Europe’s energy problems are growing. Its grid infrastructure and many power stations are ageing and major investment decisions are being taken.
After the Russia annexation of Crimea, relationship between EU and Russia got bitter. Russia supplies nearly one third of Europe’s natural gas needs, approximately half of which passes through Ukraine. Things went from bad to worse when alleged Russian missile brought down Malaysian Jet, MH17. All major European partners of Kremlin are now pushing EU to impose tougher sanctions on former Soviet Union.
Europe wants to be independent from Russian gas. They want cheap energy, create more jobs, make industries more competitive but yet they hesitate to take major energy investment decisions.
The continent has abundant amount of Shale gas but there is no will to explore these indigenous resources in most countries except for few like UK, Poland and Romania.
Europe is in the illusion of energy security from US but exports of liquefied natural gas from the US won’t solve the EU’s energy security problems. Europe pays four times more than their American counterparts for importing gas through vessels. United States who has sold most of it super cooled gas to its Asian customers, would have to divert a quarter of its gas to Europe. Meanwhile, its first facility does not even open until late next year, with the majority of the first wave of LNG terminals scheduled to come online between 2017 and 2020. The European Commission President José Manuel Barroso said after the G7 meeting, stressing the EU cannot create “the illusion that gas from the US is going to solve our problems.”
European Union has planned to produce 20% of their energy through renewables by 2020. Manufacturers of renewable energy are getting incentives from governments but the consumers are paying much higher price for their electric bills. Soaring energy costs due to hopelessly uneconomic investments in alternative technologies like wind power have left the European Union at a huge competitive disadvantage to the North America, embrace of shale gas and oil that has permanently lowered the cost of energy. Europe has not yet recovered completely from the 2008 financial crunch, they are still struggling with their financial issues. “The problem is with the financial crisis there is not much cash at the moment and to get there you need to invest the cash now,” said Stephane Bourgeois, head of Regulatory Affairs at The European Wind Energy Association (EWEA). In Germany, investors now are pulling out as the subsidies provided to them are scaled back. Cash-strapped countries such as Spain, Italy and Portugal have already wound back their incentives.
EU wants to cut down emissions to 40% from 1990 level but Europe urgently needs to find the optimal mix of fuel—oil, natural gas, etc.—or its energy and environmental objectives will slip away. Relying just on renewable may cut the emissions but it will ultimately increase the burden on the consumer pocket.
After the Fukushima nuclear disaster many European countries especially Germany shutdown their nuclear plants for power generation as a result more coal was burned by the continent who take pride in leading in renewable power generation. Germany’s decision to phase out nuclear power following the Fukushima incident caused by Japan’s tsunami disaster has led to increased coal imports for power generation in place of CO2-free nuclear energy.
European Commission has yet to take a decision on Fracking, which has brought industrial revolution in USA spurring more jobs and reduced the bills by half and cut down its emissions significantly. Europe cannot drag their energy problems for long. If they want to remain competitive they need to move more expeditiously and decisively.