Europe’s Current Energy Crisis Was Predictable — And Was Predicted
Headlines are highlighting Europe’s energy challenges at present, with extremely high natural gas prices shocking consumers and corporations. But this was entirely predictable, and in fact was predicted. The real problem was the pivot to natural gas as a bridge fuel, and too much focus on building efficiency instead of fuel switching.
Historic natural gas price fluctuations courtesy US EIA
This US data shows a clear picture that has implications globally. The fracking and shale oil boom of the 1990s to 2010s led to a period of unnatural stability in natural gas prices, and at a historically low level. The fracking companies started bankrupting in 2019 because their debt-fueled business model and race for the bottom was unsustainable. The COVID crisis put more pressure on them with globally reduced demand for both oil and gas, so more went under or significantly diminished operations. A few European countries banned fracking entirely, given its significant negative externalities of methane leakage, aquifer pollution, microquakes and general pollution.
Then the Saudi-Russian price war put a nail in the coffin of the unconventional extraction industry, targeted high-priced producers globally. That meant unconventional oil extraction was under the gun, and a great deal of natural gas comes from shale oil fields in many regions.
As a result, the ability to turn the natural gas supply up when demand increases has radically diminished around the world. It’s no longer effectively something with an infinite supply that can be turned up in weeks at most.
Over the same period, the world built a lot of natural gas plants to displace coal, a partial good as natural gas generation has lower emissions than coal, something that is somewhat challenged by methane leakage. Some, like Texas, restructured their electrical generation around the assumption of just-in-time extraction and delivery of natural gas, and they froze in the dark in February of 2021 as a result.
Europe is facing the another facet of the same challenge that Texas did eight months ago. It’s consuming 33% more natural gas annually than it did in 1990, after a short-lived decline in the early 2000s.
EU natural gas consumption 1990-2020 courtesy EU
).png){kind=link}
Natural gas is now returning to its mid-2000s habit of being a fluctuating price resource, with both greater month-to-month variance and even greater seasonal variance. All economies and facilities that have made strategic business decisions based on the false assumption of low prices and price stability of natural gas are paying the price this year. Given the growing chorus of concern about methane leakage from natural gas and shale oil extraction sites over the past decade, and given the clear reality of the climate crisis, this isn’t a surprise.
It also adds another nail in the coffin of “blue” hydrogen as a future energy source, even as the oil and gas industry works really hard to dismantle the coffin. Most hydrogen from natural gas schemes assume cheap natural gas and stable prices, not significant demand competition for a limited resource. Already unaffordable with fictitious CCS, all governments should be looking at 2021’s natural gas price shocks and reliability failures and pivoting away from “blue” hydrogen, regardless of fossil fuel industry lobbying and tax revenues.
The answer to these challenges are clear as well. Governments focused on natural gas as a bridge fuel and building efficiency programs should have been focused on renewables and fuel-switching to a much greater degree. Wind and solar have no seasonal spikes in price, and managing intermittency is a matter of overbuilding cheap renewables, more transmission, and grid storage, all of which are clearly understood and modeled.
Building efficiency is good, but fuel-switching to eliminate gas furnaces and leaky high-GWP air conditioners by replacing them with modern heat pumps with low-GWP refrigerants with COPs of 3-4 avoids a lot more of the root causes of the problems we are facing. Low cost variance wind and solar supplying high-efficiency electric heat pumps is a long overdue policy.
This change in natural gas from a constantly low-priced commodity available in as big amounts as demanded was masked by lower demand during COVID as buildings sat empty through the winter of 2020-2021 and electrical consumption was down. However, as people returned to work or school in September and October of 2021, and the weather cooled, the completely predictable has occurred.
Heating demand and electrical demand has increased, demand for gas has increased, and supply of gas is effectively capped at a low level. Supply and demand being what they are, gas prices have shot up. This isn’t rocket science, this isn’t Kahneman and Tversky Nobel Prize-winning thinking on the psychology of how decisions are actually made, this is basic economics. Supply capped, demand up, price up.
I was predicting this in the first quarter of 2020 as an obvious outcome, and wasn’t alone in seeing it. The implications of fracking bankruptcies, COVID, and the Saudi-Russian price war should have been clear to anyone looking at the space. McKinsey had a report out late last year making much the same points, although they were doing it for different reasons than I am, as they happily work with oil and gas companies and countries to help them sell more fossil fuels more profitably, not something I choose to do.
Will policymakers see the writing on the wall clearly? Certainly Texas will refuse to accept the lessons of 2021, but that doesn’t mean the US as a whole will. Brussels and the European parliaments should be rethinking their power grids and hydrogen pipe dreams, and refocusing on actual solutions to the climate crisis. Canada should be backing away from its blue-tainted hydrogen policy, and pivoting to one that’s actually green.
But the usual suspects are blaming renewables for Europe’s current problems, just as they falsely blamed renewables for Texas’ problems earlier this year. Those voices are being amplified by the usual suspects, and policymakers are susceptible to hearing what they want to hear just as much as anyone. It’s a fight for reality, and sadly, the truth travels much more slowly than lies.
The lessons of 2021 are deep, rich, and far-reaching. But the pockets of the fossil fuel companies fighting for their lives, if not the lives of their children or their employees’ children, or the children of the world, are deep, rich, and far-reaching as well. As I’ve been writing about hydrogen regularly for the past years, pointing out the failures of assumptions about demand and supply, a regular refrain has been that while I’m clearly correct in what I’m saying, my analysis and the points of others such as Paul Martin, Mark Jacobson, and Robert Howarth, among many others, will be drowned in a flood of oil-soaked lobbying.
Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.
Subaru is the latest Japanese automaker to announce it will “re-evaluate” its EV plans. The company is rethinking its strategy with slowing sales and a potential multi-billion-dollar hit from Trump’s auto tariffs. The tariffs might not even be Subaru’s biggest threat.
Subaru and other Japanese automakers adjust EV plans
Within the past week, Japanese automakers, including Nissan, Honda, Toyota, and now Subaru, have announced major adjustments to their EV plans.
After releasing fiscal year financial results on Wednesday, Subaru’s CEO, Atsushi Osaki, said, “We are re-evaluating our plans, including the timing of investments.” Osaki added that the move is due to “today’s rapidly changing environment” and other external factors.
Like most of the industry, Subaru is bracing for a shift under the Trump administration, which could cost it billions. With around half of its vehicles sold, the US is key for the Japanese automaker.
Subaru said Trump’s new auto tariffs could cost the company up to $2.5 billion this year. The automaker is looking at ways to boost US production, but it won’t be easy.
Tomoaki Emori, Subaru’s senior managing executive director, said (via Automotive News), “Under the current circumstances, there is probably no way not to expand in the US. We must think about how to go about that.”
Emori added that the company still has the production capacity, “so we would like to mitigate the impact of tariffs while making use of it.”
Subaru joins a growing list of automakers in pulling its earnings forecast, citing “developments in US tariff policy” make it hard to forecast.
The company’s global sales fell 4.1% to 936,000 units over the past year. In North America, deliveries also fell 4.1% to 732,000 vehicles. Subaru anticipates global sales will continue dropping to around 900,000 this year, or another 4% drop. A part of the forecast is due to downtime at its Yajima plant as Subaru prepares to produce EV batteries.
Osaki said Subaru is “making various preparations for a BEV-dedicated plant,” but added it may add a mix of gas-powered vehicles.
Subaru unveiled its second EV for the US at last month’s NY Auto Show, the 2026 Trailseeker. The Outback-sized electric SUV will go on sale in 2026, joining the smaller Solterra in Subaru’s EV lineup in the US.
Since “It is becoming more difficult to decide how to incorporate electrification into our production mix,” Emori said, Subaru is “thinking about how to incorporate hybrids and plug-in hybrids.”
Electrek’s Take
Subaru and other Japanese automakers are quickly falling behind Chinese EV leaders like BYD in some of their most important sales regions, like Southeast Asia.
Delaying new EV models and other projects will only set them further behind in the long run. Nissan is in crisis mode after scrapping plans to build a new battery plant in Japan. The facility was expected to produce lower-cost LFP batteries, which could have helped Nissan compete on costs with BYD and others.
Last week, Toyota’s President, Koji Sato, said the company will be “reviewing” its goal of selling 1.5 million electric vehicles by 2026. And just yesterday, Honda announced plans to pause around $15 billion in planned EV investments in Canada.
BYD and other EV leaders are expanding overseas to drive growth after squeezing foreign brands, especially Japanese automakers, out of China.
Next year, BYD is launching its first kei car, or mini EV, that’s expected to be a big threat to Japanese automakers. A Suzuki dealer (via Nikkei) warned, “Young people do not have a negative view of BYD. It would be a huge threat if the company launches cheap models in Japan.”
FTC: We use income earning auto affiliate links. More.
Porsche Cars North America has integrated over 97,000 more charging stations into its app, streamlining its Porsche Charging Service.
That brings the total number of EV charging stations available to Porsche Charging Service customers in the US to 102,000, with more scheduled to be added in 2025. That means Porsche drivers can now use the My Porsche app as a one-stop shop to easily find, use, and pay at most J1772 and CCS charging stations.
“This is a significant milestone for Porsche and the electric vehicle journey,” said Timo Resch, president and CEO of Porsche Cars North America. “We know flexibility and choice are important.”
Customers in the Porsche Charging Service inclusive period – that’s the year after you buy your EV – or who sign up for Porsche Charging Service Premium can now access the ChargePoint, EV Connect, EVgo, Flo, EvGateway, and Ionna networks, in addition to chargers in the Electrify America network.
Customers in the Porsche Charging Service Base plan will receive access later this summer.
Read more: ChargePoint unveils ‘revolutionary’ V2X EV charger tech that can double Level 2 speeds
If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
FTC: We use income earning auto affiliate links. More.
Tesla’s (TSLA) board is reportedly exploring a new CEO pay deal for Elon Musk, who might not get back his $55 billion 2018 compensation package.
According to a new Financial Times report, Tesla’s board created a new “special committee” to explore a new CEO pay package for Musk.
The report points to the committee looking at new stock options and “alternative ways” to compensate Musk if Tesla fails to reinstate his 2018 compensation package, which was rescinded by a judge who found that Musk negotiated the deal with a board under his control and then misrepresented it to shareholders.
Musk is Tesla’s largest shareholder and therefore, he stands to benefit the most when the company does well. However, he doesn’t take a salary for his role as CEO.
Historically, He has received stock compensation packages, with the one secured in 2018 being the controversial one currently under contention.
Since then, no new CEO compensation package has been approved, and Tesla has not suggested another one as it tried to appeal the judge’s decision on the 2018 package.
The company is currently attacking the decision on two fronts with an appeal to the Delaware Supreme Court and a new legislation in Delaware to try to circumvent the decision altogether.
FT reporting that the board is working on a new compensation package with backpay could point to Tesla anticipating not being able to reinstate the original compensation package.
Robyn Denholm and Kathleen Wilson-Thompson are the board members reportedly on the new committee.
Denholm took over from Musk as Tesla’s chair, and she has recently made headlines for selling her Tesla stock options for more than $530 million over the last few years.
Electrek’s Take
It increasingly looks like Tesla won’t be able to distance itself from Musk and separate its fate from his.
Musk has masterfully convinced Tesla shareholders that the destruction of its core business, selling electric vehicles, doesn’t matter because the company is on the verge of solving self-driving – something he has claimed every year for the last 6 years and has been wrong every time.
Now that they don’t care about EVs, there’s no point in blaming Musk for killing demand and delivering a single new vehicle in 5 years, the Cybertruck, a commercial flop.
Therefore, the only thing that will make Tesla shareholders stop wanting Musk as CEO is if they stop believing his self-driving and humanoid robot claims.
FTC: We use income earning auto affiliate links. More.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway