Speaker 1: Welcome to Zero. I'm Akshatrati. This week a year of war,
Speaker 1: ditching Russia and Europe's new energy landscape. This time last year,
Speaker 1: Russia launched a full scale invasion of Ukraine. What Russia
Speaker 1: hoped would be a quick three day blitz has turned
Speaker 1: out to be a protracted land war that rocked the
Speaker 1: world still recovering from the COVID nineteen pandemic. Its impact
Speaker 1: has spread far and wide, disrupting food systems, supply chains, geopolitics,
Speaker 1: and the global economy. Over the past year, I've been
Speaker 1: working with Bloomberg Energy reporter Will Mathis to look at
Speaker 1: one of those disruptions, how the war in Ukraine has
Speaker 1: transformed Europe's energy landscape. The shift has been remarkable, unprecedented
Speaker 1: in scale, and has immediate and long term implication for
Speaker 1: the use climate goals. On today's episode, we turn the
Speaker 1: tables and Zero's producer Oscar Boyd asks Will and I
Speaker 1: the questions instead, Will the attempts to ditch Russian fossil
Speaker 1: fields speed up the energy transition, or will the high
Speaker 1: price paid for energy security make it harder for the
Speaker 1: EU to live up to its big golds. In the
Speaker 1: last twelve months, there's been an extraordinary change in where
Speaker 1: and how Europe sources its energy, something that the two
Speaker 1: of you will actually have been writing about since the
Speaker 1: start of Russia's invasion of Ukraine. And in your arsicle
Speaker 1: that went out a couple of days ago, you summed
Speaker 1: up what that year of war has done to Europe's
Speaker 1: energy supplies. What did you find Over the past year.
Speaker 1: The headlines have been dominated by Europe's many attempts to
Speaker 1: try and help Ukraine deal with this war. There's been
Speaker 1: aid given, lots of military supply, lots of meetings about
Speaker 1: how to deal with a Russian threat that may come
Speaker 1: to other countries. What's not being talked about, at least
Speaker 1: not in that lens, is how quickly Europe has moved
Speaker 1: away from Russian fossil fuels, strangling one of the biggest
Speaker 1: sources of funding for Putin's war machine. Put that into
Speaker 1: numbers for me when you say it's unprecedented. They're moving
Speaker 1: quickly away from Russia's fossil fuel supply, They're stopping the
Speaker 1: funding to Russia's war machine. What does that mean, Well,
Speaker 1: Russia is a huge source of natural resources right on
Speaker 1: Europe's border, and before the war, Europe spent about a
Speaker 1: billion dollars a day to pay for gas, oil, and
Speaker 1: coal that it imported from Russia, and today that's dropped
Speaker 1: to a small fraction as Europe put embargoes on supplies
Speaker 1: and Russia cut supplies of some other fuels. Oil, crude, oil, coal,
Speaker 1: and gas have fallen not quite to zero, but pretty
Speaker 1: close and much lower than anyone really thought as possible
Speaker 1: a year ago. Even European officials have been supped. European
Speaker 1: Commission's President Ursula Wonderin said earlier this month. Initially we
Speaker 1: were discussing whether we are able to do that till
Speaker 1: twenty twenty seven. Well, you know now that we have
Speaker 1: gotten rid of our dependency completely of Russian fossil fuels.
Speaker 1: It went much faster than we expected. That's good. So
Speaker 1: take me back to this time last year when you
Speaker 1: first started reporting on this. Why was this question of
Speaker 1: Europe's dependency on Russia's energy is so important at that time?
Speaker 1: So it's not just that Europe is paying Russia a
Speaker 1: billion dollars a day, which is then eventually getting into
Speaker 1: the war machine, but Russia controls the supply and there
Speaker 1: was a risk that Russia would use its energy as
Speaker 1: a weapon. Cut off gas supplies, cut off coal supplies,
Speaker 1: and that would bring Europe's economy and its people to
Speaker 1: its knees. And there was good reason to think that,
Speaker 1: because even before the invasion started, Russian supplies of natural
Speaker 1: gas had already been back and president Europe had been
Speaker 1: going up and in late twenty twenty one. In early
Speaker 1: twenty twenty two, people didn't know exactly why Putin was
Speaker 1: doing that, but once the invasion happened, it was clear
Speaker 1: that Russia was willing to use its energy supplies as
Speaker 1: leverage over Europe right and so at a European level,
Speaker 1: politicians realized this is a pretty unsustainable relationship that they
Speaker 1: need to change quickly. If we go back to the
Speaker 1: start of February twenty twenty two, before the war is happening,
Speaker 1: as a percentage, how much of Europe's energy supply came
Speaker 1: from Russia, I mean, the numbers are spectacular. Europe is
Speaker 1: an energy dependent continent. About sixty percent of all the
Speaker 1: energy it consumed came from importing fossil fuels. Of that,
Speaker 1: forty five percent of its gas came from Russia, twenty
Speaker 1: seven percent oil and forty six percent of its coal,
Speaker 1: and different countries had different exposure to these Russian fuels.
Speaker 1: Germany in particular, built up a huge depend it's on Russia.
Speaker 1: Over half its gas came from Russia. Italy, another one
Speaker 1: of the biggest European economies, got about forty percent of
Speaker 1: its gas, and the Baltic region, which is right on
Speaker 1: Russia's doorstep, got three fourths of their gas from Russia
Speaker 1: in twenty twenty one. And why is it that it
Speaker 1: became so dependent on Russian fossil fuels. I mean, you've
Speaker 1: mentioned one reasons, which is just the actual proximity to Russia.
Speaker 1: But how did that relationship really develop? Well, it's hard
Speaker 1: to underestimate how important being close is, especially when it
Speaker 1: comes to gas. With oil, you know, you can get
Speaker 1: oil anywhere in the world, put in a ship and
Speaker 1: send it where it needs to go. But with gas,
Speaker 1: that's much more difficult and much more expensive. And if
Speaker 1: you can get gas from somewhere nearby, it's gonna be
Speaker 1: much cheaper. So Europe's economic growth and their ability to
Speaker 1: fund the transition to cleaner sources has been predicated on
Speaker 1: the ability to get really cheap energy today from Russia
Speaker 1: and some of This goes back decades right During the
Speaker 1: Cold War, there was a push to have a separation
Speaker 1: between the Soviet Union and Western allies. But after the
Speaker 1: Soviet Union fell, Germany especially but Europe in general, thought
Speaker 1: it would be a good idea to create this economic
Speaker 1: relationship tied to importing fossil fuels from Russia as a
Speaker 1: way to keep peace, which of course has been completely
Speaker 1: proven wrong over the last twelve months. And tell me
Speaker 1: more about that green transition element. Why did your plans
Speaker 1: to go green mean that it ended up relying more
Speaker 1: on Russian fossil fuels. So coal is the dirtiest fossil fuel,
Speaker 1: and Europe burned a lot of coal. Of course, going
Speaker 1: back all the way to the Industrial Revolution, gas provided
Speaker 1: the same amount of energy for about half the emissions,
Speaker 1: So gas was seen as a bridging fuel between dirty
Speaker 1: coal and clean energy. And because cheap gas, especially in
Speaker 1: the form of pipes from Russia, was available at the doorsteps,
Speaker 1: that seemed like the right option if Europe wanted to
Speaker 1: speed up its emissions reduction and find a way to
Speaker 1: make the transition as smooth as possible to clean energy.
Speaker 1: And gas also works really well paired with some renewable resources,
Speaker 1: particularly wind, which countries like Germany and the UK are
Speaker 1: ramping up significantly to cut emissions. So when the wind
Speaker 1: drops all of a sudden, but you still want to
Speaker 1: have the same amount of electricity available, you can really
Speaker 1: quickly burn more gas to match that, even as your
Speaker 1: emissions fall overall as more wind is producing electricity. Another
Speaker 1: turning point in the story was the twenty eleven to
Speaker 1: earthquake and tsunami in northeast Japan and the mountdown that
Speaker 1: followed at the Fukushima Day Nuclear power plant. I'm that
Speaker 1: disaster completely changed how Germany approached its energy mix, particularly
Speaker 1: in regards to nuclear, and also contributed to its dependence
Speaker 1: on Russian gas. Right. I mean, France is the largest
Speaker 1: nuclear power in Europe, and France has not particularly wavered,
Speaker 1: But Germany waving on nuclear mattered a lot because its
Speaker 1: replacement meant it would use more coal found in its
Speaker 1: own backyard, some of the dirtiest form of coal you
Speaker 1: could get. And as Germany started to set out more
Speaker 1: green goals, it needed to cut coal use. And what
Speaker 1: did it do well, pipes to Russia. So we get
Speaker 1: to February twenty four, twenty twenty two, Russia launches its
Speaker 1: full scale invasion. We see all the images of fighting
Speaker 1: coming out of Ukraine, cities being reduced to rubble. European
Speaker 1: leaders realized that they need to move away from Russian
Speaker 1: energy and quickly, I'm assuming that panicking at this point,
Speaker 1: what options did European countries have. And they were panicking
Speaker 1: because not only did they see their source of energy
Speaker 1: potentially being cut off, but they were also looking at
Speaker 1: the market, and prices of energy were going to levels
Speaker 1: that would have been unimaginable before that, you know, double
Speaker 1: quadruple prices that would be normal, and they're still quite high.
Speaker 1: And we basically through all of the energy sources that
Speaker 1: Europe was relying on Russian fur and then we looked
Speaker 1: at all the possible alternatives. Where could it turn for
Speaker 1: something that wasn't Russian oil, gas and coal, and how
Speaker 1: could it ramp up those alternatives. And one narrative that
Speaker 1: emerged very quickly and worked well with Europe's green ambitions
Speaker 1: was to just speed up the green transition and replace
Speaker 1: all those Russian fossil fuels with wind and solar and batteries.
Speaker 1: That is an option, but those things take time, and
Speaker 1: if you wanted to have energy for the winter, keep
Speaker 1: people warm, keep the lights on, building wind and solar
Speaker 1: could only go so far as ambitious as they might
Speaker 1: want to beat with renewables. They still have a dependency
Speaker 1: on fossil fuels, so it comes a question of where
Speaker 1: do we get it from instead exactly, And then you
Speaker 1: have to look at each of those fossil fuels differently.
Speaker 1: A coal is easy to transport, and so if you
Speaker 1: don't buy it from Russia, well you could go to
Speaker 1: the US a little bit further away, or even Australia,
Speaker 1: which plenty of goal but far away oil. On the
Speaker 1: other hand, global market again can be moved, but politically
Speaker 1: harder because the largest supplier of oil is opaque plus,
Speaker 1: which is the Middle Eastern countries, mostly with Russia, and
Speaker 1: they are in agreement on how much supply they will
Speaker 1: put into the market. And so if Western powers suddenly
Speaker 1: wanted more oil but did not want to take it
Speaker 1: from Russia, they would have to go begging to their
Speaker 1: old foes Iran and Venezuela. Not going to look politically right,
Speaker 1: but there was room to try and increase supply from
Speaker 1: those countries. Gas is a lot harder, yes, in the
Speaker 1: last few decades, we've been able to put gas on
Speaker 1: ships and move it around, but it's not cheap and
Speaker 1: there's just not enough infrastructure to make that happen at
Speaker 1: short notice. So what did you do well? It took
Speaker 1: a different approach for every different fuel, and even different
Speaker 1: countries had slightly different plans. But the biggest challenge was gas,
Speaker 1: and it was also the most urgent because not only
Speaker 1: did the EU want to cut gas demand, but Russia
Speaker 1: was actually slashing supplies to Europe. Russia's state owned energy supply,
Speaker 1: A gas promt says it is indefinitely holding the flow
Speaker 1: of gas through a key pipeline through Germany. But European
Speaker 1: leaders see Russia's move to hold gas supplies to Poland
Speaker 1: and Bulgaria because they won't pay in rubles as aggressive.
Speaker 1: So they really gave the Europeans no choice but to
Speaker 1: move as quickly as possible on gas, and they did
Speaker 1: everything they could to find alternatives. They tried to import
Speaker 1: more from North Africa. They got more from Norway, which
Speaker 1: is the biggest producer in Europe other than Russia. They
Speaker 1: got a bit more from the UK, but the by
Speaker 1: far biggest source of alternative supplies was liquefied natural gas,
Speaker 1: which is a kind of gas that has brought down
Speaker 1: to a really low temperature, put on these weird ships
Speaker 1: and then you can move it all around the world.
Speaker 1: And most of the supplies of L and G you
Speaker 1: come from the US, which has unlimited natural gas. Wise
Speaker 1: and Qatar and the Europeans went to the US and
Speaker 1: paid whatever price was necessary to swap as much elergy
Speaker 1: as was available, and luckily enough for Europe there was
Speaker 1: more lergy available than normal. Normally, the biggest player buyer
Speaker 1: for liquefied natural gas is China, but China's economy was
Speaker 1: shut because of COVID last year, so there was a
Speaker 1: big amount of supply available for the Europeans to take
Speaker 1: in and meet their needs and fill up storage. These
Speaker 1: weird chips, though, we should explain they look like these
Speaker 1: bulbous bodies floating in the ocean. There is a good
Speaker 1: reason for them being bulbous, right. They are essentially spherical tanks,
Speaker 1: multiple of them, and they're spherical because you've just put
Speaker 1: all this very high pressured gas, turned it into a liquid,
Speaker 1: and put it into a sphere. And the sphere is
Speaker 1: an object that has fewer margins to have errors and
Speaker 1: so you can actually store it for longer. So yes,
Speaker 1: it looks weird, but physics guys Llengy facts. We had
Speaker 1: to put a picture in the show notes sharing these ships.
Speaker 1: But it wasn't a unified strategy to start with. When
Speaker 1: the European Union was trying to fix its gas problem,
Speaker 1: it affects me that its member states run around and
Speaker 1: just get their hands on as much gas as they
Speaker 1: could for as much money as they were willing to pay. Yeah,
Speaker 1: and they did things that they would have never done before.
Speaker 1: Germany had been completely relying on gas from Russia and
Speaker 1: they didn't have any of the facilities to import ellengy,
Speaker 1: so they bought it indirectly from other countries that did
Speaker 1: have supplies and facilities to bring it into the gas grid.
Speaker 1: But they also basically just throughout their environmental regulations to
Speaker 1: very quickly bring on floating ellen import terminals. You know,
Speaker 1: German regulations are notoriously cumbersome and projects take a long
Speaker 1: time to build there. But in Germany last year they said,
Speaker 1: forget about all that, we need these supplies right now,
Speaker 1: and there's gas diplomacy had downstream impacts right There were
Speaker 1: countries like Pakistan that had built gas power plants dependent
Speaker 1: on ellen G at a certain price, and they were
Speaker 1: priced out to the extent where they could not have
Speaker 1: enough gas and there were blackouts. So Europe in the
Speaker 1: end does avoid blackouts, but there were blackouts in other
Speaker 1: countries Bangladesh with another one. So if gas is the
Speaker 1: most difficult, most pressing challenge to fix, what did they
Speaker 1: do with both coal and oil? So oil, because of
Speaker 1: the political nature of that commodity, they ended up setting
Speaker 1: out a target that was going out a few months,
Speaker 1: so by December they would sanction any imports of crude
Speaker 1: oil from Russia so that refineries and countries could figure
Speaker 1: out where the remainder of the supply would come from.
Speaker 1: As it turned out, some of that supply ended up
Speaker 1: coming through India, so India started importing a lot more
Speaker 1: of Russian crude. India has plenty of refineries capacity, so
Speaker 1: India took cheap Russian crewed, refined it and then exported
Speaker 1: that to Europe and we don't count that as coming
Speaker 1: from Russia. That's true. That's how Europe has been able
Speaker 1: to manage its petrol and diesel prices, and then on
Speaker 1: coal because they could import stuff from other countries. Extra
Speaker 1: supply came from the US, from Colombia and from South Africa.
Speaker 1: And also let's note that coal was burned more than
Speaker 1: usual because gas was so expensive that some of the
Speaker 1: power plants that were supposed to retire were put on hold,
Speaker 1: and some of the coal power plants that didn't use
Speaker 1: that much goal in the past were using more coal.
Speaker 1: And coal burned for the past year jumped about seven percent. Okay,
Speaker 1: so the cold amount actually increased, it did. Yeah, so
Speaker 1: it's not just that imports were replaced from Russia, but
Speaker 1: there was more coal burned after the break. Enough about
Speaker 1: fossil fuels, how have renewables helped Europe out of its
Speaker 1: energy crisis? Where the heat pumps fit into the equation,
Speaker 1: So we know that Europe has had a green strategy
Speaker 1: for a couple of decades now that actually helped alleviate
Speaker 1: some of the pressure on Europe because they had developed
Speaker 1: these non fossil fuel sources over multiple years. But at
Speaker 1: the beginning of the crisis, there is this narrative that emerges,
Speaker 1: which is, yes, we can accelerate renewables as much as
Speaker 1: possible to try and fill some of the gap. So
Speaker 1: how much of a role have renewables ended up playing
Speaker 1: well This time last year when we were looking at
Speaker 1: what could Europe possibly do. The one clean energy source
Speaker 1: that we saw as potentially playing a role in going
Speaker 1: faster with solar because solar panels are really simple. You
Speaker 1: can just basically put them anywhere, They're very easy to
Speaker 1: set up, and they start producing electricity immediately. And Europe
Speaker 1: really lived up to that. They installed by far record
Speaker 1: amount of new solar capacity all over. You know, countries
Speaker 1: like the Netherlands, which aren't particularly sunny places, installed record
Speaker 1: amounts of new solar and a lot of that came
Speaker 1: from households and businesses that we're seeing their bills rise
Speaker 1: astronomically and just thought it made economic sense to put
Speaker 1: in some solar panels and also a lot of them
Speaker 1: added batteries as well, so those are now permanently there
Speaker 1: and not just helping people last year to cut fossil fuels,
Speaker 1: but for the foreseeable future. Wind was about what we expected.
Speaker 1: But wind farms are much more complicated than solar. You
Speaker 1: can't just put a wind turbine anywhere. You need to
Speaker 1: permit them. And while there were some efforts to cut
Speaker 1: down on the time it takes to permit. They're just
Speaker 1: wasn't that much possibility to go faster with wind. So
Speaker 1: while it did play a really important role and Europe
Speaker 1: has been ramping up wind and it was a record
Speaker 1: level last year, it didn't go that much faster than
Speaker 1: otherwise would have and Europe needed this transition also because
Speaker 1: climate change plays havoc. In fact, last year because of
Speaker 1: climate impacts, hydropower, which is one of the biggest sources
Speaker 1: of clean power, took a real hit. Europe experience its
Speaker 1: worst route in five hundred years, pushing down the level
Speaker 1: of water in many reservoirs and crimping hydropower supplies. A
Speaker 1: summer of record breaking heat is drying up rivers across Europe.
Speaker 1: Shipping companies in Germany preparing for the worst as levels
Speaker 1: on the River Rhine dropped through critical levels with more
Speaker 1: than sixty percent if The European Union and the UK
Speaker 1: now under a drought alert or warning. Reservoirs and rivers
Speaker 1: are receding. At the same time, which made matters worse.
Speaker 1: Nuclear power was becoming a trouble. There were nuclear reactors
Speaker 1: in France, which is a major source of nuclear power,
Speaker 1: and exporter off nuclear power to many countries which had
Speaker 1: any maintenance issues, some expected, others not, and because of
Speaker 1: the lower production of hydropower and nuclear power, Europe had
Speaker 1: to burn even more fossil fuels. In that period, we
Speaker 1: also heard stories about solo pannel costs going up, wind
Speaker 1: turbine prices going up, and when we spoke to maud Nipper,
Speaker 1: the CEO of Allstead for our episode in January, he
Speaker 1: was talking about how complicated it is to get permits
Speaker 1: for new wind farms. But he also bought up the
Speaker 1: issue of supply chains and inflation and how that was
Speaker 1: forcing him to put more pressure on his supplies. How
Speaker 1: did those higher prices affect this renewable transition. That's true,
Speaker 1: and it certainly ought to have renewable energy prices go up,
Speaker 1: which have been for years going down. But because the delta,
Speaker 1: the difference between higher fossil fuel prices and slightly higher
Speaker 1: renewable prices only grew. The case for renewables has only
Speaker 1: gotten stronger. And there are also reliable You know, you're
Speaker 1: never going to have a country cutting off your source
Speaker 1: of wind solar, So the value of solar and wind
Speaker 1: from a political perspective has really gone up because energy
Speaker 1: security has come to the forefront of many policymakers minds,
Speaker 1: and they now see renewables as part of that strategy.
Speaker 1: One thing that's also been in the news for all
Speaker 1: sorts of reasons is Europe's push to actually reduce energy demand.
Speaker 1: One of the big stories that came out, I think
Speaker 1: it was back in September when France says, past midnight,
Speaker 1: the Eiffel Tower, our greatest national monument, will no longer
Speaker 1: be lit up. How successful his Europe been reducing its
Speaker 1: energy needs and demands. So one thing we expected when
Speaker 1: we were looking at this story right after the war
Speaker 1: began was that if Europe or to take some of
Speaker 1: the lessons of previous energy crises, it would have gone
Speaker 1: on into a propaganda mode to urge citizens to lower
Speaker 1: their termal stats, to burn less oil, to use cars
Speaker 1: only on alternate days. Those are all things that were
Speaker 1: done in nineteen seventy three, and there was another crisis,
Speaker 1: would be so very little of it. And while there
Speaker 1: were efforts to limit how warm swimming pools could be
Speaker 1: and to lower the thermostats and office buildings and public buildings,
Speaker 1: and just politicians urging people to try and cut down.
Speaker 1: The most effective way to cut demand for energy last
Speaker 1: year was just the weather. We had a incredibly warm
Speaker 1: fall and winter. I know, I didn't turn on my
Speaker 1: heat until December, and because of that, there was an
Speaker 1: incredibly successful ability for Europe to cut demand. And that
Speaker 1: was kind of an easy way to cut demand. And
Speaker 1: there was also a difficult way, which was that a
Speaker 1: lot of industries were seeing the price of gas and
Speaker 1: electricity go up to five times what they were used
Speaker 1: to paying and it just wasn't economical anymore to continue
Speaker 1: to produce. So a lot of industries shut down and
Speaker 1: some of them may never turn back on right And
Speaker 1: according to the figures that you used annual article, those
Speaker 1: jobs a massive industrial gas use fell by eighteen percent
Speaker 1: in twenty twenty two, higher than the fourteen percent drop
Speaker 1: during the first year of the pandemic, and demand for
Speaker 1: residential gas fell by fifteen percent. But coming back to
Speaker 1: your headline figure that this time year ago, Europe was
Speaker 1: sending as much as one billion dollars a day to
Speaker 1: Russia and that's now being reduced to a fraction of
Speaker 1: what it once was. That is a real transformation, and
Speaker 1: the speed of it has been remarkable. But what has
Speaker 1: been the cost of responding to this energy crisis. Well,
Speaker 1: while Europe wanted people to use less, they didn't want
Speaker 1: them to be forced to not turn the heat on
Speaker 1: because they couldn't afford it. And so according to the
Speaker 1: International Energy Agency, the EU spent about three hundred and
Speaker 1: fifty billion dollars subsidizing fossil fuel consumption last year, and
Speaker 1: the overall price was much higher than that just to
Speaker 1: account for the energy that people did pay for that
Speaker 1: wasn't subsidized, to hundreds of billions of euros, which meant
Speaker 1: you ended up spending more than what you would have
Speaker 1: paid poutin. But that was the goal to try and
Speaker 1: not pay pootin as much money. You talked about the
Speaker 1: number of solar installations rising to record high levels, But
Speaker 1: what clean tech we've seen being adopted that will impact
Speaker 1: the demand Heat bumps. Look, heat bumps are magic. They
Speaker 1: take one unit of energy from the grid and give
Speaker 1: you four units of energy. And that's exactly what everybody
Speaker 1: understood across Europe. As it turns out from sales figures,
Speaker 1: we've got recent figures suggesting that sales across Europe grew
Speaker 1: by thirty seven percent year over year, and so clearly
Speaker 1: heat bumps are things, at least for those who can
Speaker 1: afford it, because the upfront cost is high something that
Speaker 1: people are turning to because the long term running cost
Speaker 1: of a heat bump is much much lower. The other
Speaker 1: one is electry vehicles, which have been on an upward
Speaker 1: trajectory and last year they increased about twenty percent according
Speaker 1: to our colleagues at PNF, and that's not going to
Speaker 1: cut that much demand in the short term, but overall,
Speaker 1: over time, evs should cut down on how much oil
Speaker 1: and petroleum products Europeans need to burn. And of course
Speaker 1: evening numbers are lower because prices of evs have gone
Speaker 1: up because of supply chain constraints, inflation, and of course
Speaker 1: the cost of living crisis, which made it harder for
Speaker 1: people to make big purchases like evs in the past year.
Speaker 1: There is also one big motivation that will come through
Speaker 1: in the future years as Europe titans its carbon emission standards,
Speaker 1: which will make evs just much more attractive, and so
Speaker 1: that transition continues at pace. So you mentioned the cost
Speaker 1: of living crisis there. We've talked a bit about how
Speaker 1: much this is will cost now that we're through the
Speaker 1: worst of winter. Can we expect prices for energy to
Speaker 1: fall in twenty twenty three, Well, so far that is
Speaker 1: what we're seeing. Prices are now below what they were
Speaker 1: at the start of the war, which is still high.
Speaker 1: Gas in Europe went below fifty euros for the first
Speaker 1: time since the start of the war, but back in
Speaker 1: twenty nineteen gas could be fifteen euros. Is still quite high,
Speaker 1: but we're seemed to be for now out of the
Speaker 1: real crisis that happened last summer when gas prices looked
Speaker 1: like they could just keep going up forever. Also this year,
Speaker 1: there is expectation that hydropower will return, and so will
Speaker 1: nuclear power. And if you combine more renewables, more hydro,
Speaker 1: more nuclear with lower demand, what you get is a
Speaker 1: pretty spectacular outcome. According to bloom Bogenne, this year, Europe
Speaker 1: is set to burn forty three percent fewer fossil fuels
Speaker 1: for electricity compared to last year. Prior to the war,
Speaker 1: year have already had relatively ambitious plans to reduce its emissions.
Speaker 1: Back in July twenty twenty one, it launched fifty five,
Speaker 1: which was its program to cut emissions by fifty five
Speaker 1: by twenty thirty across Europe. But with the war, it's
Speaker 1: had to expand coal use, he said, by seven eight percent.
Speaker 1: It's had to build new fossil fuel infrastructure. We had
Speaker 1: Germany building alleng terminals and delay the closure of some
Speaker 1: of its fossil fuel run power stations. So macro picture
Speaker 1: hit what does the last year mean for Europe's clean
Speaker 1: energy transition. Well, we heard from Jennifer Morgan, the Climate
Speaker 1: Nuary for Germany that the goal, at least from Germany's
Speaker 1: side building all these allen Gy terminals is not to
Speaker 1: lock in the fossil fuel. They have said they will
Speaker 1: make those terminals be hydrogen ready. How believable that is
Speaker 1: remains to be seen, but there are options that Europe
Speaker 1: is building into this new fossil fuel infrastructure to go clean.
Speaker 1: They also have tried to address some of the issues
Speaker 1: that have been holding back the development of renewables which
Speaker 1: would permanently displace the need for fossil fuels. So the
Speaker 1: biggest one being permitting for wind farms can take an
Speaker 1: extremely long time, and Europe at the highest level at
Speaker 1: least has finally come to terms to that problem is
Speaker 1: trying to address it to up the deployment of not
Speaker 1: just solar but also wind, and we should recognize that
Speaker 1: despite more coal being burned llergy terminals being built, actually
Speaker 1: the emissions from Europe in twenty twenty two fell by
Speaker 1: one percent, and so Europe's not being put off track.
Speaker 1: In fact, in some sectors like solar, the transition is
Speaker 1: actually years ahead of where people estimated it to be.
Speaker 1: Because the price signals drove people to clean energy sources.
Speaker 1: It's clear that they use long term directions toward renewables
Speaker 1: and other green tech. The war has spurred a huge
Speaker 1: increase in deployment. Will that demand stay as high during
Speaker 1: twenty twenty three or now that the kind of initial
Speaker 1: crisis has begun to ease a little bit, do you
Speaker 1: think that demand will actually slow. In the case of solar,
Speaker 1: we know that Europe actually has something like seventy gig
Speaker 1: awards of solar already imported from many countries, and so
Speaker 1: deployment of solar is likely to stay high. Wind, on
Speaker 1: the other hand, may see a decline just because of
Speaker 1: all these other issues that are playing out for the
Speaker 1: next couple of years, and then rise again. But batteries
Speaker 1: and evs have a pretty positive outlook. Batteries doubled in
Speaker 1: their deployment in a year. We may not see another doubling,
Speaker 1: but there's expected to be an increased deployment. And evs
Speaker 1: saw twenty percent increase and lightly will see another increase.
Speaker 1: I think it's important to think about what this speeding
Speaker 1: up really means at the macro level. I talked to
Speaker 1: people this year who worked for the companies that were
Speaker 1: installing solar panels, and they were starting academies to train
Speaker 1: installers and hiring those people on and developing the supply chains.
Speaker 1: And once that's established, it's there. It's going to keep
Speaker 1: being there and can just keep growing. You get renewable
Speaker 1: lock in. Yeah. So what we've seen with the war
Speaker 1: in twenty twenty two and into this early part of
Speaker 1: twenty twenty three is Europe's energy landscape being permanently altered.
Speaker 1: But there's another debate playing out, and that's the growing
Speaker 1: competition between the EU and the US. How is that
Speaker 1: going to affect transition? So far, Europe has relied a
Speaker 1: lot on imported solar panels or batteries to try and
Speaker 1: push its green transition. The European Green Deal was supposed
Speaker 1: to bring in more manufacturing of batteries and other green
Speaker 1: technologies into Europe. But because of the pandemic and then
Speaker 1: the war, that conversation had sort of died down, and
Speaker 1: that's suddenly been lit up by what's happened in the
Speaker 1: US with the Inflation Reduction Act, which has all these
Speaker 1: incentives to try and bring manufacturing into the US, and
Speaker 1: that's making Europe reflect on its own shortcomings in the
Speaker 1: green deal, in its regulatory nature and in its market
Speaker 1: structure to try and speed up the manufacturing of green
Speaker 1: technologies in Europe. If it does that, and we don't
Speaker 1: know if Europe can match up to the big challenge
Speaker 1: that the US has put out, but if it does it,
Speaker 1: it's only going to make the green transition faster because
Speaker 1: it's going to bring manufacturing jobs tied to green industry
Speaker 1: in Europe and maybe even lower the cost of many
Speaker 1: of these green technologies further well Act charts. Thank you
Speaker 1: very much, thanks for having me, Thanks for having us
Speaker 1: on the show, Oscar. Europe's move away from Russian fossil
Speaker 1: fuels towards other energy sources has happened at an extraordinary pace,
Speaker 1: and it's been beautifully illustrated in charts and figures as
Speaker 1: part of Will and Natschat's recent article, which we've linked
Speaker 1: in the show notes. In our conversation, we also discussed
Speaker 1: some of our previous episodes with German Climate on Void,
Speaker 1: Jennifer Morgan and austed CEO Mad Snipper. If you want
Speaker 1: to hear more from Zero, you can listen to those
Speaker 1: episodes now wherever you get your podcasts. Thank you for
Speaker 1: listening to Zero. If you like this episode, please take
Speaker 1: a moment to rate and review us on Apple Podcasts
Speaker 1: or Spotify, send it to a friend, or share it
Speaker 1: with an energy executive. If you've got a suggestion for
Speaker 1: a guest or topic, or something you just want us
Speaker 1: to look into, get in touch. We're at Zero pod
Speaker 1: at Bloomberg dot Net. Zero's producer is me Oscar Boyd
Speaker 1: and our senior producer is Christine Driskell. Our theme music
Speaker 1: is composed by Wonderley Special thanks to Todd Gillespie, John
Speaker 1: Angel and Kira Binjo. We'll be back with that Chat
Speaker 1: as host next week.