“Cooperation in energy transformation and trade to increase the economic strength of the Three Seas Region …”
Kongres590 – Warsaw – 14 October 2021
Moderator: prof. dr. hab. Zbigniew Krysiak, Chairman of the Program Council of the Institute of Schuman Thought Panellists:
Dr. Thomas W. O’Donnell, (PhD Nuclear Physics; Lecturer in Berlin & Energy & Geopolitical Analyst),
Julius Zellah, (President of the Light for Africa Online Foundation)
Paweł Kotowski, (Deputy Director of the Department of Economic Cooperation, Ministry of Foreign Affairs)
Jarosław Malczewski, (President of the Polish Dairy Group),
Dr. Krzysztof Malczewski, (President of the B-2M Company)
Key points of my talk:
1. Poland has no previous experience in nuclear energy; and this is a difficult problem that needs to be tackled starting now. Also, any institute needs a sufficient scale to guarantee both high standards and employment security to those trained for industry, academia, safety, and planning. It is for this reason that nuclear training in Poland’ should be done jointly, together with all 12 of the Three Seas Initiative members (i.e., the eastern EU member states, and this may soon include also Ukraine – many of which countries already have established nuclear programs). And, as part of the Three Seas Initiative, this means also in conjunction with the USA, in particular its Department of Energy with a vast network of nationl laboratories and obviously decades of nuclear experience to draw on. Continue reading →
On Friday, 8 October, I was interviewed, with Aura Sabadus (@ASabadus) of ICIS-London, about Nord Stream 2’s impact on European energy politics on”Strait Talk” with TRT host Ayse Suberker. We discussed the geopolitical aims of Russian and German leaders for partnering on this pipeline.
I stressed, the issue is not whether Europe is dependent on Russian gas – it is and it will remain so for the foreseeable future for up to 40% of its imports. The issue is what route this gas takes to arrive from Russia into Europe.
Consider: Russia historically exported 80% of the gas it sends to Europe using massive Soviet-era pipelines transiting Ukraine, the remainder via a Belarus-Poland-Germany pipeline. However, for 20 years Continue reading →
I was quite happy with the answer of IEA (International Energy Agency*) director, Dr. Fadi Birol, to two critical questions I posed, first on how the European Commission should include nuclear power in its “green financing taxonomy,” and secondly, against German over-reliance on variable renewables (I termed this “renewable fundamentalism”) which I said produces high “organizational entropy,” that is, unworkable and unaffordable, completely “reinvented” so-called “smart grids” with “grid scale stage” whose technology is not sufficiently developed all to cope with the problem of unavoidable wind and solar energy fluctuations, which become more massive as the percentage of installed renewables increases. This is a significant contribution to Germany’s (and the EU’s) present crises of energy supply and price security. (The video above is set to start at my two questions.)
I recorded this last Fall, 2020, during Corona lockdown, to give an overview of my course for prospective students.
I’ve taught this course twice per year since 2016 – save this past year’s Corona shutdown. This is a longish video summary of 12 class sessions. It should give a good sense of my critical assessment of the German model of “Energiewende” – a policy of “100% renewables and no nuclear.” I analyze this model as a set back to the German and global fights to reduce CO2 emissions. Why?
Most succulently: If climate change is the huge problem the German Green Party says it is (and it is), if it really requires a “war on carbon emissions;” then why shut Germany’s nuclear fleet? These 17 (!) nuclear plants produced approximately as much carbon-free electricity as all the solar and wind Germany has so far installed. Obviously this is NOT a war on carbon, it is a war on carbon AND nuclear, with BOTH targeted at the same level of alarm.
At bottom, this “100% renewables with no nuclear” policy, the “Energiewende“, is a romantic, unscientific program to which Merkel surrendered within 48 hours after the report of the Fukushima failure due to a monster sunami having hit this nuclear facility on the Japanese coast.
This precipitous “atomic exit,” in my estimation, marked complete victory of Green populism over science-driven policy in Germany. This German model soon attained hegemony worldwide. However, it is now being seriously questioned by climate activists, as Germany has failed to meet its CO2 reduction and renewable generation targets at home, while its price of electricity is the world’s high-test amongst large industrialized countries. As I mention in the video, the Eighth Independent Monitors Report on the progress of the Energiewende made the rather alarming assessment that it will be impossible to ever supply Germany’s domestic market with electricity supplied by domestic renewable sources. Interestingly, this assessment has not been a point of discussion in the present German national election campaigning.
My Op-Ed on German motives for Nord Stream 2 appeared in the Dziennik Gazeta Pravwna 4 Aug. 2021 (no. 149 dziennik.pl, forsal.pl), derived from an English interview (below here) with Artur Ciechanowiicz (PAP, Brussels). [Polish Op-Ed link]
Here is my full English interview, expanded for clarity:
1) [AC] What are the consequences of the Nord Stream 2 deal between Washington and Berlin?
[T O’D] Stepping back a bit: this deal marks a victory by Berlin in its long and intensifying contest with its ally, the USA, over which of these two biggest transatlantic powers will decide the alliance’s strategy with respect to Russia and China. The two allies deeply disagree on this matter.
In the USA, both Democrats and Republicans have agreed since the Obama administration that “Great Power Competition” must be the strategy for the alliance versus Russia and China. The Americans strongly feel it is necessary to “decouple” from globalism’s deep trade and tech integration with China and Russia, that these states must either change their disrespect for global trade rules and moderate their increasingly aggressive geopolitical activities, or be isolated and forcibly contained.
Germany, with almost 50% of its GDP from global trade, deeply disagrees with this US strategy [i.e., German exports provide 46.9% of GDP, the USA’s only 11.7%]. Berlin likes global rules; but its unbalanced economy cannot afford trade decoupling and it broadly opposes forceful military containment of China and Russia. Instead, it wants only negotiations and occasional sanctions.
So, Nord Stream 2 is an iconic example of this clash, this “leadership fight” between the USA and Germany over the transatlantic alliance’s strategy towards Russia. Berlin wants to maintain energy ties at all costs, while the USA has long advocated maximum European energy independence from Russia, and to constrain Russia (and defend Ukraine) by forcing Putin to continue having to send gas across Ukraine to reach his European customers.
Russia, for its part, wants to re-incorporate former-Soviet Ukraine [plus Belarus, Moldova and Georgia, and minimally keep them outside of the EU and NATO], and has wanted to avoid having to send its gas to Europe via Ukraine. Moscow’s transit dependence on Ukraine not only provided income for Ukraine, this constrained Russian subversion and military aggression there, for fear that the transit pipelines could be interrupted by either Ukrainian state or non-state actors.
For Germany, the “insecurity” of having to import Russian gas through Ukraine deeply alarmed Berlin. And so it made a strategic decision over 20 years ago to partner with Russia, to build new pipelines to bring gas directly from Russia to Germany [via Nord Stream 1 and Nord Stream 2] and on to European customers long supplied with the same Russian gas but via Ukraine. The aim was to make Germany the new hub for distribution of Russian gas in Europe.
Given Berlin’s logic, the 2014 Russian war on Ukraine and its annexation of Crimea only made it more sure than ever of the dangers of relying on Russian gas imports that have to transit Ukraine, and it redoubled its efforts to complete NS2, notwithstanding this would undermine German relations with three consecutive US administrations and with many of its EU allies, esp. Poland and East-Central Europe – a region where its much-prized soft power has been sacrificed.
My live interview (22 July 2021) on the Nord Stream 2 deal between Germany and USA. with CGTN (London office of Chinese state broadcaster. This was not edited, or I would not post it here.)
I explain the bind which Berlin had put the Biden administration in for agreeing to waive sanctions on Nord Stream 2 (NS2) in return for this bad deal. The German side was playing hardball. Berlin had made clear to Washington (well before Biden arrived in office) that the pipeline would be finished regardless of sanctions.
The German (and the Danish) side had already allowed Gazprom-owned North Stream 2 AG to continue construction in their territorial waters even when reputable insurance companies and the reputable construction-commissioning firms had abandoned the project due to the threat of US sanctions; and Berlin had made it clear to the US side that it would be completed regardless of any further sanctions. Sanctions on German firms could be circumvented by Berlin continuing to allow Russian firms to do any work that German firms were prevented from performing. And, sanctioning German firms, or NS2 AG, would cause outrage in every German political party except for the Greens, the only German party clearly opposed to the project. However, the Greens had made clear they did not think US sanctions on German firms was an appropriate measure for an ally to take.
I told DW that the key reason the US has always opposed Nord Stream 2 (NS2) was that it undermines Ukraine’s security – as well as Poland’s and other eastern European and Baltic states’ security.
I told DW that one can argue with the Biden-Blinken assessment (as I have) that they “had to” waive sanctions on the Russian-owned NS2 company, insisting that the pipeline was going to be completed anyway. Indeed, German and Dutch regulators had already allowed work to proceed even when the insurance firm and commissioning firm had left due to sanction threats, and Berlin had promised it would be completed no matter the sanctions.
However, the additional factor, which US spokesmen cite only obliquely, is that Merkel’s government was evidently willing to deny Biden a show of transatlantic unity from which to confront Putin. This shows the extreme lengths Merkel’s government had gone to to insure success in her partnership with Putin to finish NS2..
For Moscow, the essential aim of this partnership has been to avoid the “risk” (as Russian officials have put it) of having to export its gas across Ukraine, a country Putin wants to annex and is now at war with.
For Berlin, the most essential aim of this partnership is to avoid the “risk” (as I have been told repeatedly) of having to import Russian gas via what has long been seen by German political and economic elites as an “insecure” Ukraine (although it is obviously Moscow responsible for this “insecurity”), and as an “unreliable” Ukraine (i.e., German elites had lost confidence in Ukraine to reform itself, or at least the willingness to risk the process).
This German pipeline partnership with Putin,, in other words, is a decision to pursue narrow-national interests. It elevates protection of Germany’s Russian gas supplies for its troubled domestic energy system, and protection of Russian gas supplies for its principal EU trading partners, above the interests of Ukraine’s security and independence as Putin pushes to reincorporate Ukraine into the Russian Federation.
Rather than showing solidarity by forcing Putin to continue shipping his gas to Germany and to other EU sates via Ukraine, the gas will now come directly to Germany. Germany will become the principal hub for distribution of Russian gas to Europe, and Berlin will “handle” any difficulties with Moscow and Putin. Of course, Berlin never consulted with the other EU Member states, much less Kyiv, on what amounts to its narrow-nationalist energy-security plan for Europe.
Mr. Trump promises he’d use the USA’s shale-oil revolution to deliver “complete” independence from foreign oil, telling voters in May: “Imagine a world in which our foes and the oil cartels (sic) can no longer use energy as a weapon. Wouldn’t that be nice?” But, he is confusing two quite distinct things:
“Energy independence” – in the sense of the USA producing more oil than the country consumes – is indeed possible, even “tantalizingly close” as this CNNMoney article (Aug. 9, 2016, by Matt Egan) makes clear, citing myself and other experts. For clarity, I’ll call this “net oil-exporter status.”
However, Donald Trump asks us to “imagine” he can use this net oil exporter status, to make the US independent of the global oil market and oil in geopolitics where our “foes” and “cartels” have leverage. Continue reading →
Gillian Rich at Investors’ Business Daily News (17 June 2016) writes a quite informative survey of the many new technological methods pushing the cost of US shale production ever downward. Here’s Gillian’s article. She asked me about the impact on OPEC producers and my central point (my quotes are below) was that it will be the high-tech, most-efficient producers (such as US shale) and NOT necessarily those with the largest and easiest-to-access proven reserves (e.g., countries such as Venezuela and much of OPEC, many corrupt Russian and Chinese state-dominated firms, etc.) that will set the pace in the new oil order
If the latter actors can’t find ways to innovate in technology and operational methods they will be at a disadvantage because shale production looks more like manufacturing than traditional oil extraction. Many OPEC and other state-owned firms never had to think like a combination of Henry Ford and Silicon Valley, but could instead count on huge, low-cost reserves, inefficient exploration and production and cheap local labor.
Eventually, the new shale methods will of course spread to promising shale fields in Argentina, China, Eastern/Central Europe and elsewhere; but this will require big advances in local infrastructure, training and government regulatory capacity. Again, things those countries must think about very seriously. Here are my quotes (from near the end of her long article).
New Oil Order
…. OPEC countries like Nigeria and Venezuela that haven’t invested in newer technology will be hurt by advances in the U.S., said Thomas O’Donnell, a senior energy analyst at the consulting firm Wikistrat. Russia also can’t exploit shale and Arctic assets because of economic sanctions that limit Westerners from helping develop the new fields.
Meanwhile, Saudi Arabia has low-cost production fields, and state-run oil company Saudi Aramco can bring in foreign experts knowledgeable about fracking and new technologies, he added.
Still, OPEC must now grapple with U.S. shale producers on the rebound, which could lead to volatility, O’Donnell said. “The oil order has changed. It’s conventional oil on one side, and new shale oil on the other.”
To put Iran’s recent production increases in perspective: On its own, for 37 years, Iran has struggled to produce two-thirds of its pre-revolutionary level of 6 million barrels/day. Now, domestic opposition is again limiting foreign oil companies’ participation to boost production.
Since the Obama-administration’s and Europe’s nuclear sanctions were lifted early this year (marked ‘e’ on the chart), Iran has been expanding its production and exports more rapidly than most experts had expected. Tehran has actually tripled exports since late-2015 (see point ‘f’). But, here’s the big question: Can Iran sustain this years’ production gains?
If to, this could seriously undermine Saudi Arabia’s global oil-market share, and boost Iran’s sanctions-damaged economy to a long-awaited recovery.
The short answer: Now that foreign sanctions are finally lifted, the battle to boost Iran’s oil exports has shifted to a domestic clash over whether to allow foreign oil companies to have significant upstream involvement. This is a domestic Iranian issue with a long history.
Let’s start with some historical perspective: The Iranian National Oil Company (NIOC) can only do so much on its own to boost production. After decades of sanctions, it lacks the needed technology and finance. I told CNNMoney‘s Matt Egan, on Wednesday, that the faster Iran expands on its own, the faster production will plateau. (His CNNMoney article today quotes me .).
This was what happened after the 1980-1988 Iran-Iraq war.(‘b’ on the chart). By about 1992, production had plateaued at almost 4 million barrels/day, under 2/3 of the pre-revolutionary, late-1970’s level of roughly 6 million barrels per day. (‘a’ on chart). The Iranian president at the time, Rafsanjani, argued to religious conservative and nationalist members of the Majilis that only foreign oil companies’ technology and investments could expand production further. However, he only won grudging approval for an offshore project due to fears that foreigners would bring their irreligious ways ashore and/or undermine the hard-won nationalization of Iran’s oil sector. Continue reading →