Mar 08, 2022
Scott Buchanan
There is a difference between healthy zeal for a basically good cause like reducing CO2 emissions, and unbalanced myopia. Back in September I wrote about the European power debacle (skyrocketing gas and electricity prices):
Shut down your old reliable coal and nuclear power plants. Replace them with wind turbines. Count on natural gas fueled power plants to fill in when the breeze stops blowing. Curtail drilling for your own natural gas, and so become dependent on gas supplied by pipeline from Russia or by tankers chugging thousands of miles from the Middle East. What could possibly go wrong?
Well, now we know what can go wrong.
In January I noted more specifically, “This energy shortage also makes Europe very vulnerable to Russia, at a time when Putin is menacing Ukraine with invasion.” Now it has come to pass. All the huffing and puffing about economic sanctions on Russia is mainly just hot air. Because Europe is utterly dependent on Russian gas, massive “carve-outs” have been made in sanctions in order to continue these purchases to continue. The vaunted SWIFT restrictions on Russian banks have been carved down to practical irrelevance. While sanctions may impact the lifestyles of oligarch playboys, this flow of euros to Russia ensures that Putin will not run short of money for his war.
Ecomodernist Michael Shellenberger writes that behind the Ukraine military drama “is a story about material reality and basic economics—two things that Putin seems to understand far better than his counterparts in the free world and especially in Europe.” Shellenberger asks, “How is it possible that European countries, Germany especially, allowed themselves to become so dependent on an authoritarian country over the 30 years since the end of the Cold War?” and then answers this question in his trademark style:
Here’s how: These countries are in the grips of a delusional ideology that makes them incapable of understanding the hard realities of energy production. Green ideology insists we don’t need nuclear and that we don’t need fracking. It insists that it’s just a matter of will and money to switch to all-renewables—and fast. It insists that we need “degrowth” of the economy, and that we face looming human “extinction.” (I would know. I myself was once a true believer.)
… While Putin expanded Russia’s oil production, expanded natural gas production, and then doubled nuclear energy production to allow more exports of its precious gas, Europe, led by Germany, shut down its nuclear power plants, closed gas fields, and refused to develop more through advanced methods like fracking.
The numbers tell the story best. In 2016, 30 percent of the natural gas consumed by the European Union came from Russia. In 2018, that figure jumped to 40 percent. By 2020, it was nearly 44 percent, and by early 2021, it was nearly 47 percent.
…The result has been the worst global energy crisis since 1973, driving prices for electricity and gasoline higher around the world. It is a crisis, fundamentally, of inadequate supply. But the scarcity is entirely manufactured.
Europeans—led by figures like Greta Thunberg and European Green Party leaders, and supported by Americans like John Kerry—believed that a healthy relationship with the Earth requires making energy scarce. By turning to renewables, they would show the world how to live without harming the planet. But this was a pipe dream. You can’t power a whole grid with solar and wind, because the sun and the wind are inconstant, and currently existing batteries aren’t even cheap enough to store large quantities of electricity overnight, much less across whole seasons.
In service to green ideology, they made the perfect the enemy of the good—and of Ukraine.
There we have it. It’s not just the Europeans. As I write this, shells are raining down on Ukrainian cities but the U.S. is not restricting its imports of Russian oil, lest our price of oil go even higher. The present oil shortage (even before the Ukraine invasion) is what happens when a president on his first day in office signs an executive order to cancel a pipeline expansion which would have enabled increased oil production from Canada’s massive oil sands, and the whole ESG movement hates on investing in projects for producing oil or gas.
All that said, what the West gives with one hand it may take back with the other. Although energy exports from Russia are theoretically permitted, Western private enterprises, including finance arms, are pulling back from any dealings with Russia. This means in practice, lots of wrenches are being thrown into the machinery of international finance, such that energy exports from Russia are being slowed, though not stopped. But in turn, the Russians are getting higher prices per barrel for the oil that does get exported. There are many moving parts to all this, so we will see how it all shakes out.
economistwritingeveryday.com
Scott Buchanan
There is a difference between healthy zeal for a basically good cause like reducing CO2 emissions, and unbalanced myopia. Back in September I wrote about the European power debacle (skyrocketing gas and electricity prices):
Shut down your old reliable coal and nuclear power plants. Replace them with wind turbines. Count on natural gas fueled power plants to fill in when the breeze stops blowing. Curtail drilling for your own natural gas, and so become dependent on gas supplied by pipeline from Russia or by tankers chugging thousands of miles from the Middle East. What could possibly go wrong?
Well, now we know what can go wrong.
In January I noted more specifically, “This energy shortage also makes Europe very vulnerable to Russia, at a time when Putin is menacing Ukraine with invasion.” Now it has come to pass. All the huffing and puffing about economic sanctions on Russia is mainly just hot air. Because Europe is utterly dependent on Russian gas, massive “carve-outs” have been made in sanctions in order to continue these purchases to continue. The vaunted SWIFT restrictions on Russian banks have been carved down to practical irrelevance. While sanctions may impact the lifestyles of oligarch playboys, this flow of euros to Russia ensures that Putin will not run short of money for his war.
Ecomodernist Michael Shellenberger writes that behind the Ukraine military drama “is a story about material reality and basic economics—two things that Putin seems to understand far better than his counterparts in the free world and especially in Europe.” Shellenberger asks, “How is it possible that European countries, Germany especially, allowed themselves to become so dependent on an authoritarian country over the 30 years since the end of the Cold War?” and then answers this question in his trademark style:
Here’s how: These countries are in the grips of a delusional ideology that makes them incapable of understanding the hard realities of energy production. Green ideology insists we don’t need nuclear and that we don’t need fracking. It insists that it’s just a matter of will and money to switch to all-renewables—and fast. It insists that we need “degrowth” of the economy, and that we face looming human “extinction.” (I would know. I myself was once a true believer.)
… While Putin expanded Russia’s oil production, expanded natural gas production, and then doubled nuclear energy production to allow more exports of its precious gas, Europe, led by Germany, shut down its nuclear power plants, closed gas fields, and refused to develop more through advanced methods like fracking.
The numbers tell the story best. In 2016, 30 percent of the natural gas consumed by the European Union came from Russia. In 2018, that figure jumped to 40 percent. By 2020, it was nearly 44 percent, and by early 2021, it was nearly 47 percent.
…The result has been the worst global energy crisis since 1973, driving prices for electricity and gasoline higher around the world. It is a crisis, fundamentally, of inadequate supply. But the scarcity is entirely manufactured.
Europeans—led by figures like Greta Thunberg and European Green Party leaders, and supported by Americans like John Kerry—believed that a healthy relationship with the Earth requires making energy scarce. By turning to renewables, they would show the world how to live without harming the planet. But this was a pipe dream. You can’t power a whole grid with solar and wind, because the sun and the wind are inconstant, and currently existing batteries aren’t even cheap enough to store large quantities of electricity overnight, much less across whole seasons.
In service to green ideology, they made the perfect the enemy of the good—and of Ukraine.
There we have it. It’s not just the Europeans. As I write this, shells are raining down on Ukrainian cities but the U.S. is not restricting its imports of Russian oil, lest our price of oil go even higher. The present oil shortage (even before the Ukraine invasion) is what happens when a president on his first day in office signs an executive order to cancel a pipeline expansion which would have enabled increased oil production from Canada’s massive oil sands, and the whole ESG movement hates on investing in projects for producing oil or gas.
All that said, what the West gives with one hand it may take back with the other. Although energy exports from Russia are theoretically permitted, Western private enterprises, including finance arms, are pulling back from any dealings with Russia. This means in practice, lots of wrenches are being thrown into the machinery of international finance, such that energy exports from Russia are being slowed, though not stopped. But in turn, the Russians are getting higher prices per barrel for the oil that does get exported. There are many moving parts to all this, so we will see how it all shakes out.
How Overzealous Green Policies Force Europe to Bankroll Putin’s Military
There is a difference between healthy zeal for a basically good cause like reducing CO2 emissions, and unbalanced myopia. Back in September I wrote about the European power debacle (skyrocketing ga…
economistwritingeveryday.com
