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Developing Nations Can’t Afford to Go Cold Turkey on #Coal

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The UK recently made headlines by announcing that it had gone for three days without using coal, a new record. During the coal-free 76 hours, the majority of the UK’s electricity supply came from gas, followed by wind, nuclear, biomass and solar. While many commentators touted this, the longest period Britain has gone without coal since the Industrial Revolution, as an important step towards reducing global emissions, the story isn’t so simple.

While the UK has greatly increased its renewable capacity in recent years, the only way it was able to power the country without coal for a few days was by relying heavily on natural gas, which is very, very far from being a green fuel. While burning natural gas does emit less carbon dioxide than coal, it also emits methane, a far more potent greenhouse gas. Studies show leakage rates of methane are about 3 percent—while that might not sound like much, that amount of methane warms the planet more than CO2 does. Yet somehow, public opinion still favours natural gas as a cleaner replacement for fossil fuels.

While congratulating the UK for managing three days without coal, the press also overlooked the fact that Britain can afford to ramp down its use of coal now because it’s reaped the benefits of the fossil fuel for more than 150 years. Coal was the backbone of the modern British economy through most of the 19th and 20th centuries, powering the country’s industrial revolution. This irrefutable fact explains why developing nations are increasingly voicing their frustration that wealthy countries want to deny them the same chance to use their natural resources to bankroll economic growth.

Many African countries, including Mozambique, Botswana, South Africa and Zimbabwe, are known to have vast reserves of coal. South Africa’s state-owned utility Eskom estimates that the country’s 53 billion tonnes in coal reserves are enough to fuel the country for the next 200 years.

The prospect of using these substantial resources is particularly alluring given that large swaths of these countries remain unelectrified. More than 600 million Africans still don’t have access to electricity, causing them to burn dangerous and polluting biomass and undermining their economic growth.

While Africa is making great strides in adding renewable energy capacity, the continent is so energy poor that closing this gap solely with renewables is unrealistic in the medium term. At current rates of growth, Africa won’t achieve full electrification until 2080. Investment in coal-powered plants in these countries could mean the difference for millions of people between being able to turn on the lights at night or living in darkness. These coal-rich countries are looking to capitalise upon their resources – much like the same Western countries who are now pushing a renewables-only model did for more than a hundred years.

This pressure on developing nations to deploy renewable energy solutions they cannot afford is both political and financial. The UK and international organisations such as the European Investment Bank and the World Bank stopped funding coal plants in developing countries. At the time, the World Bank stated it would provide financing in exceptional cases where no viable alternatives existed. Since then, however, only one coal project, in Kosovo, has been considered for a loan.

The consequences of this overly restrictive policy? Developing countries remain in the dark, increasingly frustrated by what India’s chief economic adviser termed the west’s “carbon imperialism”. They have started taking matters into their own hands, as illustrated by the African Development Bank (ADB) recently breaking from other international financial institutions and agreeing to continue funding new coal projects. The President of the ADB emphasized that “Africa must develop its energy sector with what it has” and underscored the fact that “it is almost impossible to start a business, teach or provide healthcare without power and light”.

Developing countries are gaining international support for their right to fully exploit their natural resources, particularly from the United States. In March, US Energy Secretary Rick Perry announced the creation of a global fossil fuel alliance, which would see the US and other partners export clean coal technology to developing nations, allowing them to quickly expand electricity access while keeping emissions relatively low. In what he described as a new policy of ‘energy realism’, Perry emphasised the need to straddle the line between energy needs and investing in emission-free resources, referring to the global shift away from fossil fuels as “immoral” as it denies people in developing countries access to electricity.

This global fossil fuel alliance is only one part of US efforts to help electrify developing countries. Among the Japan-United States Strategic Energy Partnership’s priorities for 2017 and 2018 is deploying highly efficient, low emissions coal technology, as well as energy infrastructure, in South Asia and Sub-Saharan Africa. Under the auspices of the Power Africa 2.0 program, the U.S. is providing financing and technical assistance for 30,000 MW of electricity projects across Africa.

These moves from the US are a sign that the country has recognised that there is no one-size-fits-all path to a clean energy future. A practical model would be one that takes into consideration the stage of economic development in a country, in conjunction with the social and environmental impacts of proposed power plants. By so doing, carbon can be used more responsibly without unfairly penalising developing countries, whose emissions are already a very small part of the global total.

The UK may well pat itself on the back for going three days without coal, but it should remember that not all countries have that luxury.

Energy

Nord Stream-2 and US sanctions 

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Washington's threats of sanctions against the Nord Stream-2 project are nothing more than attempts to oust Russia from the European gas market with non-market instruments. This was stated by the head of Gazprom export ("daughter" of Gazprom PJSC) Elena Burmistrova, speaking at online conference, writes Alexi Ivanov, Moscow correspondent.

"Unfortunately, there is an additional threat, which increasingly affect our co-operation is a political confrontation in General and, in particular, the threat of US sanctions against the Nord Stream-2," she said.

According to Burmistrova, American suppliers of liquefied natural gas (LNG) have disturbed the European market and are unable to stabilize him. "Now the US is trying to oust Russia using non - market instruments," the top Manager believes.

US threats to impose sanctions on Nord stream 2 are attempts to oust Russia from the European gas market with non – market instruments, said Elena Burmistrova.

Earlier, Russian Ambassador to the United States Anatoly Antonov said that the actions of the American side in relation to the "Nord stream – 2" are caused by the desire to make Moscow pay for an independent foreign policy.

Meanwhile, in early October, Denmark found a way to circumvent US sanctions against Nord Stream-2. According to many news reports, Copenhagen, which had been dragging its feet for many years with a permit to build the pipe, gave the go-ahead for its operation in advance and how this would affect the completion of the project.

On the first day of the work of the new Polish government, in which the position of Deputy Prime Minister responsible for national security was given to the Russophobe Jaroslaw Kaczynski, the head of the Polish antitrust regulator UOKiK Tomasz Krustny said that his Department had completed the investigation on Nord Stream-2 the day before and decided to impose a fine of 29 billion zlotys ($7.6bn) on Russia's Gazprom. In Warsaw they are convinced that the project participants should have previously notified UOKiK and received consent.

"We are talking about construction without the consent of the Antimonopoly German Chancellor Angela Merkel makes similar statements: "We have different views on Nord stream-2. We consider this project an economic one. We are in favor of diversification. The project does not constitute a threat to the diversification," said the politician at a meeting with Polish Prime Minister Mateusz Morawiecki in February 2020.

The Germans are really in favor of diversification. The German energy doctrine for the next three years refers to the construction of terminals for receiving liquefied natural gas (LNG). Simply put, Berlin was going to import fuel from other suppliers: Americans or Qataris. This looks somewhat strange, given the current relations between Germany and Gazprom (in which Germany has every chance to become a key player in the European energy market). At the same time the cost LNG is definitely more expensive than main gas. Not to mention that the construction of LNG infrastructure also costs money (at least 500 million euros for one terminal in Brunsbuttel, according to Bloomberg).

On the other hand, the same German energy doctrine prescribes a complete rejection of the use of coal (by 2050). This is done for environmental reasons. Coal is an inexpensive fuel, but its use is dangerous because of harmful substances released into the atmosphere. Gas is a much safer type of fuel for the environment. It turns out that the demand for it from Germany will grow, but the Germans will not be able to meet their gas needs by importing LNG from the United States and Qatar. Most likely, Berlin's plans for liquefied natural gas are just a step to diversify supplies, but the country will not be able to refuse Russian fuel, experts say..

Germany has always been the main lobbyist for the construction of Nord Stream-2. This is understandable: after the gas pipeline is put into operation, Germany will become the largest gas hub in Europe, gaining both political points and financial flows. Two German companies are taking part in the construction of the second branch of Nord stream: E.ON and Wintershall (both have 10% each).

The other day, German foreign Minister, Heiko Maas, claimed that the gas pipeline project is economic. "Nord stream-2 is a project within the private economy. This is a purely commercial, economic project," Maas was quoted as saying by TASS.

German Chancellor Angela Merkel makes similar statements: "We have different views on Nord stream. We consider this project an economic one. We are in favor of diversification. The project does not constitute a threat to the diversification," said the politician at a meeting with Polish Prime Minister Mateusz Morawiecki in February 2020.

It seems that no one else in Europe cares about the issue of US sanctions in connection with the construction of the Nord stream - 2 gas pipeline. They have long understood that their own economic interests are much more important than American claims, and therefore they are trying to overcome American pressure in every possible way for the sake of their economic benefits.

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Biofuels

Commission approves one-year prolongation of tax exemption for biofuels in Sweden

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The European Commission has approved, under EU state aid rules, the prolongation of the tax exemption measure for biofuels in Sweden. Sweden has exempted liquid biofuels from energy and CO₂ taxation since 2002. The scheme was prolonged following the Commission decision in case SA. 48069 in 2017 until 31 December 2020. By this decision, the Commission approves a one-year prolongation of the tax exemption (from 01 January 2021 to 31 December 2021).

The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport. The Commission assessed the measures under EU state aid rules, in particular the Guidelines on State Aid for environmental protection and energy 2014-2020. The Commission found that the tax exemptions are necessary and appropriate for stimulating the production and consumption of domestic and imported biofuels, without unduly distorting competition in the Single Market. In addition, the scheme will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris agreement and move towards the 2030 renewables and CO₂ targets.

The support to food-based biofuels should remain limited, in line with the thresholds imposed by the revised Renewable Energy Directive. Furthermore, the exemption can only be granted when operators demonstrate compliance with sustainability criteria, which will be transposed by Sweden as required by the revised Renewable Energy Directive. On this basis, the Commission concluded that the measure is in line with EU state aid rules. More information will be available on the Commission's competition website, in the State Aid Register under the case number SA.55695.

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Energy

Investing in new energy infrastructure: Green light for EU grants worth nearly €1 billion

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EU member states have agreed on a Commission proposal to invest €998 million in key European energy infrastructure projects under the Connecting Europe Facility (CEF). Financial aid will be provided for works and studies on ten projects, in line with the objectives of the European Green Deal; 84% of the funding goes to electricity or smart grid projects. The largest amount goes to the Baltic Synchronization Project (€720 million), to better integrate the electricity markets of Estonia, Latvia, Lithuania and Poland.

Meeting with the Lithuanian president and the prime ministers of Estonia, Latvia and Poland to celebrate the funding to the Baltic Synchronization Project, President Ursula von der Leyen (pictured) said: “Today is a very important day for Europe. It is a landmark moment in ending the isolation of the Baltic energy market. This project is good for connecting Europe, good for our energy security, and it is good for the European Green Deal.”

Energy Commissioner Kadri Simson said: “These ten projects will contribute to a more modern, secure and smart energy infrastructure system, which is crucial for delivering the European Green Deal and meeting our ambitious 2030 climate targets. Yesterday's decision marks a decisive step in the Baltic Synchronisation process in particular, a project of European strategic interest. These investments will help sustain the EU's economic recovery and create jobs.”

Among the ten projects, there are two for electricity transmission, one for smart electricity grids, six for CO2 transport, and one for gas. The President's remarks at this morning's meeting are available here and a press release on the funding for the ten projects is available here.

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