape of the taxpayer and rate payer pocket book. It will soon reach its maximum efficiency of 100% and produce a dead economy.

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