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Category — European Union (EU)

European Energy Policy: The ‘Fatal Conceit’ Continues (EU’s ‘Energy Roadmap’ to 2050 Reconsidered)

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

- F. A. Hayek: The Fatal Conceit: The Errors of Socialism (1988), p. 76. 

The European Commission’s (EC) just-published Energy Roadmap 2050 (Roadmap) updates its last analysis (which I criticized here) of EU forced-energy-transformation projects to 2020 , as well as  scenarios reducing greenhouse gas emissions to 80-95% below EU 1990 levels by 2050. The forecast is stated (postmodernism?) as coincident with the need for energy security and affordability.

As one should “follow the money” when it comes to political capitalism, one should “follow the assumptions” when it comes to any roadmap pertaining to a post-carbon-based energy world.

1. Renewables The share of renewable energy sources is projected to be 75% in gross final energy consumption and 97% in electricity consumption by 2050. Electricity is projected to provide a substantially increased share of final energy demand reaching almost 40% by 2050 versus just over 20% today. A chart on page 5 of Roadmap shows renewable targets of 40–60% versus the above-75% as reported on page 4.

Either way the renewables portion is unrealistically high.

2. Costs The costs involved are substantial. Cumulative grid investments alone could be 1.5 to 2.2 trillion Euros between 2011 and 2050 according to the Roadmap. Remember much of this will have to be front-loaded to provide the infrastructure to theoretically support the projected deployment of renewable energy sources, and could easily be under-estimated given the uncertainties of such long term projections.

To this must be added an amount in the same order of magnitude for the renewable generation plants. Then there is also the additional cost of duplicate capacity of conventional generation plants required to compensate for wind’s unreliable and erratic behavior. These very high costs are consistent with those I previously described here and here.

Interestingly, as part of the process, the EC saw fit to establish an ad hoc Advisory Group (Group) to provide independent, expert advice on the proposed Roadmap. The following is a brief review of this energy policy approach in terms of the Group’s report published in December 2011. [Read more →]

January 30, 2012   4 Comments

The Expensive Failure of Europe’s Emissions Trading Scheme: A Summary

The European Union Emissions Trading Scheme (ETS) is currently the largest cap-and-trade scheme in the world. Covering 11,500 installations and countries with a combined population of around 500 million, the scope of the scheme is truly enormous. Before Americans adopt a cap-and-trade scheme of their own, it is vital that they take a serious look at how things have gone in Europe. I hope that my study, released at the end of last week, can demonstrate some of the huge risks that the United States will face if cap-and-trade advocates get their way.

The first thing to note is that the scheme has cost European consumers a fortune. There was a total bill of €93 ($123) billion between the introduction of the scheme in January 2005 and the end of 2008. That is €185 ($245) for every man, woman, and child across an area where average incomes are considerably lower than they are in the United States. That bill is expected to rise in the years to come.

And the people who pay the heaviest price are those least able to bear it. A large part of the bill to consumers will come through higher prices for electricity. When you combine the ETS with other policies, such as renewable energy mandates, which may well form part of a cap-and-trade bill, they amount to 14 per cent of household electricity bills in the U.K. That will be felt most by the poor and elderly. By contrast, [Read more →]

November 3, 2009   2 Comments