China laughed at Europe’s call to give up hydrocarbons
At the end of January, the concept of so-called climate diplomacy was approved in Brussels. From now on, the European Union will not only develop green energy on its territory but also insist that the rest of the world also intensify this process. The EU plans to force Asian and African states to abandon hydrocarbons, in particular, by reducing investment in their production and processing.
A Green Pact for Europe
Since 2019, the rhetoric of politicians and even scientists of the Old World has undergone significant changes. Where once they argued that the most efficient energy mix until mid-century was a combination of renewable energy sources (RES) and natural gas, hydrogen has now taken the place of the latter. The lack of safe technologies for its storage and transportation, as well as the infrastructure that must be created from scratch, does not seem to confuse anyone in Europe.
They also prefer not to mention the low efficiency of solar panels, which cannot operate at night, and wind turbines, whose blades stop spinning when there is no wind. Nevertheless, mankind has not yet invented affordable ways to accumulate the energy of the stream on an industrial scale. So there is no way to compensate for windless and cloudy days at the expense of “lucky” ones. The only option to ensure stable power supplies to households and businesses is to use nuclear power plants, hydroelectric power plants, natural gas, or other traditional energy resources as a “safety cushion.” According to experts, if their share falls below 50%, the probability of blackouts becomes very high.
However, Europe did achieve certain results on the way to implementing the idea of the energy transition. The average share of renewables in the total generation structure there is already 21%, while the share of coal (the “dirtiest” raw material) is only 12%. In some countries, renewable energy sources have become leaders in terms of energy generation. For example, in Denmark, they produce 64% of the total volume of consumption, and in Germany - 42%.
Another thing is that it will not be easy to develop this success. For example, Poland, whose economy is very dependent on coal-fired generation, has not yet submitted a plan to abandon it. This is quite understandable because the construction of the necessary number of wind turbines and related infrastructure will require huge investments, while thermal power plants have long been built and do not need significant capital expenditures.
Germany, largely due to increased imports of electricity from France, has indeed reduced the share of coal in its energy balance from 40 to 30%. However, this trend may weaken noticeably rather soon against the background of the closure of the last nuclear power plants and problems with the completion of the Nord Stream-2 project. It is still difficult to claim that Germany will be able to completely abandon coal by 2038. If it happens, it will only happen at the expense of huge financial costs and a sharp rise in the cost of electricity.
Despite the difficulties in implementing the Green Pact within Europe itself, Brussels believes that the time has come to extend its terms to the rest of the world. However, developing countries have so far reacted rather modestly to Europe’s efforts. For example, Chinese President Xi Jinping, in his speech at the UN General Assembly, promised to make the country “carbon-neutral” by 2060. However, the reality is fundamentally at odds with the official statements of the head of China.
Last year, several new coal-fired thermal power plants with a total capacity of 38.4 GW were commissioned there, which is more than three times the amount of construction in all other states. And this undermines the international community’s efforts to reduce the human impact on nature. Analysts at Global Energy Monitor and the Helsinki Center for Research on Energy and Clean Air (CREA) argue that China’s coal-fired generation in 2020 (taking into account the closure of obsolete power plants) will increase by 29.8 GW, while the rest of the world has reduced it by 17.2 GW.
Today, China’s existing thermal power plants, which use the most environmentally harmful resource as fuel, produce 247 GW, which would be more than enough to power all of Germany. Moreover, in 2020, Beijing approved the construction of another 36.9 GW of coal-fired facilities, which means that talk about the world’s second-largest economy striving to minimize environmental damage is nothing more than talk. Especially when you consider the constant growth of oil consumption. Its imports in January reached a record 12 million barrels per day. This is significantly more than last year when supplies from abroad averaged 10.85 million bpd (10.1 million bpd in 2019).
China demonstrates that unlike the EU, which is mired in endless lockdowns, is going to continue to develop its economy, and even more rapidly than before the pandemic. And no matter what they say, the Celestial Empire plans to use fossil fuels as the foundation for intensifying GDP growth rates.
The real reasons for the energy transition
Many experts believe that the real reason behind the energy transition initiated by the European Union is not concern about the climate or the environment, but the desire to reduce dependence on imported raw materials, which has become more and more evident in recent years. For example, natural gas production in the Netherlands, which was the second-largest producer of natural gas in Western Europe after Norway, has been declining for several years in a row and may soon stop altogether. At the same time, EU demand for electricity remains at a very high level, since it is consumed not only by the population but also by large enterprises.
The introduction of green technologies, whose efficiency leaves much to be desired, required enormous investments. The cost of electricity due to the constant increase in their share in the total volume of generation has increased markedly, as well as the cost of end-consumption goods, especially high-tech ones. To be sure of this it is enough to go to a car dealership, where they sell German cars and look at the prices. Production of the German car industry becomes less accessible, not only for people from developing countries but also for Europeans. That is less competitive on an international scale. And in the future, if the Old World manages to achieve carbon neutrality, this trend will only increase. This is why it is now vital for Brussels to involve other countries in the energy transition, especially Asian countries. After all, otherwise, they will get a clear advantage in the global market, which will lead to the decline of the European Union.
According to Vladimir Litvinenko, a leading expert in the field of the fuel and energy complex and rector of St. Petersburg Mining University, the energy sector in most countries of the world risks being subjected to pressure from the West while solving climate and environmental problems. The consequence of this policy may be a decrease in the sustainability of many national economies, especially those that are unable to finance the transition to a new energy paradigm.
“Mankind today is facing a huge number of large-scale tasks, the realization of which, without exaggeration, determines the future of our civilization. One of the most important is the need to drastically reduce pollution, with which I agree. But Western politicians are deeply mistaken, believing that this can only be achieved by increasing the share of renewable sources in the total generation volume, using the energy of the stream - in particular, wind and sun, and hydrogen. Because of their biases or stereotypes, they insist that the financing of green energy must constantly grow at the expense of reducing investments in hydrocarbons. But investment in them over the past six years has already fallen from $900 billion to $400 billion a year. But this has not and will not lead to a drop in demand for traditional energy sources. It will continue to grow, and this trend will be observed for several more decades. Therefore, the transformation of the world’s fuel and energy complex, which will significantly reduce the anthropogenic impact on the biosphere, should not consist in the complete abandonment of fossil fuels, because it is impossible, but in their gradual replacement by alternative sources, and, of course, the introduction of innovations to reduce the level of pollution of ecosystems, such as technologies to capture CO2. Otherwise, in five, ten, or twenty years we will still be living in a world where the consumption of oil and gas will remain very high, while their extraction and processing will continue to cause great harm to the environment due to a lack of appropriate financing. Meanwhile, the Western countries, some of which will manage to get closer to carbon neutrality, will still ‘chatter slogans’ about the need to stop global warming or climate change instead of contributing to environmental well-being on a global scale,” Vladimir Litvinenko believes.
There is no doubt that the West will continue to direct the vast majority of “climate” investments exactly to the wind and solar power, as well as scientific research related to hydrogen, and impose on the rest of the world the idea of abandoning fossil fuels. At the same time, China’s actions make it clear that its demand for hydrocarbons, as well as that of many other powers, will remain very high even in the second half of the 21st century.