The wall

Did you know that the EU has the most advanced legislation on our climate change-stricken planet? What am I asking, of course you did. And did you know Europe was warming, wait for it… wait for it some more… yep, it’s warming at twice the rate of everywhere else. Just like, you know, everywhere else.

This very same EU with the twice-as-fast warming continent has run into trouble. With its advanced green legislation. The trouble? They can’t turn the legislation into action. So they’re falling behind on their targets.

The Guardian 2.0 informed us about it this week, quoting climate commissioner Wopke Hoekstra as saying “I am confident that given the conversations we are having . . . that we will make [55 per cent] but there is a bit of homework to be done by a range of us around the table.”

A bit of homework may be a bit of an understatement in light of the fact that “the EU is struggling to compete and sell its ambitious climate agenda to an industrial sector suffering fatigue from high inflation, trade tensions and increasing regulation.”

The reasons for the high inflation, trade tensions and increasing regulation are delicately omitted, which is not the case with the opinion of Austria’s climate minister who apparently believes that “Despite it being really hard work and a fight every day, you can see that green climate policies deliver. Emissions are going down.”

They certainly deliver, yes. They deliver lower emissions at the cost of high inflation and more regulation for industries to struggle with, possibly with the aim of getting in shape for the transition. And reducing emissions further. Europe is approaching the wall of reality at speed, accelerating thanks to fast-emptying subsidy coffers. There’s nothing to replenish them with, shockingly.

Californians are also hurtling towards that wall: the state’s Public Utilities Commission recently proposed a strange move to separate the grid maintenance component of electricity bills into a separate flat rate entry on bills… because this will reduce overall bills. How? See for yourself.

“The proposal cuts the usage rate by 5 to 7 cents per kilowatt-hour, making electricity cheaper for all customers and cheaper to electrify homes and vehicles.” How exactly, they don’t say.

Fair enough, but people would still have to pay the grid maintenance component… just separately. At first glance, it seems like a pointless exercise for people with too much time on their hands and little imagination.

But according to California legislators, that exercise will actually make electricity more expensive. Because once you untie the grid maintenance price from the total bill, you get to pay it at a fixed rate regardless of how much electricity you consume. When it is tied to the usage rate, the less electricity you use, the lower grid maintenance rates you pay.

“A single parent with one child living in a small apartment in the expensive San Diego area earning just $40,000 per year would be forced to pay a new fixed charge of $73 each month—regardless of how much they try to reduce their energy usage,” the group of critical legislators explained in a letter to the CPUC.

It seems I was wrong assuming little imagination. This is actually quite a smart way to suck more money out of people — while arguing you’re making electricity more affordable, especially for poorer Californians. The reaction of the utilities is proof enough:

Per PV Magazine: “The proposed decision is unanimously supported by the state’s large investor-owned utilities, which stand to profit from an energy mix that includes less customer-sited solar and less electricity conservation.”

Well, that settles it, then. In no universe would a business support a move than makes its product cheaper for customers who have no alternative but to buy it. A move that makes this product more expensive, on the other hand, is another thing entirely.

Speaking of expensive, the green hydrogen fan club is moving towards the wall of reality, too, albeit at a slower speed, probably because it never had the chance to build much momentum. So it’s asking for some.

Green hydrogen companies in the U.S. have asked for laxer requirements for access to generous subsidies and I have to say these requirements are indeed very strict — to the point of discouraging rather than encouraging investment. Because they’re trying to kill two birds with one quite small stone. And the birds are flying in different directions.

The gist of it: subsidy requirements say that to qualify for the subsidy, which is really good, at up to $3 per kilo of green hydrogen, you need to produce said hydrogen from electricity sources that are, first, close to the electrolyser, second, were built recently, and third, generated the power used for the hydrogen production at around the same time the hydrogen was produced.

Translation: you can only use wind and solar installations to produce green hydrogen because we’re so smart we thought this was a good way to encourage more wind and solar construction. But the hydrogeneers are calling rulemakers out on their bluff.

One company spoke against these requirements because it planned to use hydropower for its green hydrogen plans. Another wants to produce its green hydrogen from nuclear and landfill gas.

None of these would qualify for the top subsidy because obviously the government is leaving everything to market forces and not picking winners and losers at all. What they see trembling on the horizon is a wall but they’re yet to realise this as they get closer. Perhaps they should get some stronger glasses.

Meanwhile a rather humorous situation is brewing in oil. Well, when I say humorous, I mean it would be humorous for Chinese refiners but probably not for the average European politician. A report by Wood Mackenzie this week revealed that more than a fifth of global refining capacity is at risk of getting shut down. A lot of it in Europe.

The reasons Wood Mac gave for the prediction were lower gasoline margins — that is, anticipated lower margins because EVs and blah — and growing emission pressure. We could easily shrug off the lower margins prediction but the growing emission pressure is, unlike the EV revolution, an actual thing. And it could cost Europe more refineries.

Now, what would this lead to? Why, more fuel imports, of course, as evidenced by developments from the last two years. Like I said, Chinese refiners and their Indian friends, as well as those U.S. refiners who haven’t yet turned their refineries into biofuel plants will have reason to be happy.

Not so with The Guardian 1.0, which has grimly cited a new report by a climate NGO that found new discoveries have unlocked as much as 21 billion barrels of new oil supply since 2021 when the IEA said, per TG1.0 “There can be no new oil and gas infrastructure if the planet is to avoid careering past 1.5C (2.7F) of global heating, above pre-industrial times.”

Actually, because I excel at holding a grudge, the IEA said the world did not need any more oil and gas supply, not that it shouldn’t have any more because of the 1.5-degree fantasy. There’s a subtle but important difference. Anyway, what the IEA wanted to happen is not happening. The IEA is facing the wall up close.

The rest of the climate crusade army have yet to get there and they are marching forward. Some of them have now put hydropower in their crosshairs because this was the last vestige of sense in Transitionland so it’s high time it was killed.

Hydroelectricity is a hidden source of methane emissions, the BBC reported this week, going on to explain that “it's not just water passing through the turbines – a lot of dissolved greenhouse gases flow through them too. Just as carbon dioxide dissolves in our fizzy water while under pressure, so too does methane gas dissolve in large bodies of water under certain conditions.”

Shall we do a countdown until this is interpreted as “Hydropower is bad because it emits methane all the time and we can’t have methane emitting sources of energy so let’s break down some more dams and build wind and solar”? It won’t take long, I’m sure. And that wall will only get closer.

At some point, the wall would become impossible to ignore and that’s the good news. The bad news is that the political myopia is so severe we might need to hit it face first before it becomes impossible to ignore.