Borislav Boev on energy security, the transition, and nuclear

Borislav Boev has a Ph.D in economics. He defended his thesis in the field of economics of nuclear energy. He’s the author of numerous scientific publications dedicated to strategic energy planning and the economic aspects of nuclear energy. Honorary lecturer at the D.A. Tsenov Academy of Economics – Svishtov, Bulgaria.

Borislav is one of the precious few voices of reason in the energy debate in my part of the world. Naturally, this has turned him into a huge target for transitionists but he’s not giving up. It was a pleasure and a learning experience to hear his takes on energy security, the transition and the importance of nuclear power.

You can find him on LinkedIn and on X.

1. What are the components of energy security?

There are many definitions of energy security. The International Energy Agency (IEA) defines it as "the continuity and accessibility of energy resources at an affordable price". Other academic authors such as Daniel Yergin define energy security as "ensuring an adequate and reliable supply of energy at reasonable prices, in a way that does not threaten national values and national goals." In summary, it can be argued that energy security is an integral part of a country's national security and is a top priority in strategic energy planning.

2. How would you describe the energy security situation in Europe right now?

First, we need to clarify the systemic context. In Europe, and in the world, there is convergence from many crises – energy crisis, financial and economic instability, destroyed supply chains built decades in the past, etc.

Specifically for Europe, we can add the loss of competitiveness of the industry, which is clear from the data on industrial production both at European level and in certain countries such as Germany.

I stress that Germany fell into a technical recession at the beginning of 2023 and there is currently no indication for a rapid recovery of the German economy.  All these developments directly affect the level of energy security of Europe.

The opposite effect is also true: precisely because of the energy crisis, industrial companies in Europe are experiencing enormous financial difficulties. High energy prices are a particular threat to energy-intensive industries because they form a large part of the cost component of their production.

Industrial companies in Europe, for their part, have realized that increased production costs cannot be transferred indefinitely to consumers (in terms of higher end prices), and are already choosing more drastic solutions - reducing or ending production activities, or exporting production to third countries in Asia or moving to the USA, where the regulatory environment is more favorable and predictable, and the price of energy is many times lower.

This is where the role of political leadership comes in. It should create a favorable administrative and regulatory environment for sustainable energy development and economic growth. So, another key element is the strategic policymaking by the European Commission.

In recent years, we have seen an adventurous policy on carbon reduction targets, the manifestations of which are expressed in a continuous and unrealistic increase of CO2 reduction targets.

This creates enormous uncertainty in the energy planning of the member countries. For example, the countries of Eastern Europe are not ready for a quick replacement of coal plants as the European Commission wants, because their coal power plants are fundamental for the energy balance.

It’s worth mentioning that with the onset of the energy crisis from 2021 to the present day, it was these conventional energy sources that helped the countries of Eastern Europe to maintain the stability of their energy system.

After all, in the short term, I see risks associated with European gas markets. The gas prices are also driven by geopolitical instability in the Middle East and Europe's dependence on external natural gas suppliers (both LNG and pipeline gas).

So, it is imperative for Europe to take a proactive approach and review the possibilities for exploration for its own natural gas reserves, because the use of local energy resources is a key factor in increasing the level of energy security on the Continent.

In the medium and long term, I also see risks for the electricity system, especially with the spontaneous penetration of renewables and the slow development of base-load sources such as nuclear energy in Europe.

3. The energy transition: can the world go net zero by 2050? Should it?

At the current level of technological development, the chance of the world becoming net zero is…. zero. It should be noted that fossil fuels continue to be an indispensable foundation in global energy systems, because they have a share of over 80% in primary energy consumption.

Reforming the energy system, in particular the abandonment of fossil fuels, will require the mobilization of huge capital resources, which raises a question about the economic feasibility of this transition.

Moreover, in industrial production there are technological processes that are very difficult to change their fuel base, first for technological and then for economic reasons.

It is possible to reduce the emission profile of some subsectors and sectors in the energy system, such as power generation. However, I would like to stress that when we talk about emissions, we should also focus on those that have a direct effect on the environment and human health such as sulfur dioxide, nitrogen oxides, dust, ash, etc.

Somehow the debate about them remains in the background. About power generation, the world needs to understand that the only ways to a sustainable, smooth, and cost-effective transition are to use nuclear energy, which is a proven reliable, sustainable, and clean energy source.

Of course, there is also room for development of renewable energy sources, but their unstable and unpredictable nature of power generation must also be considered in energy planning.

4. How do you see the long-term demand prospects of oil, gas, and coal?

Fossil fuels will continue to lead, especially for emerging economies in Asia and Africa. Asia will be the main driving factor in global coal demand. Although 2023 is not over yet, it is expected that this year 3 out of 4 tons of coal worldwide are consumed in the Asian region. Moreover, China and India account for two-thirds of global coal consumption, or nearly 70%.

The same conclusions can be drawn regarding the future demand for oil in Asia. In support of this, OPEC last month forecast that global oil demand will increase by 10% in 2028, and by more than 16% in 2045 compared to the base year 2022.

The explanation for this is dictated by simple economic logic — developing countries need reliable, secure, proven energy resources at an affordable price for their economies to register high growth. Currently, only fossil fuels (oil, gas, and coal) can meet these requirements.

The situation with gas markets in Europe is also interesting. Although the European Commission promises that the EU will be carbon-neutral after 2050, natural gas will remain a key element for the EU's energy security. In terms of price, the prices at the TTF gas hub have calmed down compared to the turbulent 2022, but the energy crisis has not gone away at all, on the contrary, it has simply entered a new stage.

For example, the price of natural gas at the European TTF hub in October 2023 increased by 25% compared to the previous month, reaching $14.5/mmbtu.

The reasons for this price growth are several: the outbreak of the crisis in the Middle East and the instability of the supply of liquefied natural gas (LNG) from Australia as a result of the strikes in some LNG terminals there.

In addition to these global trends, especially for Europe we can note the reduced volumes of delivery from Norway for that month, as well as the local crisis with the Baltic interconnector.

The only thing that "saves" Europe from more drastic [price] growth is the crisis in industrial production (namely the ongoing economic recession and demand destruction) and the mild weather in October, which did not lead to a significant increase in electricity generation from gas power plants. But these factors are not favorable, because they indicate the presence of structural problems not only in Europe's energy sector, but also in the economy.

Regarding the competitiveness of the European industry - the price of natural gas in the USA is about 4.8 times lower than in Europe. There is no need for a deep analysis of why energy-intensive industries are fleeing to the United States.

5. There's a debate on whether nuclear power has a place in a net-zero system. Your thoughts?

Certainly, nuclear energy has its place in the energy transition and the facts prove it. Nuclear power plants (NPPs) have an extremely low carbon footprint - only 12 grams of CO2 per kilowatt-hour of electricity produced.

In addition, the production of electricity from NPPs practically does not emit sulfur dioxide, nitrogen oxides, dust, and ash. Also, it should be noted that in the current conditions of high penetration of renewable sources in the electricity mix, dispatchable sources are also required.

In this sense, nuclear power plants and other conventional plants provide the necessary balancing services and regulation of the electricity system. Nuclear energy, however, as an industry, is also undergoing a transformation.

Currently, the global nuclear industry is transitioning from the operated and already established nuclear reactors of the 2nd generation to the implementation of new reactors of 3, 3+ and 4 generation.

Hard work is also being done on the so-called "non-electrical applications" of nuclear energy, and the possibilities for this are promising — production of clean hydrogen, seawater desalination systems, household and industrial district heating, cogeneration, polygeneration, production of radioactive isotopes for medical purposes, etc.

Along with the development of nuclear reactors with a large single installed capacity (typically over 1000MW), the process of implementing small modular reactors (SMR) is going on.

SMRs will be an increasingly attractive option for smaller energy markets, for energy supply to specific industrial sites, for energy supply to remote regions, etc.

In conclusion of this debate, I believe that the nuclear portfolio has significantly enriched itself and this process will continue in the future. I would also like to emphasize a situation within the nuclear industry itself that is not often talked about.

In some expert circles, there is artificial tribalism between the proponents of large reactors and the proponents of SMRs. In my opinion, this dispute is artificial and unnecessary because it harms the nuclear industry itself and its public image.

Each technology and each type of nuclear reactor has its advantages and disadvantages. What is important for the nuclear industry is to consolidate around what works safely and economically efficiently. In short, there is a market for both large and small reactors.

The highest risk for nuclear energy, especially in the Western world, is the political one. Projects for new nuclear power plants occur over a time horizon of 10-15 years, exceeding the mandates of governments, and with an inconsistent national policy, it is extremely difficult to implement these nuclear projects.

That is why the most important thing is to form a national policy and doctrine regarding the development of nuclear energy, which wouldn’t be influenced by situational political changes.