God’s joke on governments that try to control the climate with their electricity grid:
Europe talks itself out of building gas plants in order to stop global warming, then after an extra cold winter, they also run out of gas, and now they have to go back to burning coal.
Spooked investors weren’t funding many gas plants now that the glorious renewable era was here and policy makers were all wearing their Hydrogen badges, and waving their carbon capture wands. In the last year all the geniuses of the European Investment Bank, the IEA, the European Commission were saying “gas is over” and it would be a stranded asset.
One month ago, Nina Chestney was predicting a gas supply crunch:
Gas faces existential crisis in climate wary Europe
May 14, 2021, , Reuters
Europe faces the prospect of higher electricity bills and a supply crunch, as utilities struggle to finance new gas-fired power plants unless they meet tougher emissions criteria imposed by banks pressured to stop financing fossil-fuel projects.
…Gas projects worth some 30 billion euros were cancelled, delayed or indefinitely postponed last year as they struggled to find funding.
The costs of renewables are expected to continue falling, while gas plant owners are exposed to EU carbon prices, which have hit record levels above 50 euros a tonne, and volatile wholesale energy prices.
But in Europe, where coal is already hard to finance, lending institutions and governments have moved on to tightening requirements for funding gas projects.
The European Investment Bank, Europe’s largest public lender, has revamped its lending policy to largely exclude new gas infrastructure from the end of this year.
“To put it mildly, gas is over…Without the end to the use of unabated fossil fuels, we will not be able to reach the climate targets,” EIB president Werner Hoyer said in January.
And so the shortage came to pass:
Not only was there a shortage of gas plants, but also a shortage of gas too. Winter was freezing, and Russia was sending more gas to China, and less through the old pipe to Europe through Ukraine. Plus the pipes from Norway were under heavy maintenance.
Gas Is So Scarce in Europe That Coal Is Making a Comeback
Europe is so short of natural gas that the continent — usually seen as the poster child for the global fight against emissions — is turning to coal to meet electricity demand that is now back to pre-pandemic levels. Coal usage in the continent jumped 10% to 15% this year after a colder- and longer-than-usual winter left gas storage sites depleted, said Andy Sommer, team leader of fundamental analysis and modeling at Swiss trader Axpo Solutions AG.
GIE European gas storage: percentage of full
Europe faced freezing temperatures earlier this year, boosting demand for heating at a time liquefied natural gas cargoes were being sent to Asia instead. Russia sent less gas to the continent via Ukraine ahead of the start of the Nord Stream 2 link to Germany, expected later this year.
All of that mean that European storage is currently 25% below the five-year average and benchmark Dutch gas surged more than 50% this year.
Nord Stream 2 will be the contentious big direct gas pipe from Russia to Germany under the Baltic sea, which most of Eastern Europe is annoyed about because it bypasses them, and most of the West is annoyed about because it hands power to Putin. The US is annoyed because it competes with their gas sales.
Somehow coal is still profitable, despite the high price of carbon, due to long hedges bought years in advance.
It’s only temporary, though Europe may need coal on a rolling temporary basis for decades to come.