When the Going Gets Tough, Europe Turns to Fossil Fuels

July 13, 2021

After decades of being attacked by radical environmentalists, it turns out that fossil fuel is actually pretty important. This is becoming particularly true in Europe right now, as the European Union copes with skyrocketing prices for natural gas and electricity. Today’s Wall Street Journal reports:

A scramble for natural gas is creating pockets of scarcity in the global market, boosting prices for the fuel and for the electricity generated by burning it…

Europe, in particular, is feeling the pinch. With vessels of liquefied natural gas heading to Asia, buyers on the continent have struggled to replenish tanks and caverns after a long and cold winter. Storage levels are the lowest for this time of year in a decade, said Natasha Fielding, a gas analyst at Argus Media.

The price of gas at a trading hub in the Netherlands shot to a record $13.10 per million British thermal units in July, according to S&P Global Platts data going back to 2004. Barring mild temperatures this winter, gas prices are likely to remain elevated globally for at least another year, according to Chris Midgley, head of analytics at the commodities-data firm.

The article goes on to discuss how high energy prices are impacting companies around the continent, forcing them to raise prices for their products or absorb massive losses.

Europe has long viewed itself as setting an example for the rest of the world on environmental policies, but reality is now setting in. In fact, Bloomberg reported last month that the energy shortage is now causing the EU to turn to coal, a fuel source that European politicians have long vilified. According to Bloomberg:

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. As economies reopen and people go back to the office, countries like Germany, the Netherlands and Poland turned to coal to keep the lights on.

Just as we pointed out in yesterday’s blog, renewable energy has proven to be unreliable and when it fails to produce energy it turns to fossil fuels to power the grid.

The energy marketplace is complex, but its goal is not to provide people with reliable sources of fuel and electricity. Unfortunately for European citizens, their politicians would rather chase ‘feel good’ headlines about environmental goals rather than engage in the tough work of ensuring that energy and environmental goals can be met simultaneously. Renewable sources of energy are not currently capable of serving the baseload needs of entire continents. Thankfully for Europe, fossil fuels are once again there to save the day. We hope the Biden administration is taking notes.