News round-up, May 12, 2023
Quote of the day…
A Fundamental Debate over Hydrogen in Brussels:
…”Not everyone is on board with repurposing old gas networks for future use. German companies and municipal utilities hope to make the switch. Still, the issue is being debated in Brussels over an EU directive called the Hydrogen and Gas Market Decarbonization Package. All of this is a part of the larger "Green Deal" program, which aims to greener Europe.
"If we don't use the gas grid for the energy transition, we'll be shooting ourselves in the foot."
Carsten Rolle of the Federation of German IndustriesSpiegel Most read…
How Germany's Hydrogen Boom Stalled
Green hydrogen has the potential to heat millions of homes and keep German industry humming. So far, though, a lack of the environmentally friendly gas and the infrastructure needed to transport it have prevented its wide-scale use.
Spiegel By Claus Hecking, Isabell Hülsen, Benedikt Müller-Arnold, Michael Sauga and Gerald Traufetter, 11.05.2023Europe First: Macron hits the gas in transatlantic subsidy race with EU carmaking cash
French president takes first concrete step in countering Biden’s ‘Buy American’ green subsidies.
POLITICO EU BY GIORGIO LEALI AND JOSHUA POSANER, MAY 11, 2023Don’t isolate China, Brussels tells EU capitals
Get ready for the Taiwan crisis to blow up but don’t make China ‘more foreign,’ EU document recommends.
POLITICO EU BY STUART LAU, JACOPO BARIGAZZI AND SUZANNE LYNCH, MAY 11, 2023 OPEC’s Output Slipped in April Ahead of Saudi-Led Production Cuts
Oil prices have tumbled in recent weeks over concerns about the health of U.S. banks
WSJ By Will Horner, May 11, 2023The West Needs Russia to Power Its Nuclear Comeback
U.S., Europe add reactors but still heavily dependent on Moscow for crucial ingredients to produce fuel
WSJ by Jennifer Hiller, Daniel Michaels, and Kim Mackrael, May 10, 2023Henry Kissinger's Shifting Views on Ukraine
Kissinger, a key figure in U.S. Cold War policy towards the Soviet Union during his time under Presidents Nixon and Ford, has always maintained that Ukraine should maintain neutrality and refrain from joining NATO. However, he recently stated at the Davos conference that if Russia were to invade, Ukraine joining the Transatlantic Alliance could be a viable solution.
NEWSWEEK BY JACK DUTTON ON 1/18/23
Andrés Gluski, CEO of energy and utility AES CorpHow can strategic investment achieve both economic growth and social progress?… What is the role of renewable energy and battery storage in achieving the goals of the low-carbon economy?…
The AES Corporation President Andrés Gluski, Dominican Republic Minister of Industry and Commerce Victor Bisonó, and Rolando González-Bunster, CEO of InterEnergy Group, spoke at the Latin American Cities Conferences panel on "Facilitating Sustainable Investment in Strategic Sectors" on April 12 in Santo Domingo, Dominican Republic.
Today's events
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Today's events 〰️
A simulation of the Aquaventus initiative in the North Sea: Electrolyzers will use wind power to produce hydrogen that is to be transported to the mainland via a pipeline. Jakob Martens / AquaVentus/Editing by Germán & CoHow Germany's Hydrogen Boom Stalled
Green hydrogen has the potential to heat millions of homes and keep German industry humming. So far, though, a lack of the environmentally friendly gas and the infrastructure needed to transport it have prevented its wide-scale use.
Spiegel By Claus Hecking, Isabell Hülsen, Benedikt Müller-Arnold, Michael Sauga and Gerald Traufetter, 11.05.2023The pipe, it seems, just can't get around the seals. On a windy day this winter, hundreds of seals populate the beach at the dune near the island of Helgoland in Germany. They grunt quietly when you get close to them. "Let's keep our distance," says Thilo Thunhorst. "Then the seals don't feel so disturbed."
The animals are a problem for Thunhorst. The 52-year-old is an engineer with Gascade, an energy network operator. On the small island neighboring Helgoland, the company plans to lay a pipeline for the Aquaventus pilot project, one of the most ambitious hydrogen initiatives in the world. After its completion, climate-friendly hydrogen will soon be transported from an offshore wind farm equipped with electrolyzers, to the mainland. German utility company RWE and Shell are among the companies involved.
But not even the pilot project – a single wind turbine with the pipeline connection to Helgoland – is in place yet. The test facility is expected to be up and running in three years – that is, if Thunhorst can get past the seals. Helgoland is surrounded by nature reserves, anchoring zones for tankers and ferries, fisheries and areas which may contain unexploded bombs from World War II.
Thunhorst has to lay the pipeline amid all of that. "If I pay heed to the conservation area, then I have no choice but to run the line through the anchoring zones and the suspected munitions areas," he says.
The only alternative is to cross the dune, the seals' habitat. Or by drilling under the island, an undertaking that would cost several million euros more.
Without Hydrogen, There Can Be No Demand
Welcome to the sobering hydrogen reality. While Germany hopes that it will soon be able to run basement gas heating systems on hydrogen, steel manufacturers are converting their production to the green gas at a cost of billions and energy companies are planning new power plants that will generate electricity from hydrogen, almost everything needed to make the climate-neutral dreams a reality in the near future is still lacking. The environmentally friendly hydrogen is missing, as are the pipeline networks to carry it across the country, not to mention reliable business models.
This plethora of issues has created a chicken-and-egg problem in the industry: So long as there isn't sufficient hydrogen, there won't be demand from customers. And without demand, no one will build a pipeline network, which in turn means no demand.
German Economics Minister Robert Habeck, whose ministry is responsible for the mammoth undertaking, recently complained: "When the Dutch energy minister wants a pipeline to be built, he just calls Gasunie." The state-owned company then sets about getting the work done. In Germany, though, the minister has to deal with 16 long-distance gas network operators, countless municipal utilities and regional network providers, stubborn government coalition partners and powerful lobbying associations.
The hype is thus contradicted by the figures: 44 terawatt hours (TWh) of hydrogen were produced in Germany last year, of which not even 1 percent was produced using climate-neutral green electricity. The rest is "gray" hydrogen and comes primarily from natural gas. By comparison: Last year, Germany required 866 TWh of natural gas for heating, power plants and industry. With the amount of hydrogen that the largest existing electrolyzer can produce each year, natural gas could be replaced in this country for only a half an hour.
There's still a long way to go before green hydrogen can contribute to a secure energy supply. Currently, only 417 kilometers (259 miles) of hydrogen pipelines are in operation across Germany, compared to tens of thousands of kilometers of natural gas networks.
The German government has set itself the bold goal of building electrolyzers with a capacity of 10 gigawatts by 2030. And, indeed, corporations like BP and RWE are planning numerous large-scale plants.
However, final investment decisions are still pending for most of the projects. And that's where things look dire. The United States is currently courting climate-neutral investments with billions in tax subsidies. "Some industries in this country are asking themselves whether hydrogen should still be produced in Europe at all, or whether it would be better to produce it in the U.S.," says Gabriël Clemens, who is responsible for hydrogen and environmentally friendly gases at E.on, a German energy utility company.
"We are discussing petty issues in Germany," complains Uwe Lauber, the CEO of MAN Energy Solutions, which builds such plants, and a member of the National Hydrogen Council, an advisory body to the German government. "But what we need to be doing is to build plants now, big plants." He argues that smaller electrolyzers won't make hydrogen any cheaper and will keep the market from taking off.
A Showcase Project
If there is one place that displays both the progress and backwardness in the quest for hydrogen energy in equal measure, it's the Ruhrchemie plant in the city of Oberhausen. It is a convoluted agglomeration of factories and pipe bridges. Air Liquide, a French company, uses it to produce gray hydrogen from natural gas and distributes it across its own 240-kilometer network, the largest in Germany to date. It winds its way largely underground from Leverkusen, a city that is home to major chemicals manufacturing, with a few branches to the Ruhr region. The pipeline is connected to, among other things, a refinery, plastics factories and the ThyssenKrupp steel mill in nearby Duisburg.
By the end of the year, Air Liquide's network is set to become a little bit greener. An electrolyzer is currently being built in Oberhausen that will produce hydrogen using green electricity. It's a flagship project, which even prompted German President Frank-Walter Steinmeier to pay a visit last week.
Although the plant will be one of the largest water electrolyzers in Germany, with a capacity of 20 megawatts, the volume it produces will only be enough to meet one-sixth of the needs of the factories connected to the pipeline. Why isn't the company thinking in much bigger terms?
Green hydrogen is still twice as expensive as gray hydrogen, explains Gilles Le Van, who is the head of Air Liquide's division for industrial customers in Central Europe. High gas prices and more expensive CO2 emission rights have recently made gray hydrogen significantly costlier, but the production costs for the green alternative hinge on the price of electricity. And electricity prices are at a record high in Germany right now.
The capacity of Air Liquide's network is also limited. With a diameter of no more than 30 centimeters, the pipeline is significantly smaller than long-distance gas pipelines, which easily reach 80 centimeters. Le Van is hoping that natural gas network operators will rededicate at least part of their lines to hydrogen so that the Oberhausen project doesn't remain a lone venture.
Can Existing Gas Pipelines Be Tapped?
When Ontras boss Ralph Bahke wants to know whether hydrogen could flow through his pipes in the future, he pulls out a pipe inspection gauge. The device, which is equipped with sensors, looks like a cross between a space probe and a chimney brush. It can be used to measure the finest cracks and damage inside the steel pipes. If the steel is undamaged, the tube is potentially suitable for the fine hydrogen molecules, meaning it is H2-ready.
Ontras, a subsidiary of German energy utility EnBW, owns around 7,700 kilometers of gas networks in eastern Germany. Large plants such as the Leuna Chemical Complex and the Piesteritz nitrogen works are directly connected to the network. Because gas demand is expected to drop dramatically in the next few years, Bahke is aware that he needs an alternative use for his pipelines, like hydrogen.
Bahke has already tested around half of his network for its suitability for hydrogen. And the majority so far would work, at least in principle. It's good news, Bahke says, "because repurposing costs only one-fifth of what it would cost to build a new network."
Nevertheless, hundreds of kilometers of pipelines still need to be built in order to supply the company's customers with hydrogen on a broad scale, in part because some potential customers weren't even connected to the gas network before. Two model projects in the region alone are expected to devour several hundred million euros in investment by 2030. Will it pay off? "We're doing a lot of the upfront work now," Bahke says.
It's unlikely there won't be enough demand. In a survey conducted by the long-distance gas network operators of their customers in 2021, the reported hydrogen demand increased tenfold compared to 2020. The only problem is that very few of them know who can supply them with hydrogen, in what quantities and at what price. And that's a problem for network operators. Because the lines have to be financed through customer-use fees. If only one customer were to use the network in the beginning, then that customer would also theoretically have to pay the network charge on their own, which would be unimaginable. "We wouldn't be able to muster the revenues we would need," says Bahke.
He argues that the state will have to step in as the guarantor in the development of the hydrogen network. Network operators are already discussing one possible solution with Habeck's Economics Ministry: Charges for the new network could be capped initially so that the customers who are the first to use the lines don't get penalized. If there aren't enough revenues, then the government could step in. "Ideally, demand will be so great by then that no public money will be needed at all," Bahke says in support of the idea.
With the exception of a small project in Bad Lauchstädt, it will be around four years before hydrogen starts flowing through the new Ontras pipelines, in part because they are seeking European Union subsidies in Brussels earmarked for what are called IPCEI projects. These subsidies are intended for projects that are in the EU's interest and deemed to be particularly worthy of support. The processing of the paperwork has been delayed because the European Commission lacks the staff to handle the flood of applications. "We're running out of time," Bahke warns.
To turn the patchwork of regional pilot projects into a national network, the Ontras manager would like to work with the other long-distance gas network operators to design a German start-up network, a kind of highway map for hydrogen. So far, efforts to implement that have collided with the legal situation. Whereas the natural gas network is under the supervision of the Federal Network Agency, which requires suppliers to build and operate pipelines and work together to do so, the hydrogen network has largely been left to the free market so far. Anyone who wants to build a network can do so, provided they have the approval of the regional authorities. At first glance, that looks like a lot of freedom. But German competition law prohibits network operators from colluding. And the Federal Network Agency has so far lacked the legal basis to sign off on the plan for a national network. This is another reason that many plans haven't moved forward.
Since last week, though, it appears that Economics Minister Habeck has come to understand the dilemma. By the summer, the minister wants to amend the Energy Industry Act to enable the rapid development of a start-up network. Habeck initially wants to commission the construction of 1,800 kilometers as part of IPCEI projects. The Federal Network Agency and the operators of the long-distance gas pipelines would also be allowed to design it together. Habeck has also held out the prospect of money to close the financing gap from the initially meager grid fees.
A Fundamental Debate over Hydrogen in Brussels
The hope of companies like Ontras and many municipal utilities to repurpose as many kilometers as possible of their old gas network for future use is by no means universally accepted. Especially not in Brussels, where a lobbying battle is currently raging over an EU directive known as the Hydrogen and Gas Market Decarbonization Package. It is part of the "Green Deal" with which the European Commission wants to transform Europe into a climate-friendly continent.
"If we don't use the gas grid for the energy transition, we'll be shooting ourselves in the foot."
Carsten Rolle of the Federation of German IndustriesSo far, hydrogen has played only a modest role in those rules. The Commission's argument: The direct use of electricity – in heat pumps and electric motors, for example – is much more efficient than conversion to hydrogen, a process in which considerable energy is lost. Because the green fuel will be scarce and expensive for quite some time to come, they expect it will only be used in a few industries, such as steel and chemicals, as well as in shipping and heavy-duty transport. The remaining energy requirements are to be covered by green electricity and batteries. That would mean that a large part of the network wouldn't even be needed.
A repurposing of gas pipelines for hydrogen, the European Commission fears, could slow down rather than accelerate the transition to clean energies. This is why the Commission is pushing forward with unbundling regulation that would require gas network operators to hand over their pipes in the long term if they enter into the hydrogen business. Unbundling fits with the assumption that hydrogen is likely to be used primarily in industry and heavy-goods transport: If that is the case, why should private citizens help finance the development of this infrastructure with their gas network fees?
The industry recently protested loudly against the Commission's plans. They argue that the regulation would choke off any incentive to invest in hydrogen networks. Papers published by lobbyists speak of "economic nonsense" that makes it more difficult to achieve the climate targets. "If we don't use the gas grid for the energy transition, we'll be shooting ourselves in the foot," warns Carsten Rolle, head of the energy and climate policy department at the Federation of German Industries (BDI). Germany's second legislative chamber, the Bundesrat, which represents the federal states and has traditionally been sympathetic to representatives of the municipal sector, urged the federal government to push for changes to the proposed regulation.
"As industrial centers, Germany and Europe have no time to lose."
Jens Geier, member of the European ParliamentOne person who holds a similar view is Jens Geier, the head of the center-left German Social Democratic Party (SPD's) party group in the European Parliament. The gas industry will have to change, says Geier, who is leading negotiations on the regulation for the European Parliament. "That's why it should also take responsibility for the development of the hydrogen networks," he says. "This is important for the timely supply of energy-intensive industry."
In February, members of the European Parliament decided that distribution network operators controlled by municipal authorities should be permitted to transport hydrogen without major restrictions. It was a victory for the gas industry, but only a temporary one. That's because the European Council, which represents the member states, still has to approve the regulation, and it remains controversial there. France, for example, couldn't care less about preserving the German gas network. The government in Paris wants to protect its own electricity sector. In a country with 57 nuclear power plants, electricity had traditionally been more important than gas for energy supply. If Paris had its way, nuclear power would flow directly to electrolyzers located near the factories, eliminating the need for any large hydrogen pipelines.
The gas lobby fears that consensus for that opinion could also develop in Germany. The reason behind that is a recently published paper by the think tank Agora Energiewende, which had been headed for years by Patrick Graichen, the state secretary responsible for the issue at the Economics Ministry, which is led by the Green Party. The Agora study sees no future for more than 90 percent of gas distribution networks in Germany. Instead, it states, the "orderly and timely decommissioning" is a central task of the transition away from natural gas to other technologies for heating.
If, on the other hand, the phase-out were postponed, it would lead to the stranding of up to 10 billion euros in assets. In the end, these costs would be borne by consumers, who, according to Agora's philosophy, should in the future get their heating primarily through heat pumps or district heating.
EU parliamentarian Geier is proposing a compromise. "The EU should put regulation of competition for the hydrogen economy in the hands of individual member states." Then each country could decide for itself which regime best suits its energy system. "As industrial centers," he says, "Germany and Europe have no time to lose."
The German Heating Illusion
E.on executive Gabriël Clemens doesn't want to wait that long. He has been talking to some of his customers about building electrolyzers on site, even if small plants are significantly less efficient than those on a gigawatt scale.
Clemens points out that a supraregional transmission network would be of little help to most German companies. "Small and medium-sized enterprises, the core of the German economy, are connected to the distribution networks." He is thinking primarily of businesses that require high temperatures – glassworks, foundries or ceramics manufacturers, for example. The intricate distribution network would also be needed to realize some politicians' hope of potentially supplying every private boiler room with hydrogen in the near future.
"Hydrogen in the building sector is a niche topic."
Stefan Schönberger, Boston Consulting GroupIn contrast to the long-distance gas network, where several pipes run parallel along many routes, the distribution network consists of only a single pipe in many places. Adding hydrogen in these locations is considered a waste of the scarce energy carrier. However, operators such as E.on could only convert entire network sections to 100 percent hydrogen if all connected consumers were able to handle it. Most gas heating systems currently installed allow at most a 20 to 30 percent admixture of hydrogen. And that's not even mentioning the lack of efficiency in the field. "Hydrogen in the building sector is a niche topic," says Stefan Schönberger of the consulting firm Boston Consulting Group.
Despite all the difficulties, E.on has formed partnerships with companies from Canada and Australia to bring hydrogen – in the form of ammonia, for example – to Europe. Ammonia is a compound of hydrogen and nitrogen that can be transported by ship and train and cracked, or broken down, into pure hydrogen on site. "So there are a lot of possibilities, even without pipelines," Clemens says.
Time-Consuming Approval Processes
Meanwhile, on the island of Helgoland, Thunhorst, the engineer, looks out over the sea and points to an imaginary point in the distance where the pilot wind turbine will one day stand. It will be built as far away as possible and close to existing wind farms "so that it is less visibly noticeable," Thunhorst explains. After all, they don't need protests from locals on top of everything else.
Pipeline expert Thilo Thunhorst at the beach populated by seals on a small island near HelgolandFoto: Claus Hecking / DER SPIEGEL/Editing by Germán & CoIn addition to the seals, Thunhorst has already identified the next problem. A few steps away from the possible landing point of the pipeline on Helgoland, he points to a curly plant on the side of the road. "Real sea kale," he says. "It's protected by nature conservation laws." Before digging can be done here, a biotope type mapping must be done that shows protected plant and animal species in the area.
The pilot project alone requires four permitting processes, with each demanding hundreds of pages of expert opinions. For the full Aquaventus project, five additional permitting processes would be needed. Even in the best-case scenario, that would take years. They are already considering shifting the focus away from Helgoland, across the North Sea.
And why did the planning start so late in the first place? "People believed in cheap natural gas," Thunhorst said. No one could have imagined that one day it would just suddenly stop flowing. Himself included, he says.
France's President Emmanuel Macron sits inside the Hopium Machina Vision hydrogen-powered car | Pooled photo by Gonzalo Fuentes/AFP/Editing by Germán & CoEurope First: Macron hits the gas in transatlantic subsidy race with EU carmaking cash
French president takes first concrete step in countering Biden’s ‘Buy American’ green subsidies.
POLITICO EU BY GIORGIO LEALI AND JOSHUA POSANER, MAY 11, 2023…”Macron, a student of Kissinger
Don’t repeat this in front of the 26 other European heads of state or government meeting this Monday. [30] and Tuesday [31 mai] in Brussels for a new extraordinary summit dedicated to Ukraine: 44-year-old Emmanuel Macron is following in the footsteps of the most respected and criticized master diplomat of the last century, the American Henry Kissinger.
thenewsdept.com by James, May 31, 2022PARIS — Emmanuel Macron took his war of words with Washington to the mat Thursday by proposing a concrete counter to Washington's electric car subsidies — a move likely to further heighten transatlantic tensions.
France, home to major carmakers like Renault and Stellantis, will tailor its existing measures that encourage green vehicle purchases to specifically reward European manufacturers by the end of this year, the president said, calling on the rest of the European Union to take similar action.
"We will be the first European country to reform the criteria for the allocation of the car bonus," Macron said in a speech at the Elysée Palace during an event on re-industrialization, where EU Internal Market Commissioner Thierry Breton also took the floor. "It's a small revolution that we want to bring to the European level," Macron said.
Macron has been a combative voice hitting out at the subsidies under Joe Biden's Inflation Reduction Act, which encourages consumers to "Buy American" when it comes to electric cars and offers other perks to the domestic green industry. He further stirred the pot with Washington last month after a visit to Beijing when he argued Europe should not act as "followers" of the U.S. when it comes to defending Taiwan from China.
The new French measures would, however, also take aim at China, which also subsidizes local carmakers.
"Why should we be the only space in the world that supports what is produced by competitors? We will not close the door to them, but since they already have uncooperative policies, we are not going to further help them with aid measures," he said, referring to the fact that American and Chinese companies can currently benefit from French incentives for consumers who buy eco-friendly goods like electric vehicles and solar panels.
"This doesn't mean that we are protectionist, we are not going to close the market, but we don't want to use the French taxpayers' money to accelerate non-European industrialization," Macron added.
EU leaders are generally worried about Biden's green subsidy scheme, fearing it will hinder production on the Continent and drive companies toward the U.S. to benefit from the $369 billion package. The European Commission has taken its concerns to the World Trade Organization, along with South Korea, Japan, China and Russia, arguing it unfairly discriminates against foreign manufacturers.
But France under Macron has played a more pronounced role as bad cop in talks with Washington meant to find a solution.
"We don't want to depend; we are not meant to become consumers for the American industry," Macron said Thursday.
The new measures will be part of an upcoming "green industry bill," which is set to be adopted during a Cabinet meeting next week and go through parliament this summer. The text, proposed by Economy and Finance Minister Bruno Le Maire, will also include other measures inspired by the U.S. plan, such as tax credits for sectors including batteries, heat pumps, wind and solar power, which, according to Macron, could generate €20 billion in new investments by 2030.
"It will allow us to massively reduce imports of strategic parts from other countries ... by doing this, we'll realign with China and the United States," Macron said.
China in the rearview mirror
While much of Brussels' focus has been on the U.S. scheme's impact on carmakers, many experts argue France has more to fear from Beijing than Washington when it comes to electric vehicles.
Tweaking clean car subsidies to make sure they only benefit local production is exactly the kind of policymaking car executives have been demanding for months to bolster their own efforts to counter both America’s investment splurge and China’s insurgent car brands.
Chinese carmakers — already global leaders in battery technology — have this year doubled down on efforts to crack open the European car market, with brands such as BYD, Nio and Great Wall ramping up their sales plans on the Continent.
“The French are most exposed to the Chinese automotive invasion because they are going straight for their price segment and local carmakers don’t have as much brand value like they do in Germany,” said Matthias Schmidt, an automotive market analyst.
That poses a major threat to European legacy brands, which are already encumbered by the costs of switching away from combustion engines under new EU rules that mandate a transition to only selling all-electric models by 2035.
That's why Macron is now urging Brussels to adopt a similar approach to favor European battery production over foreign competitors.
"I do not want Europe to support batteries that are not made in Europe under its battery legislation, because neither the Americans nor the Chinese are helping batteries made in Europe," he said.
*Giorgio Leali reported from Paris, Joshua Posaner reported from Berlin.
Chinese President Xi Jinping | Pooled photo by Thibault Camus/AFP/Editing by Germán & CoDon’t isolate China, Brussels tells EU capitals
Get ready for the Taiwan crisis to blow up but don’t make China ‘more foreign,’ EU document recommends.
POLITICO EU BY STUART LAU, JACOPO BARIGAZZI AND SUZANNE LYNCH, MAY 11, 2023 BRUSSELS — The EU’s high command is calling on European governments to keep talking to China amid deepening tensions between Washington and Beijing.
The European Union’s diplomatic arm wants member countries to “be prepared” for a potentially critical escalation in the crisis over Taiwan, warning that a military conflict would upend the vital supply of microchips to Europe.
But while there’s a need to reduce risks to Europe, it may not seal itself off from China, according to an internal document drafted by the European External Action Service and seen by POLITICO.
The document, which will be discussed by the bloc’s foreign ministers at a gathering in Stockholm on Friday, comes at a crucial time for the EU as it navigates an increasingly complex relationship with China. The U.S. is doubling down on its hawkish stance toward Beijing, while European leaders have not yet agreed on a unified approach. ‘terrorist group’
The paper triggered immediate backlash from some of Europe’s more hawkish governments. “With all possible alarm lights flashing, we seem to prefer hitting a snooze button again,” one senior EU diplomat said on condition of anonymity in order to discuss sensitive issues.
In the document, prepared by the EU executive’s diplomatic officials, the bloc’s 27 member countries are urged to seize “a window of opportunity” to reduce the risk of China’s growing influence over economic and security matters.
A chance remains for Europe to speak directly to President Xi Jinping’s government, the paper says. “China and Europe cannot become more foreign to each other. Otherwise there is a risk that misunderstandings will grow and spread to other areas,” according to the draft.
“Systemic rivalry may feature in almost all areas of engagement. But this must not deter the EU from maintaining open channels of communication and seeking constructive cooperation with China […] Such cooperation can serve to break through a growing self-induced isolation of the Chinese leadership but most importantly should advance the EU’s core interests,” the paper continued.
Friday’s debate at an informal meeting of foreign ministers in Sweden will fire the starting gun on a discussion over the EU’s relationship with China that is expected to dominate policymaking in the coming months, with a more comprehensive debate expected at an EU leaders’ summit in Brussels this June.
De-risking Beijing
The paper calls on member countries to speed up plans for “de-risking” and reducing overdependence on China.
“De-risking can ensure predictability and transparency in our economic and trade relations, while promoting a secure, rules-based approach,” the paper says.
The call for de-risking comes as Beijing appears increasingly impatient with the narrative that it poses a threat to the West. Chinese Foreign Minister Qin Gang, speaking in Berlin this week, criticized European politicians for attempting to “get rid of China” in the name of de-risking.
The paper also tackles the politically sensitive issue of Taiwan, with ministers due to discuss this issue as well on Friday. French President Emmanuel Macron told POLITICO in an interview last month that Europe should avoid getting dragged into a confrontation between China and the U.S. over the self-governing island, which Beijing claims as its own.
On Taiwan, the paper says: “The EU is […] adamant that any unilateral change of the status quo and use of force could have massive economic, political and security consequences, at global level, especially considering Taiwan’s primary role as supplier of the most advanced semiconductors.”
The document continues: “The EU needs to be prepared for scenarios in which tensions increase significantly. The risk of escalation in the Taiwan Strait clearly shows the necessity to work with partners to deter the erosion of the status quo in the interest of all.”
Some 90 percent of advanced semiconductors imported into the EU come from Taiwan, according to the bloc’s own estimates.
Taiwan’s semiconductor giant TSMC has been under pressure to relocate some of its manufacturing capabilities, but so far it has only moved in the direction of Taiwan’s two presumed security providers — the U.S. and Japan.
On Ukraine, the EU is not impressed with China’s latest diplomatic show, marked by President Xi Jinping’s belated first call with his Ukrainian counterpart Volodymyr Zelenskyy.
“China’s ’12-point position paper on the Ukraine Crisis’ […] confirms its firmly pro-Russian stance,” the document said. “Direct dialogue between China and Ukraine would be the best opportunity for China to contribute to a fair political settlement,” it continued.
EU member countries should keep warning Beijing to refrain from supporting Russia, including by circumventing sanctions, the same paper added.
The paper also casts gloom on the outlook for China’s domestic development, saying the Asian superpower “is likely to face unprecedented economic and political challenges internally” due to the deceleration of economic growth and demographic change.
Seaboard: pioneers in power generation in the country
…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.
More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.
Photo/ Editing by Germán & Co by ShutterstockOPEC’s Output Slipped in April Ahead of Saudi-Led Production Cuts
Oil prices have tumbled in recent weeks over concerns about the health of U.S. banks
WSJ By Will Horner, May 11, 2023Supply disruptions in Iraq and Nigeria caused OPEC to pump less oil in April, further straining an already tight oil market as some of the group’s largest producers are set to slash output sharply within weeks.
The declines come as the Vienna-based oil producers’ group left its forecasts for global oil demand and supply unchanged, meaning it continues to foresee stronger demand later this year which the oil market could struggle to satisfy—raising the threat of higher oil prices.
In its monthly report, the Organization of the Petroleum Exporting Countries said its production fell by 191,000 barrels a day in April to 28.60 million barrels a day due to production problems in Nigeria and a legal dispute in Iraq.
Iraq’s production fell by 203,000 barrels a day in April from the previous month, OPEC said, citing data collated from several independent data providers such as S&P Global Platts and Argus Media. Nigeria’s output slipped by 170,000 barrels a day. Together the declines outweighed a modest increase in output in Saudi Arabia and Iran.
Iraq’s output has slipped because a pipeline linking its oil-rich semiautonomous Kurdish region with an export terminal on Turkey’s Mediterranean coast has been closed for over a month amid a legal dispute involving Baghdad, the Kurds and Turkey. Talks to resolve the issue have shown signs of progress but flows through the pipeline are yet to resume.
The declines come as the oil producers’ cartel, which has consistently struggled to meet its own production targets, plans to further reduce its production levels. A group of the cartel’s largest members, including Saudi Arabia—its de facto leader—said last month they plan to reduce output by over 1 million barrels a day starting in May.
That move has puzzled analysts, who broadly see a need for more barrels of oil this year, not fewer, to meet demand from growing economies in Asia, in particular, China. OPEC’s own forecasts, which it left unchanged in Thursday’s report, also foresee growing demand this year to the tune of 2.3 million barrels a day.
Russia, meanwhile, which is allied with OPEC in a grouping known as OPEC+, appears to have maintained its output despite saying earlier this year that it would reduce its output by 500,000 barrels a day. As part of the Saudi-led action, Moscow said it would extend those cuts until the end of the year.
Despite initially rising following those cuts, oil prices have tumbled in recent weeks over concerns about the health of U.S. banks heightening fears of a recession that would crimp demand for crude. Brent crude, the international oil benchmark, earlier this month hit its lowest level since December 2021. It fell 1.9% to close Thursday at $74.98 a barrel. The main U.S. oil price shed $1.69 to end at $70.87.
The declines have added to analysts’ expectations that OPEC+ could use a meeting early next month to recommend reducing its collective output further in an effort to prevent further falls in oil prices. OPEC says it makes changes to output based on demand forecasts and doesn’t seek to direct oil prices.
“OPEC+ hasn’t really even started cutting yet,” said Bjarne Schieldrop, chief commodities analyst at SEB, in a note. “OPEC+ has lots of ‘dry powder’ for further cuts if needed.”
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Image by Germán & Co/ShutterstockThe West Needs Russia to Power Its Nuclear Comeback
U.S., Europe add reactors but still heavily dependent on Moscow for crucial ingredients to produce fuel
WSJ by Jennifer Hiller, Daniel Michaels, and Kim Mackrael, May 10, 2023Nuclear power in the West is having a long-awaited revival, with new reactors opening in the U.S. and Europe and fresh momentum toward building more soon.
A gaping hole in the plan: The West doesn’t have enough nuclear fuel—and lacks the capacity to swiftly ramp up production. Even more vexing, the biggest source of critical ingredients is Russia and its state monopoly, Rosatom, which is implicated in supporting the war in Ukraine.
Nuclear power supplies nearly 20% of U.S. electricity, and roughly 25% of European electricity, but in recent decades has struggled to gain traction in most of the West as a green alternative to fossil fuels, for reasons ranging from cost to waste disposal and an erosion of expertise in building reactors.
Pockets of stiff resistance remain: Germany closed its last reactors in April, in a phaseout that began more than a decade ago.
But there are signs of a shift back in nuclear power’s direction, as governments are drawn to its carbon-free electricity as a tool for fighting climate change and lessening dependence on Russian oil and gas.
In the U.S., after years of delays and billions in cost overruns, a nuclear reactor in Georgia in March began splitting atoms for the first time, a crucial step toward reaching commercial operation. Another reactor at the facility, owned by a unit of Atlanta-based Southern, is scheduled to be operational next year.
Finland last month started regular electricity output at Europe’s largest nuclear reactor, the continent’s first to open in 16 years, which will eventually produce one-third of the country’s electricity.
Poland in November chose the U.S. company Westinghouse Electric to build its first nuclear-power plant, which will include three reactors and cost about $20 billion.
A recent Gallup poll found that Americans are more supportive of the technology than at any point in the past decade.
Westinghouse, a storied pioneer of electric power, has struggled in the nuclear sector and repeatedly changed hands amid market swings and tighter industry regulation after the reactor accidents at Three Mile Island, Chernobyl and Fukushima.
A group including private-equity firm Brookfield Asset Management bought Westinghouse for almost $8 billion in October, in a move billed as a bet on nuclear power’s resurgence.
Finland has begun regular electricity production at Europe’s largest nuclear reactor. PHOTO: OLIVIER MORIN/AGENCE FRANCE-PRESSE/Editing by Germán & CoWestinghouse said this month that it next plans to launch a line of smaller reactors that could cost as little as $1 billion each.
Westinghouse Chief Executive Patrick Fragman said there is a growing public acceptance of nuclear power and that the company has corrected previous mistakes. “We are in a radically different place and we have taken a lot of the lessons of the past,” he said in an interview.
Despite the industry’s progress, the dependence on Russian enriched uranium for nuclear fuel has proven intractable.
Nuclear fuel is one of the few Russian energy sources not banned by the West as a result of the war in Ukraine. The reason is rooted in a program from the early 1990s, soon after the Cold War ended, aimed at shrinking the threat of Soviet nuclear warheads falling into the wrong hands.
Under the 1993 deal, the brainchild of a Massachusetts Institute of Technology researcher named Thomas Neff and dubbed Megatons to Megawatts, the U.S. bought 500 metric tons of highly enriched uranium, enough for 20,000 warheads, and had it converted into reactor fuel.
A nuclear reactor in Georgia started to split atoms in March after years of delays and billions in cost overruns. PHOTO: JOHN BAZEMORE/ASSOCIATED PRESS/Editing by Germán Arms-control advocates hailed it as a win-win: Moscow got urgently needed cash, Washington reduced its proliferation headache and U.S. utilities got inexpensive fuel. It remains one of the world’s most successful nuclear-disarmament programs.
The deal “did what was promised,” Dr. Neff said in an interview. “We have many fewer nuclear weapons and stuff to make them out of than we did.”
The problem, critics said, was that the deal delivered Russian nuclear fuel so cheaply that rival suppliers struggled to compete. Before long, U.S. and European companies were scaling back and Russia was the world’s biggest supplier of enriched uranium, with nearly half of global capacity.
Before the deal ended in 2013, Russian suppliers, now organized as Rosatom, signed a new contract with the U.S. private sector to provide commercial fuel beyond the government-to-government program. Rosatom still supplies as much as one-fourth of U.S. nuclear fuel.
U.S. companies collectively sent almost $1 billion last year to Rosatom, according to a recent analysis from Darya Dolzikova at the Royal United Services Institute in London.
Russia has seized Ukraine’s Zaporizhzhia nuclear-power plant, the largest in Europe. PHOTO: ASSOCIATED PRESS/Editing by Germán & Co“That’s money that’s going right into the defense complex in Russia,” said Scott Melbye, executive vice president of uranium miner Uranium Energy and president of the Uranium Producers of America, an industry group. “We’re funding both sides of the war.”
Rosatom was formed by Russian President Vladimir Putin in 2007 from various parts of the country’s nuclear-power industry and is closely controlled by the Kremlin. Its top managers have been deeply involved in running Ukraine’s Zaporizhzhia nuclear-power plant, Europe’s largest, which Russia seized last year and has used as a base for attacks on territory controlled by Kyiv.
Pressure is growing to expand Western uranium-enrichment capacity, not only because a big part of the U.S. economy relies on Russian fuel. A proposed new generation of reactors, which proponents and investors including Microsoft founder Bill Gates are touting as less risky and more environmentally friendly than current reactor designs, requires a special type of fuel that is the nuclear equivalent of high-octane gasoline.
The only source of that fuel today is Rosatom.
“We need fuel to turn our reactor on,” said Jeff Navin, director of external affairs at TerraPower, the Gates-backed company that plans to build its first reactor in Wyoming. He said the U.S. is paying the price for its yearslong unwillingness to build a domestic supply chain for nuclear fuel. “Our options are either build it out now, or hope for some magical solution emerging in another country,” Mr. Navin said.
Russian President Vladimir Putin meeting last year with Alexey Likhachev, CEO of state-run nuclear company Rosatom. PHOTO: MIKHAIL KLIMENTYEV/AGENCE FRANCE-PRESSE/Editing by Germán 6 CoThe multinational Urenco owns one of only two uranium-processing facilities in the U.S., in Eunice, N.M., just across the Texas border. The company says it is spending roughly $200 million on new capacity and can invest much more if Russian uranium is sanctioned.
The catch: It wants government guarantees on quantities allowed in the market.
How do you see nuclear power fitting into the West’s energy future? Join the conversation below.
Urenco’s fear, said Kirk Schnoebelen, head of U.S. sales, is that in several years low-price Russian enriched uranium might swamp world markets, tanking prices.
Mr. Schnoebelen said the concern is born of history. Urenco in the 1990s began planning what was to be the first new uranium-enrichment plant in the U.S. in decades.
But because of the Megatons deal, “the business case for that project was utterly destroyed,” he said. Today that history “absolutely” informs the U.S. nuclear industry’s thinking and makes corporate boards reluctant to invest the necessary billions, he added.
Cylinders of Russian uranium were loaded on a truck in Dunkirk, France, earlier this year. PHOTO: SAMEER AL-DOUMY/AGENCE FRANCE-PRESSE/Editing by Germán & CoA bipartisan group in Congress is now pushing legislation to ban U.S. use of Russian uranium, build a national uranium reserve, boost domestic ability to refine uranium into fuel and add uranium to the country’s critical minerals list.
“When the Ukraine war is over, it is not going to be over,” said Idaho Sen. Jim Risch, a Republican and co-author of the legislation. “It’s going to take generations before there’s any trust again in the Russians.”
Westinghouse’s Mr. Fragman said the legislation is long overdue.
“Governments need to keep an eye on what is going on in the nuclear industry,” he said. “At some point when a certain number of Western facilities shut down there should have been an alarm bell.”
Image: Germán & Co by ShutterstockHenry Kissinger's Shifting Views on Ukraine
Kissinger, a key figure in U.S. Cold War policy towards the Soviet Union during his time under Presidents Nixon and Ford, has always maintained that Ukraine should maintain neutrality and refrain from joining NATO. However, he recently stated at the Davos conference that if Russia were to invade, Ukraine joining the Transatlantic Alliance could be a viable solution.
NEWSWEEK BY JACK DUTTON ON 1/18/23He can find no leader who excites him, with the possible exception of France’s Emmanuel Macron. “I can’t yet say he’s effective because he’s just started but I like his style,” says Kissinger. “Among other European statesmen, Angela Merkel is very local. I like her personally and I respect her but she’s not a transcendent figure.”
www.henryakissinger.com/interviews/lunch-ft-henry-kissinger/
"I don't think Putin is a Hitler-like character," Kissinger replies. "He comes out of Dostoevsky."
Portofalio magazine interview of Mr. Henry Kissinger in the French restaurant Jubilee in downtown Manhattan in New York on July 27, 2018 energycentral.com/c/gn/riddle-non-nord-stream-returnFormer U.S. Secretary of State and National Security Advisor Henry Kissinger's stance on Ukraine has changed over the years, including on whether the country should become a NATO member.
Speaking at the World Economic Forum's annual meeting in Davos, Switzerland, on Tuesday, the 99-year-old Kissinger said: "Before this war, I was opposed to membership of Ukraine in NATO because I feared that it would start exactly the process that we have seen now.
"The idea of a neutral Ukraine under these conditions is no longer meaningful."
Kissinger, who was instrumental to U.S. Cold War policy toward the Soviet Union when he served under presidents Richard Nixon and Gerald Ford, has long said Ukraine should remain neutral and not join NATO. Despite this, he said at Davos that the country joining the Transatlantic alliance could be an "appropriate outcome" of Russia's invasion.
He said that dialogue must be kept open between Russia and other countries even as the war rages on in Ukraine.
Kissinger said that Ukraine should recapture territory that has been annexed by Russia while holding negotiations to end the war, which has been going for nearly 11 months.
He said that a diplomatic process could help Russia "re-evaluate its historic position, which was an amalgam of an attraction to the culture of Europe and a fear of domination by Europe."
"Each side needs to consider for itself how the threat to human survival of the destructiveness of weapons, coupled with making them almost conscious in their application, can be dealt with," he said.
But for months before Davos, Kissinger has advocated for a ceasefire that would see Ukraine accept some of the annexed territory as Russian land.
Last May, he suggested a ceasefire that would see Russia withdraw to what the frontlines were before the February invasion, but the status of Crimea would be the subject of "negotiation." But Ukrainian President Volodymr has repeatedly said that all annexed territory, including Crimea, would have to be returned to his country if there is to be peace with Russia.
In 2014, the year Russia annexed Crimea, Kissinger said that Ukraine should be neutral.
'If Ukraine is to survive and thrive, it must not be either side's outpost against the other—it should function as a bridge between them,' he wrote in a Washington Post column.
Russian President Vladimir Putin has said that the threat of Ukraine joining NATO was one of the reasons he launched the invasion last February 24.
U.S. President Joe Biden's administration has said that it was up to Ukraine as to whether it should join NATO. But there has been little support for Ukraine joining the alliance as other members were concerned of guaranteeing mutual security to a country that has been at war with Russia since 2014 over the eastern Crimean Peninsula.