Although Germany’s entire defense budget is $42 billion, it is, as Donald Trump provocatively observed, only twice as much — approximately $21 billion — as what it pays to Russia in gas purchases. The facts are stark. “About 35% of Germany’s gas is imported from Russia, and fracking is banned at least until 2021. A former Chancellor of Germany sits on the Gazprom board.” At a time when Putin is the international bad guy, it’s disturbingly hard to deny that much of his bankroll originates in Europe.
Merkel is certainly intellectually aware of the facts. In light of her country’s energy dependency on Russia, she warned that “all of Germany’s energy policies must be reconsidered.” But Merkel is captive to Germany’s politics, bound by its “Energiewende policy involving phasing out nuclear power by 2023 and increasing its reliance on solar and wind power.” Although fracking may provide a a technical escape from dependence on Russia, it is a political impossibility.
Environmentalists say the technology is highly risky … only … Lower Saxony has decided to allow fracking, and then only under certain conditions. … [even though] gas can be found in depths of up to 4,000 meters – significantly more than all of Germany’s known conventionally extractable natural gas reserves …
But in the foreseeable future there won’t be a political majority in support of it. Furthermore, the German government ruled out fracking in its coalition agreement if toxic substances are used. If this does not change, Germany will be forced to import all its gas in the foreseeable future.
This mirrors the broader political situation on a continent that is both energy poor and rich in environmental zeal. “The EU is the largest energy importer in the world, importing 53% of its energy, at an annual cost of around €400 billion. … The EU has …. an emissions trading system … to counter climate change, and a major factor in EU energy policy. ” The one constrains the other. But as with Germany, the tightness of the bonds varies by locality. Poland and other eastern European countries — probably with the memory of the Soviet era still vivid — are more willing to rely on coal and possibly shale gas “as a higher priority than CO2 reduction.”
But in Western Europe things are different. There the long shadow of the anti-nuclear movement hangs over the electorate. Even considering non-carbon energy sources, it’s interesting to compare French and German nuclear energy choices. “Nuclear power is a major source of energy in France, with a 40% share of energy consumption in 2015 … the largest source of electricity in the country, with …. 76.3% of the country’s total production of 546 TWh, the highest percentage in the world”. By contrast German nuclear power is in the process of assisted suicide. “Nuclear power in Germany accounted for 17.7% of national electricity supply in 2011, compared to 22.4% in 2010. … As of 2017, the share of nuclear power in the electricity sector in the country is decreasing following the decision of a complete nuclear phase-out by the next decade.”
A special report in the Economist notes the Germans bet big on solar and wind power without realizing the complications. “Wind and sunshine have two big drawbacks as sources of power. First, they are erratic. … The second problem … oddly, is that … because their power is free at the margin [it] is pushing down the clearing price and bending Germany’s energy market out of shape.” At the margin the two lowest bidders to supply the electric grid, to the horror of the environmentalists, are solar and lignite. Perhaps one of the most tragicomic consequences of Berlin’s decision to stop coal production in 2018 was it forced them to import coal — 25 percent of it from Russia.
Lignite is proving to be an excellent partner for erratic wind and solar power … Earlier this year a shamefaced German government moved to regulate lignite-burning power stations out of existence, but … thousands of miners protested … And because of generous feed-in tariffs for renewables that are guaranteed for 20 years, consumers in Germany are paying high prices for their not especially clean power. In the first half of this year households there paid €0.30 for a kilowatt-hour of electricity, whereas the French paid a mere €0.16.
Germany has made unusually big mistakes. Handing out enormous long-term subsidies to solar farms was unwise; abolishing nuclear power so quickly is crazy. It has also been unlucky. The price of globally traded hard coal has dropped in the past few years, partly because shale-gas-rich America is exporting so much. But Germany’s biggest error is one commonly committed by countries that are trying to move away from fossil fuels and towards renewables. It is to ignore the fact that wind and solar power impose costs on the entire energy system, which go up more than proportionately as they add more.
One of the unintended consequences of European environmentalism is it keeps Putin in funds. The EIA described the vital link between Europe’s energy imports and the Kremlin’s bankroll in 2017. “Russia exported more than 5.2 million barrels per day (b/d) of crude oil and condensate and more than 2.4 million b/d of petroleum products in 2016, mostly to countries in Europe. Exports of crude oil and petroleum products represented nearly 70% of total Russian petroleum liquids production in 2016. Russia’s oil and natural gas industry is a key component of Russia’s economy, with revenues from oil and natural gas activities—including exports—making up 36% of Russia’s federal budget revenues.”
According to the European Council for Foreign Relations, the EU’s alternatives to Russian gas are importing from the Middle East and North Africa; intensifying work on the Southern Gas Corridor through Azerbaijan, Kazakhstan, and Turkmenistan; importing Liquefied Natural Gas (LNG) from the United States and Australia as well as from East Africa. In any event, nothing can be done until 2025. Speaking of pipelines, DW observes that
Russian state-owned energy giant Gazprom and Germany’s Wintershall, a subsidiary of chemicals firm BASF … jointly own the 2,300-kilometer German pipeline network “Gascade.” But Russia now controls Germany’s gas storage – and with it, the safety margin of the German gas supply. The German economics ministry evidently has no worries about the deal.
It is a hole with no easy way out. The inability till recently of the US media to perceive the connection between Europe’s energy vulnerability and Russian expansionism might seem surprising at first but in retrospect is easy to understand. The politics of environmentalism have roots distinct from traditional strategic thought and the two never properly intertwined. Environmentalism grew out of literary circles — Henry David Thoreau, John Muir and Rachel Carson and Earth Day — while modern strategy grew from other soil — names like Clausewitz, Herman Kahn and Henry Kissinger come to mind. The two camps don’t normally talk to each other.
The tendency to put environmental ideology and national security in separate compartments was illustrated by an article in City Journal that describes New York State’s version of Energiewende. “Governor Andrew Cuomo and activist/actress Cynthia Nixon, opponents in September’s New York gubernatorial primary, don’t agree on much—but they are hell on hydrocarbons. Cuomo has outlawed natural-gas hydraulic fracturing, or fracking, in the Empire State, while Nixon wants to ban fracked gas from even entering the state. Never mind that the revolutionary energy-extraction method has over the past decade transformed America from a net hydrocarbon importer to the world’s leading energy producer. Both candidates promise to block new gas pipelines in New York, too.”
Cuomo knows that hydrocarbons fuel our civilization. They certainly power New York, an energy-gobbling giant; it leads American states in commercial consumption of natural gas and is near the top in most other categories as well. But because of Cuomo’s ban, the state produces virtually no natural gas, despite vast hydrocarbon reserves in the Marcellus Shale formation, located in the state’s needlessly impoverished Southern Tier. Neither Cuomo nor Nixon proposes substantive energy alternatives.
Like all New Yorkers, the governor, a two-term Democrat, and Nixon, of Sex and the City fame, rely heavily on hydrocarbons themselves. Cuomo flits about the state in a helicopter, and he commands a massive, natural-gas-heated government complex in Albany. And what would Sex and the City have been without the energy-sucking bright lights of Broadway? (Nixon’s NoHo building uses gas heat—small beer, to be sure, but shouldn’t prohibitionists be held to a higher standard?)
Bob McManus, the City Journal writer, concludes his piece by saying, “not fracking, in other words, has costs of its own. But don’t expect Cuomo or Nixon to tell you about it.” The charitable explanation is that, like the German politicians, Cuomo thinks you get electricity from the plug. Being dependent on Putin for gas apparently has costs of its own, but sometimes you have to be simple minded enough to see that.
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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, by Erik Brynjolfsson and Andrew McAfee. This book reveals the forces driving the reinvention of our lives and our economy. As the full impact of digital technologies is felt, we will realize immense bounty but also experience wrenching change. Professions of all kinds – from lawyers to truck drivers – will be forever upended. Companies will be forced to transform or die. Recent economic indicators reflect this shift: fewer people are working, and wages are falling even as productivity and profits soar. Drawing on years of research and up-to-the-minute trends, MIT’s Brynjolfsson and McAfee identify the best strategies for survival and a new path to prosperity.
Open Curtains: What if Privacy were Property not only a Right, by George Spix and Richard Fernandez. This book is a proposal for bringing privacy to the internet by assigning monetary value to data. The image of “open curtains” is meant to suggest a system that allows different degrees of privacy, controlled by the owner. The “curtains” may be open, shut, or open to various degrees depending on which piece of data is being dealt with. Ultimately, what is at stake is governance. We are en route to control of society by and for the few rather than by and for the many, because currently the handful of mega tech companies are siphoning up everyone’s data, for nothing, and selling it. Under the open curtains proposal, government would also pay for its surveillance in the form of tax rebates, providing at least some incentive for government to minimize its intrusions … (from a review by E. Greenwood).
Skin in the Game, by Nassim Nicholas Taleb. In his new work, Taleb uses the phrase “skin in the game” to introduce a complex worldview that applies to literally all aspects of our lives. “Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will profit and their mistakes will never come back to haunt them,” he says. In his inimitable style, he pulls on everything from Antaeus the Giant to Hammurabi to Donald Trump to Seneca to the ethics of disagreement to create a jaw-dropping tapestry for understanding our world in a brand new way.
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The War of the Words, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity, or why the truth shall make you free
The Three Conjectures, reflections on terrorism and the nuclear age
Storming the Castle, why government should get small
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Storm Over the South China Sea, how China is restarting history in the Pacific
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