Europe's black and green stuff

Europe's energy supply mix is changing again. It won’t be good news for the climate targets

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From the French love affair with the atom to the nuclear phase-out in Germany, from the carbon-free current in Sweden to the 80% coal electricity mix of Poland, the EU's energy market, despite all the efforts to build common policies, is still characterised as much by its variety as its commonality. This is not about to change, but the balance will probably shift as the three biggest European economies review their energy choices.

Germany became the standard-bearer for energy transition in 2000 when the red-green coalition decided to replace nuclear power with renewable energy in 20 years. Germany's nuclear phase-out is now planned to end in 2022 and is likely to succeed: 11 of the 19 reactors running in 2000 are already shut and new solar, wind and biomass production has more than compensated for their loss. It allowed Germany to be slightly less dependent on fossil fuels for its electricity but mostly increase its production: it became the largest European exporter last year. This experience was expensive for German households: investments in renewables were funded through a levy on their consumption and they now pay more than €0.30 ($0.35) for a kilowatt-hour, twice as much as their French neighbours. And for what? Germany is likely to miss its greenhouse gas emissions target in 2020.

With the end of nuclear phase-out in sight and German climate commitments in jeopardy, coal is the elephant in the room. In 2016, it still accounted for 40% of German electricity, compared with 25% in average in the EU and 30% in the US. Angela Merkel's government has taken some measures to push out coal: extraction of hard coal, which is used to produce 17% of German electricity, will end in 2018 and eight lignite-fired plants (about 2.7 gigawatts of supply) were put in cold capacity reserve, meaning they will only be reactivated in the event of an electricity shortage. Saying auf Wiedersehen to coal is not a taboo anymore but keeping the grid balanced and electricity affordable without it will be difficult. To make matters worse, lignite plants are politically sensitive because extraction is largely located in poorer eastern regions.

When Germans cast their vote in the national elections on 24 September, they will be deciding what comes next for their electricity mix. Merkel recently stated that working with affected regions to develop alternatives for coal-mining employees is part of her Christian Democrat party's platform and that "then the exit can be contemplated". But a coalition with the historically pro-coal Social Democrats or with the liberal Free Democratic Party is unlikely to embrace this agenda. On the other hand, an alliance including the Greens would boost it: the party, which is competing to take the third place, pledged to immediately close the 20 dirtiest plants and to end coal's place in German energy by 2030.

Nuclear phase-out

France faced a similar choice earlier this year: the 56 French nuclear reactors are currently allowed to stay in service for 40 years. But 34 of them will reach this limit before 2025 and their fate was one of the dividing lines during the presidential and legislative elections. Right-wing parties wanted to modernise the nuclear fleet and extend its lifespan, while left-wing candidates moved to organise a swift phase-out. Emmanuel Macron, who ultimately won both elections with his new La République en Marche party, pledged to decrease the share of nuclear power in electricity production, from approximately 75% today to 50% in 2025, which means that at least a dozen reactors have to close while others are retrofitted to stay in service.

The exact schedule of reactors' closure will be set in 2018 when the next programmation pluriannuelle de l'énergie (multiannual energy plan) is debated. Many observers expect the 50% nuclear mark to be revised upwards or, more probably, postponed while the country builds enough renewable capacity to compensate for the decline without a surge of emissions. But even in that case France faces a complex energy equation.

Speaking of complexity, the UK set the bar to an all new level. Its electricity mix is changing quickly. Coal's share dropped from 22% to 9% in just one year after the UK's top-up carbon tax doubled in 2015. But the British electricity sector needs colossal investments to compensate for its dying old plants: the Department of Energy estimates that £14bn ($18.5bn) to £19bn is required yearly until 2020. Worse still, Brexit has created an atmosphere of uncertainty as it implies that large portions of energy and climate regulations will be reviewed. It also means that the UK will leave Euratom which, compounded with clouds gathering on Hinkley Point and Toshiba's withdrawal from the business of building nuclear reactors, would seek to destroy plans to make new nuclear the core of future energy supply.

40% - Coal's share of Germany's electricity supply

As the country will have to rethink at least some orientations of its energy policy, it may be tempted to take advantage of Brexit to consider radically different energy models. The US could appear as an alternative example, implying a lowering of UK climate and environmental targets and an emphasis on unconventional oil and gas. Fracking, for example, is about to start in parts of northern England.

Whichever path the UK chooses, its influence on the continent's energy sector is bound to vanish—just another part of the wider rebalancing of European energy policies. Nuclear energy will probably be marginalised as London turns its back on the EU and France starts questioning its electricity mix, leaving renewables as the only prospect to achieve a carbon-free electricity supply in the middle of the century. And in the match between coal and natural gas, the former scores: prospects of shale gas exploitation move away with the UK and pro-coal central Europe sees its relative weight grow. All in all, climate may be a collateral victim of these shifts, especially if September elections in Germany end with a grand coalition.

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