Germany to Complete Nuclear Phaseout

Germany will likely finish its nuclear phaseout this week.

“The three remaining nuclear plants in Germany will be shut down for good on 15 April, following a three-month extension granted in the context of the European energy crisis, environment minister Steffi Lemke confirmed to journalists in Berlin,” reports Clean Energy Wire. “‘The technology’s era is over’ in the country, Lemke said, arguing that this will make Germany a safer place and put a stop to generating nuclear waste. Germany’s energy security will not be jeopardised by the decommissioning of the three plants, Isar 2 and Neckarwestheim 2 in southern Germany and Emsland in the north, Lemke said.”

Germany’s nuclear phaseout will leave the country more dependent on LNG and coal for electricity reliability and hamper its emissions goals.

The German policy has drawn criticism from climate activists, scientists, and even Fatih Birol, director of the International Energy Agency, had choice words for the country. At a conference, Birol said it was a mistake for member nations to “show coldness” to nuclear energy. After the Ukraine conflict, anti-nuclear EU members "will have to sit down and engage in serious self-criticism," said Birol.

But Germany appears undeterred and continues to frustrate G7 attempts to support nuclear energy.

Europe’s Winter 2023 Problem

Europe made it through this past winter thanks to nice weather and wealth—it outbid the developing world for LNG. What about this upcoming winter?

Europe has not inked enough long-term contracts for LNG as an alternative to Russian pipeline supply, a problem that may prove costly next winter as a rebound in Chinese demand could cinch the market.

“Buying LNG to replace curtailed Russian flows helped the bloc weather the first winter of the Ukraine conflict, with Europe importing 121 million tonnes of the fuel in 2022, a 60% increase from 2021,” reports Reuters. “But that came at a cost: Europe bought largely on the spot market, where prices are much higher than those negotiated under long-term deals favoured by seasoned buyers like China. According to the International Energy Agency, the cost of its LNG imports more than tripled in 2022 to some $190 billion.”

But Europe bought largely on the pricey spot market rather than cheaper long-term deals. In 2021, such deals made for 13% of the market, and in 2022 the number lifted to a third of the market. Analysts told Reuters that if no long term contracts were signed, that number could balloon to 50% this year.

However, Europe's climate goals will impede its LNG buyers’ ability to nail down the timeframes they need to lock in cheaper LNG. Europe needs about 70-75% of its LNG supply under firm long-term sale and purchase agreements (SPAs). But the greens have persuaded many European politicians that hydrogen can replace natural gas as an energy carrier by 2030.

In other words, environmental ambition has outpaced prudence, leaving Europe waiting on an unlikely technology—green hydrogen—to replace necessary LNG while the window to lock down cheap contracts shrinks.

EPA to Drive Up Non-EV Car Costs

The Biden administration plans to roll out some of the most stringent auto pollution limits in the world to increase electric vehicle sales to 67% of cars sold by 2032.

Achieving this goal would mark a substantial uptick in EV production and consumption. Last year, only 5.8% of new vehicles sold in the US were electric.

This new regulation from the Environmental Protection Agency would be America’s most aggressive climate regulation, putting it in league with the rest of the West. “The European Union has already enacted vehicle emissions standards that are expected to phase out the sale of new gasoline-powered vehicles by 2035. Canada and Britain have proposed standards similar to the European model,” reports the New York Times.

But the proposed regulation will be tough on automakers, which have faced nagging supply chain issues. And some wonder if consumers will buy enough EVs. It will also be hard on Americans who can’t afford new EVs and the automotive labor force—EV production requires half the workforce of regular car production.

“The proposed rule would not mandate that electric vehicles make up a certain number or percentage of sales. Instead, it would require that automakers make sure the total number of vehicles they sell each year did not exceed a certain emissions limit,” reports the NYT. “That limit would be so strict that it would force carmakers to ensure that two thirds of the vehicles they sold were all-electric by 2032, according to the people familiar with the matter.”

The regulation should be announced by the Environmental Protection Agency on this week.

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Conversation Starters

1. Tesla is going big in China. “Tesla will build a factory in Shanghai to manufacture its large-scale energy-storage batteries known as the Megapack,” reports the New York Times. “Tesla, which is owned by Elon Musk, will break ground on the plant in the third quarter of this year and start production in the second quarter of 2024, [the Chinese state news agency Xinhua reported on Sunday]. The new factory will complement Tesla’s existing plant in Shanghai, where it makes electric vehicles, and it will initially produce 10,000 Megapacks a year, equal to around 40 gigawatt-hours of energy storage, to be sold globally.”

2. Puerto Rico’s utility needs some help. “LUMA Energy is making progress upgrading Puerto Rico’s electric grid and has requested $8.2 billion from the Federal Emergency Management Agency to support hundreds of modernization initiatives,” reports Utility Dive. “The utility is advancing a ‘record number of critical reconstruction projects,’ Juan Rodríguez, LUMA Energy’s vice president of capital programs, wrote in a recent column first published March 31 by Puerto Rico’s El Nuevo Día. The utility later shared an English language version. Over the last 21 months the utility submitted 314 projects to the disaster relief agency, all aimed at ‘restoring and modernizing the most critical elements of the infrastructure and electric grid,’ Rodríguez said.”

3. The deadline for selling shares of Russia’s Sakhalin-1 has been extended. “Vladimir Putin signed a decree in October establishing a new operator company for the Sakhalin-1 project, inviting Russian shareholders to apply for shares in the new company. ExxonMobil, which owned 30% in Sakhalin-1, left projects in the Russian Federation due to Moscow's special military operation in Ukraine,” reports Natural Gas World. “Prior to the creation of the new company, Exxon and a consortium of Japanese companies Sakhalin Oil and Gas Development Co (SODECO) each owned 30% of the project. Russian Rosneft and Indian ONGC Videsh owned 20% each.”

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