[Scott] Next on "Energy Switch," the energy and climate policies that drive Europe.

- Clearly, Vladimir Putin took energy and gas as the main weapon to start the invasion, and the gas prices costs were 10 times larger.

And this is a huge burden for the continents.

- Thinking about strategic vulnerabilities and over reliance as we seek to change, this could be actually a good thing out of a very bad time.

[Scott] Sure, Sure.

[Scott] Coming up, part one of "EU Energy and Climate Policy."

[Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

Europe is in an energy crisis exacerbated by Russia's Ukraine invasion which has caused a war economy mentality.

This has increased many countries push towards solar and wind, or other domestic energy sources like nuclear in France and coal in Germany, and increased cooperation between member nations and the EU governing body while making them wary of imported energy.

We'll talk about this with Carlos Batlle.

He's an associate professor at Comilla Pontifical University's Institute for Research and Technology in Madrid, and a visiting scientist at the MIT Energy Initiative.

Jon Elkind is a senior research scholar at Columbia Center on Global Energy Policy, and a former U.S. Department of Energy Assistant Secretary for the Office of International Affairs.

In this episode, we'll begin our discussion of EU energy and climate policy.

So we like to start with just thinking about why.

Why do world care about what Europeans are doing in energy and climate?

- Well, I think that they do care because they are really, in a good sense, aggressive in their policies.

Twenty years ago, there was a significant move towards changing the energy sector there.

They announced that they were going to move fast and that area's somehow pushed the countries to follow.

Now they want to push even further.

- Same question.

- Starter reason is because we have a deep and decades long security relationship with Europe.

Secondly, we have such close economic ties.

Third, because what happens in the European energy markets matters either as example or as direct export impact in the current case.

And last, because the impacts on global markets are so deep.

And that goes for everything from what happens to the price of coal globally to what happens to the price of fertilizer globally.

- There's an energy crisis in Europe.

So is that just Ukraine or when did that start?

- There was kind of a perfect storm to some extent.

First thing, there was too fast recovery from Covid and the energy suppliers were not ready to actually catch up.

[Scott] Right.

- On top of that, if you wanted more problems, 50% of the nuclear fleet in France was out of order for months in the hottest summer in years, and with a drought that affected the hydro reservoirs.

Clearly Vladimir Putin took energy and gas as the main weapon to actually start the invasion.

And obviously, the gas prices costs were 10 times larger.

And it's amazing from 30 to sometimes 50, 250, 300, and this is a huge burden for the continents.

[Scott] It's incredible.

[Jon] It's incredible.

[Scott] Yeah.

Yeah, and Europe won't develop its own gas.

- Europe has watched its own domestic production of gas steadily on a downward slope.

That's been most dramatically true in the case of some of the production from the Netherlands, the Groningen field that is basically now all but offline.

[Scott] Right.

- Which was driven substantially because of seismicity, earthquakes that were happening, cracking people's homes, et cetera, creating a huge political challenge.

- Sure.

- But also other resources haven't been as proactively and aggressively developed as might be the case.

- You know, Europe has led into decarbonization.

Part of that I think is Europe had but doesn't have much oil resource anymore.

They don't have reserves of natural gas.

Well, we need something else, right, for transportation and for making things work.

How much does that play into it?

You're deep into this- [Carlos] One hundred percent, it plays 100%.

Obviously, it was an objective that aligned perfectly with climate change and the like.

And when it comes to sell the policy to the population, it's much easier to sell it saying, "Hey guys, we need to decarbonize the planet."

But certainly 100% the objective was to increase energy independence.

- Yeah.

- And that's why I think it's so relevant the difference between the United States and Europe.

[Scott] Mm-hmm.

- Europe doesn't have any other or the choices.

This is not the case in the United States.

- Right.

- United States could decide to live on their own and they could make it.

- But by the way, one of the, I think potentially really important silver linings, if you can use that term, is that there's now I think an embedded view that I hear from most of the European corporate decision makers, government decision makers, and just everyday people that you have to do them both in tandem, right?

- Energy, security- - Energy, security, and climate at the same time.

[Scott] Yep.

- If one thinks about what the world may conclude, looking back five years from now or 10 years from now, pick your point in the future, I think the significance of this time will in part be for that kind of reason, that thinking about strategic vulnerabilities and over reliance as we seek to change a part of our economy that is so utterly fundamental, this could be actually a good thing out of a very bad time.

- Sure, sure.

At a real high level, portfolios matter optionality.

But some of that trend seems to have been reducing options, is that?

- You mean the policies towards decarbonizing and- - Yeah, are they eliminating too many options like nuclear going away, no natural gas developed, these kinds of things, or?

- I would say, I don't think that nuclear is actually going away that much.

Emanuel Macron announced six new nuclear reactors for the next years, so- [Scott] New builds?

- Yeah.

[Scott] Oh, good.

- Probably new, but- - I mean, Germany shut down a lot of its post- - Yeah, of course, of course.

And Germany decided to phase out their nuclear fleet like a decade ago.

And well, hindsight is 2020.

- Yeah.

[Jon] As I talk to Germans even today, I don't hear much of a different sentiment about de-nuclearization.

They realize that they're having to contend with the impacts of it, but the politics of the anti-nuclear movement in Germany have such deep and long roots that it's kinda hard to imagine that story changing anytime soon.

But it also points up the fact that the solutions that different European states are pursuing are really very different.

Poland and Estonia are very far along looking at one particular model of the small modular reactors that are emerging.

But France very stubbornly is defending the point.

And it's a fact that essentially, all of that nuclear capacity is a zero carbon resource.

- Absolutely.

- Once again, you have to overcome the population feelings in front of nuclear that are really, really intense.

I mean, this will never happen in Italy, will never happen, in general, in the southern part of Europe.

The population is very much against that.

It's something that comes from decades that you cannot change the mindset of the people.

- Is that a second world war, why?

- I mean, mainly it's security.

So it's this idea of having something there that is dangerous.

You know, it's like the fear to fly.

No matter how many times you tell them, [Scott] it's real fear.

- they don't care.

It's like, so security is one of them, of course.

And then the other message that they usually receive is, "Listen, if it would be significantly cheaper, then I would be willing to bear the risk."

Take into account for example the case from Germany, Angela Merkel, a year before Fukushima announced the life extension of all the nuclear fleet-- - Right.

- For 20 more years, then Fukushima happened.

And six months later, she announced phasing out.

Well, when politicians and a politician like Angela Merkel does something like that, it is not because she has changed the way of looking at that.

It's because she feels that the whole population is like, "Oops, we don't want that anymore."

So it was just security and it was a move in less than three years where it was from extending the life to phasing them out, and-- [Scott] They've kept three, I think, thankfully.

- Until the end of this year, they kept three.

- See what happens.

- And so then, I see no reason to believe that you will see a further life extension on those three German nuclear plants.

[Scott] You don't?

- No way.

No way.

- What did those get replaced with?

- Well, those plants got replaced by the rest of the German mix.

The rest of the German mix being four times more carbon intensive, for example, than the French mix.

According to the most recent data I saw, more carbon intensive than the US resource mix.

- So coal mostly-- - Natural gas, coal-- - To back up the wind.

- Renewables, you know, so.

- Yeah, their expectation was that they were going to be able to get to this 80% renewable objective for 2030 relying on gas.

Obviously, creating an invasion has complicated that thing.

They needed to kind of use more than what they expected the coal plants.

But they expectation is that they're going to double their wind capacity in the next three years.

[Scott] Are they getting pushed back on the windmill?

- Well, I think that the huge potential is offshore wind in the North Sea.

[Scott] Okay.

- But they are struggling a little bit on how to develop the network for that.

But thanks to the crisis have big push and permitting.

So all these administrative bureaucracies have been relaxed very quickly and surely it's going to be easier to go faster into that.

- Yeah.

Interesting.

And do you see a lot of the rest of Europe following that?

- Yeah, no doubt.

Even a country like Portugal or Spain who have a very significant access to LNG because they have lots of LNG terminals, [Scott] Right.

- So they are in their energy and climate plans that they had to be announced a year ago.

All of them are very aggressive in going into more renewables.

- Yeah, yeah.

Why are the new reactors, the few that are being built, why are they going so far over budget?

- Surely there is a part that has to do with know-how.

So part of the message that EDF sends is, well, yes it's true.

It took us four times the budget or that we originally thought, but it was simply because for 30 years, we lost all the knowledge and then we need to kind of restart with that.

And the first reactor has been extremely expensive.

The second will be a little bit less and then we will be able to compete.

We will see, hopefully we are right.

- Well, so there's a difference that's important to draw out here between the kind of thousand megawatt electric Generation III reactors versus the discussed prospect of small modular reactors which are meant to be serial production in kind of factory setting.

And the argument goes that this would result in technological learning, cost reduction, and very importantly, quality control.

These are also reactors that are smaller as a general rule that are much smaller in scale.

So instead of having to completely, you know, rewire your grid, 'cause here comes a boom, a thousand megawatts in a particular place, you're putting, you know, 200 there and 300 there and 50 there.

And it's much less of a disturbance, so to speak, on the electrical grid.

- The ones who are building the gigawatts are, but they're pretty far over budget.

- Yep.

No, I mean- - What's driving that?

- It's problems with workforce, as Carlos mentioned.

It's, you know, particular requirements, it's cost of capital, it's cost of inputs that have escalated over time as the schedule has slipped.

So I mean, it ends up being a kind of a vicious cycle in essence.

- Right, I guess I contrast it to China who seems to be building reactors like China does every three or four years, bam, there's another reactor.

- Another typical argument is also that the security constraints in China might not be as stringent as they are in Europe.

So Europe is way more careful in that.

And this could have also an impact, but looks like that most of the delays that have got up to 12 years have been more on unexpected technological issues that they didn't know about.

And they are every day saying, okay, "Oops, we have found this thing, we need six more months."

Hopefully, once they are actually able to finish, these lessons are good enough to go and be able to do it much faster later on.

- Yeah, other than France, does Europe have any hope for nuclear in its future?

- Poland and Estonia are very far along looking at one particular model of the small modular reactors that are emerging.

- Right, Romanian too, I think.

- into the marketplace.

- Yeah.

- Romania is also expressing a great deal of interest.

Yeah, I mean, I think that you're gonna see a separation of the European Union into, you know, those that will and those that won't.

- Right.

- And that probably means that the policy debates will remain fairly bitter going forward.

But I just- [Scott] Sure.

- You know, I don't see that changing anytime soon.

- That brings us to kind of this dialogue, this federalist dialogue.

There's the EU wanting to behave in a kind of a coordinated way and then there's countries doing different things now, even more so than perhaps in the past.

So let's talk about it.

What's happening?

- Yeah, I think it has changed for a number of reasons.

One of them is Brexit.

It might not be very politically correct, but the European Commission is a magic thing of 27 different countries with a huge diversity.

But it has more or less always been like on equilibrium between France and Germany.

The presence of Great Britain in that discussion was more or less kind of the referee balancing the dispute and being able to keep the balance.

Now the Great Britain is out, I think that there is more obvious this idea of the two blocks, for instance.

On all this huge crisis, the perception from Paris to the north is that, well, it was tough, but they could afford it.

But if you look south, they had the immediate idea that they could not afford it.

And the other important shock has been urgence.

Until now, particularly the energy sector had such an inertia that you could discuss things, take your time, but because of the Ukrainian invasion-- - Yeah, okay.

- Some member states in itself were desperate thinking that they might not have a supply.

As he mentioned Germany, but also Italy.

Italy was 40% dependent on Russian gas.

So in that situation, the European Commission suddenly was in a position of trying to go fast with very radical proposals from particularly the countries in the south.

And they were not used to that.

They were not used to, actually every four months they were changing their ideas, their positions.

- Hell, prime ministers were changing faster than that in some countries.

[Carlos] Yeah, I mean it's- - It's incredible.

[Carlos] It's a war economy in this moment, right?

Part of the stress test, I would say, for the whole European Union, not just for the energy sector.

- Yeah.

Yeah.

- Carlos uses a term there that I think is really important to emphasize which is a war economy.

One of my colleagues at Columbia University notes that essentially Europe is at war, albeit economic war these days with Russia.

And I think that's so very important to keep in mind the challenges that Europe is facing.

Maybe challenges that take advantage of long-running choices made and not made.

But the particular moment is one that's been thrust upon Europe.

- Right.

- And so Europe, which has always had deliberation and political accommodation and long-running dialogues as kind of the core, now has to make decisions pretty fast.

[Scott] Yes.

- Fix this in the course of this year so that I don't face that problem when the weather gets cold in the winter.

- Yeah.

- It's really hard to do adjustments in that kind of timeframe without massive cost run ups.

[Scott] Yeah.

- And it has to be said that the bureaucratic hurdles that are always the enemy of energy development anywhere, certainly in the United States, that's true.

It's a constant complaint from industry.

But when you talk to people that are looking at the European markets, unfortunately you hear this even more strongly, and it's useful to take a kind of a historical step back.

It's not much more than 15 years ago that for the first time in the treaty on the functioning of the European Union, any decision-making went to Brussels about energy.

Until that time, it was all decision-making to be made at the level of the individual member states of the European Union.

So now you've got that for the first time, that shared competence, that shared responsibility for decision-making.

And there's a lot of push and pull that's still going on about whose prerogatives should dominate.

[Scott] Sure.

And thankfully, winter of 22, 23 was pretty warm.

- Yeah.

- You know, it could have been even worse.

- Yeah.

- What are some specific examples of sort of state interest conflicting with the EU?

Jon, what do you see there?

- Well, there's a lot of issues around interconnection.

For example, the long running discussions that went on for well over a decade about creating the so-called mid cat gas pipeline, which would have enabled shipping gas across the Pyrenees from the Iberian Peninsula where there's lots of LNG capacity, regasification capacity into Southern France and onward into elsewhere in continental Europe.

And that was a no-go for years and years and years.

In part, it was local opposition to the idea of a pipeline crossing what is a beautiful part of the world.

In part, it was cost allocation issues.

But in any event, you know, you had this crazy imbalance where something like 45% of the capacity to accept LNG and turn it back into normal natural gas was in the Iberian Peninsula leaving only 55% for all of the rest of continental Europe, and that certainly was a kind of a visual visible imbalance, if you will.

[Scott] Interesting.

- But there are others around that you could point to.

Some are about gas, some are about electric power.

In the case of Germany, they've got their load centers in the south.

[Scott] Yeah.

- And they severely lack the backbone transmission from the North Sea to Bavaria.

It's a story that American energy people should recognize very well because it exactly mirrors the problems we have with permitting to get wind from West Texas to other parts of this state, or from Iowa to the industrial Midwest.

[Scott] Or a pipeline built.

- Or a pipeline built.

- Also, we have to take into account that more or less, like here in the United States, in Europe there are Wyomings also.

So Poland has always been reliant on coal.

[Scott] Yes.

- And is very difficult to actually tell these guys, well, everything's gonna be great when coal is over, and you're gonna be fed by the wind from the North Sea or the solar output from the south.

Same thing for France.

France, they are in the middle of everything but they don't have a huge wind potential.

They don't have a huge solar potential.

They have always been the energy champions in the- - Not much oil and gas really either.

- Yeah, so now they feel like they are losing that position.

And you know, the French, they don't like relying that much in the neighbors.

So that's why the only solution they see is going strong once again for nuclear.

And on top of that, obviously, as Jon mentioned before, Germany decided to rely 100% on Russia.

So one of the reasons why these pipelines didn't happen, it was to some extent that Germany was not actually pushing that hard for this to happen.

In the last, I mean, at the end of 2022, the Spanish government and the German government quickly, in a question of a couple of weeks, got to an agreement to build a new pipeline, not only for gas transportation, but also hydrogen.

And so when you are under stress, you move quickly, right?

- Right.

[Carlos] And until that moment, it didn't happen.

- A rapid Covid recovery that renewed energy demand, Russia's invasion of Ukraine that cut off natural gas and other policy-related energy issues building for over a decade have caused an energy crisis in Europe.

Carlos emphasized that climate concerns allowed policymakers to push mostly for solar and wind.

Jon emphasized the importance of working energy and climate security in parallel.

Some see decarbonization policies that promote solar and wind has a chance to grow domestic energy.

Others worry about cost and energy security.

France remains pro-nuclear though many countries still fear it.

And because Europe won't develop domestic natural gas, many have replaced nuclear with coal, trading increased carbon emissions for reliability and affordability.

Meanwhile, a war economy mentality has made permitting certain energy projects easier and encouraged cooperation.

Though challenges remain with cross border pipelines and power lines.

We'll talk more about EU energy and climate policy in part two.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.