Fantasy's divorce from reality gets ugly

The European Union is about to start discussing an overhaul of its electricity market aimed at encouraging more wind and solar generation capacity and discouraging fossil fuel capacity.

The overhaul, while not as radical as some countries wanted it, should advance the bloc’s ambitions to reduce emissions by 55% by 2030 through government guarantees of long-term wind and solar power purchase commitments that would, per EU hopes, invite more investment in wind and solar.

Besides these guarantees, the EU will also encourage — a polite way of saying force — member states to also invest in battery storage and “other alternatives to replace the role gas plants play in balancing the power grid,” per Reuters.

Let’s forget for a moment that this overhaul is being devised at a time when Germany is building LNG import terminals like there’s no tomorrow and expanding a coal mine.

Let’s also forget that the EU is next month going to start its joint gas buying aiming to secure a minimum of 15% of gas storage capacity for next heating season, as if 15% would be any good on its own.

Let’s also forget the fact that the EU’s and the UK’s LNG imports last year combined shot up by 60% and, according to Shell, demand will remain strong for the next two years, at least. Shell is not a reliable source anyway because it trades LNG so it has an interest in strong LNG demand.

Last but not least, let’s forget — with some effort — that Germany is not the only one building LNG import terminals like there’s no tomorrow. The whole EU is doing it, risking a serious overbuild, exceeding gas demand more than twofold, according to this forecast.

Let’s say the EU is singularly focused on reducing fossil fuel demand and is doing everything it can to effect this reduction instead of dancing the classic one step forwards two steps backwards dance. Even if all this was true, it still wound’t be enough.