Wednesday 23 July 2014

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Die europäische Energiefalle

Posted by on 07/05/14

Energie darf nicht zur Waffe werden, sagte Energieminister Gabriel in Rom… Doch was wie eine deutliche und entschlossene Ansage klingen sollte, ist nicht mehr als das sprichwörtliche Pfeifen im Wald. Denn Energie, die Verfügungsgewalt über Öl, Gas und Pipelines ist schon längst eine der wichtigsten Waffen in großen und kleinen Konflikten…

Und nicht nur das: Energie, der Streit um Zugang zu diesem unverzichtbaren Lebenselixier unserer hypermobilen Welt, ist immer häufiger selbst Auslöser für Krisen und Kriege. Der aktuelle Konflikt um die Ukraine ist in beiderlei Hinsicht ein Beleg dafür. Die Ukraine war und ist als wichtigstes Gas-Transitland für den Kreml besonders wichtig. Und Putin bezieht nicht nur im aktuellen Konflikt einen Großteil seines Selbstbewusstseins aus der Tatsache, dass er mit der Gaswaffe sowohl die Ukraine als auch große Teile Westeuropas unter Druck setzen kann.

Die Hilflosigkeit des Westens resultiert allerdings nicht allein aus der Skrupellosigkeit des russischen Präsidenten. Europa ist zum großen Teil selbst schuld an der Zwickmühle, in der es jetzt steckt. Denn viel zu lange hat man die Warnungen vor dem Versiegen der Öl- und Gasquellen und der wachsenden Abhängigkeit der EU von Energie-Importen in den Wind geschlagen…

Bislang fanden die Energiekriege weit weg von Europa statt, doch mit der Ukraine-Krise bekommen wir diese fatale Entwicklung direkt vor unserer Haustür zu spüren. Es gibt keinen kurzfristigen, ja nicht einmal einen mittelfristigen Ausweg aus dieser Energiefalle… Die einzig wirksamen Rezepte wirken nur langfristig: Umstieg auf Erneuerbare, mehr Energie-Effizienz, Flüssiggas und neue Pipelines – und für manche auch Atomkraft. Denen sei allerdings ein Blick in die Ukraine empfohlen: Dort steht mahnend nicht nur die Ruine von Tschernobyl, sondern weitere fünfzehn Atomkraftwerke, deren Sicherheit im aktuellen Konflikt bestimmt nicht größer geworden ist.

Europe can be role model at UN’s Climate Change Conference 2015

Posted by on 06/05/14
By Thomas Becker Ukraine and the 2030 energy targets put renewables front and centre in terms of policy challenges. Do we lock ourselves in to fossil fuels for the next 50 years or do we allow Europeans to determine their own future, safe in the knowledge that the wind energy tap cannot be turned off?

Why is European energy security not at top of priorities list?

Posted by on 06/05/14

Energy security has re-appeared on the agenda of European energy policy. More than half of European energy needs are covered through imports, with most of them coming from a few countries like Russia, Saudi Arabia, Nigeria.

Under the impact of the Ukraine crisis, the EU has launched efforts to diversify its gas imports to other supply countries like Norway, Algeria, Qatar and USA and strengthening intra-EU connections. But this should be only one chapter of a more comprehensive policy effort.

Europe would be well advised to reduce its overall import dependency. It is likely to become a balance of payments burden, as global energy resources will become scarcer and more expensive. This trend has been accelerating during the past few decades. No commodity has seen a steeper price rise than oil, which today is about 40 times more expensive than 50 years ago, something we tend to overlook in view of the short-term market fluctuations.

The long-term recipe for energy security is simple: reduce the consumption of energy, in particular of fossil fuels. That corresponds to Europe’s basic strategy the rationale of which deserves an overhaul. Instead of trying to minimise climate change, which remains the biggest global challenge, we should focus more on European interests: guarantee our long-term energy supply, which should make it easier for citizens to accept a higher price.

More domestic fossil energy production like shale gas would be helpful for lowering import dependency. It should also help replacing lignite and coal that need to be phased because of their high CO2 content.

But if Europa wants to be serious with cutting its energy imports to, say, a quarter of its needs until the middle of the century it has no choice but to sharply reduce its energy demand and, in parallel, boost wind, solar and ocean energies and make them less dependent on weather vagaries thanks to a comprehensive EU-wide grid.

By doing so it will greatly enhance its energy security while making a valid input against climate change. Both of these objectives are worth an increase of energy prices, which is likely to happen anyhow. Politicians should therefore stop complaining of “high energy prices” and put them in the wider context of a reliable energy supply and the preservation of the planet.

Eberhard Rhein, Brussels, 5/5/2014

Can Scotland help inspire Europe on renewable energy?

Posted by on 04/05/14
By Jason Anderson for WWF In 2013 Scotland met almost 47% of its electricity needs from renewables and there is plenty more to come. If anyone doubted we can respond to the challenge the IPCC set out, the example offered by Scotland and many other countries the world over show the EU can and must step up for a safer future for people everywhere.

Will humanity take effective action against climate change?

Posted by on 14/04/14

In the fall of 2015 the international community is set to adopt a comprehensive action plan to combat climate change. Paris having been chosen as the meeting place the French government is showing more interest in climate issues and trying to mobilise the EU on a rapid agreement of its 2030 climate objectives.

The UN preparatory machinery keeps running full steam to obtain a successful outcome.

This goes above all for the scientific aspects.

In the last seven years, Humanity has accumulated a huge amount of scientific data on the climate change that has taken place during the 20th century and is likely to occur during the 21st century. Never have human beings known so much about the climate. It is therefore no longer possible for anyone to deny climate change taking place and being mostly man-made.

There is also a consensus on its main causes: C02 and methane emissions from burning fossil energies for heating, cooling, transport, industrial processes and massive deforestation are the principal villains.

If Humanity were able to contain these major causal factors within the next five decades it would still have a chance of mitigating climate change.

Theoretically this is possible.

Humanity can do without burning as much fossil energy as it does. This goes in particular for the wealthy West and China.

Wind, solar, biomass and waves can substitute fossil energy, provided storage facilities and long-distance grid interconnections are in place.

As long as they are still more expensive than coal and gas temporary subsidy regimes should offer incentives.

But why should the 2015 “big bang” in Paris be any different from the 20 preceding “Conferences of the Parties” and lay out a convincing path for Humanity to throw off the burden of climate change that will weigh so heavily on the shoulders of the coming generations?

The 195 countries that will attend the COP 21 remain deeply divided on the nature of the commitments and the burden sharing they will have to accept for a successful outcome. So far they are likely to agree only on the necessity to contain global warming within the critical margin of two centigrade; but that would be nothing new and rather meaningless without firm and verifiable commitments as to the actions to be taken.

But the international community is less than ever concerned about climate change. According to the last assessments the impact of climate change on the global economy is likely to be much lower than projected only six years ago by the Stern Report. And how many politicians care already about the impacts on biodiversity, natural catastrophes or even a steep increase in the numbers of “climate refugees”!

It is therefore not surprising to see the emphasis shifting from mitigation to adaptation. Humanity seems to prefer the costs for adaptation rather than invest in mitigation efforts, even if that will be risky because of the irreversible effects of climate change.

It is fully in line with this trend that:

  • big polluter countries like Japan, Australia, Canada or Russia are anything but keen combating climate change;
  • all major fossil energy producing countries refuse phasing out their massive oil and gas subsidies;
  • EU climate policy suffers from the global indifference. The EU rightly underlines that its efforts matter less and less as its share of global emissions is approaching 10 per cent. Contrary to the wishes of the UN Secretary General, it is not likely to play the role of a powerful locomotive in Paris, however regrettable this may be.

China and USA, the two emission giants, accounting for about half of global emissions, might be a glimpse of light in the gloomy picture.

But China will take another 20 years or so before its emissions might start falling; and the US objective of reducing its emissions by 17 per cent until 2017 compared to 2005 will not be a glorious achievement, considering its extremely high per capita emissions of 14 tons and the EU scheduled reductions and by at least 40 per cent until 2030 over 1990.

In conclusion, it looks presently unlikely that the COP 21 in Paris will turn out to be a thrilling success.

It would be a great progress if:

  • the 20 major emitter countries responsible for about 75 per cent of global emissions committed themselves to formulate 20-year strategies within a UN framework and to submit annual performance reports;
  • all rich countries, including the oil/gas exporters, offered the World Bank the financial means – say $ 100 billion per year – to help finance a big programmes for wind, hydro and solar energy;
  • the tropical forest countries were to curb illegal wood cutting and receive appropriate compensation for these efforts.

Eberhard Rhein, Brussels, 11/4/2014

Rem Korteweg: ‘Europe is a resource-poor continent’

Posted by on 10/04/14
By Joop Hazenberg In the last interview for my book project, I gave the floor to Rem Korteweg, senior research fellow at the Centre for European Reform (CER) in London. Korteweg almost defends the British perspective on Europe: A compromise on the direction, course and structure of the EU is necessary.

What has the EU ever done for us?

Posted by on 08/04/14

 

For this post, EU Perspectives, turns to Monty Python’s “The Life of Brian” and a  scene where the People’s Judean Front (PJF) plots to kidnap Pontius Pilot’s wife.  In between discussing how to get into their hated governor’s house, the conversation turns to, “What have the Romans ever done for us?”  Rather a lot as it turns out – peace, sanitation, medicine, education, wine, public order, irrigation, roads, a fresh water system, and public health amongst others, which prompts the leader of the PJF, Reg, (played by John Cleese) to state,

“All right, but apart from – the sanitation, the medicine, education, wine, public order, irrigation, roads, a fresh water system, and public health – what have the Romans ever done for us?”

Fast forward two thousand years and it is as if the Monty Python team wrote the script for UKIP and their Tory admirers.

“All right, but apart from – peace, prosperity, trade, funding, an inter-connected infrastructure and cheap French wine – what has the EU ever done for us?”

Tory and UKIP anti-EU campaigners and other Eurosceptics could come straight from central casting. Featuring, Boris “Reg” JohnsonMichael “Reg” PortilloLord “Reg” Lawson – or EU Perspectives all time favourite: Mr Fargy-“Reg”-Wargy (aka Nigel Farage).

There is a certain streak of martyrdom to their speeches that smacks of freedom fighter’s rhetoric, which makes David Cameron’s assertion that the Brits come to the European Union, “with a frame of mind that is more practical than emotional” sound at odds with the rhetoric of the odd-bods listed above.

They may wish to portray themselves as England’s last hope to free themselves of the terrible empire that is the EU, but in reality they are no such thing. It is pure sentiment, not reason, that distinguishes freedom fighters from rational politics.  Far, far easier for the Reg’s of this world to generate publicity for their cause by spouting populist sound-bites than to sit down and quantify the benefits of pooling interests for peace and prosperity.

Complete withdrawal from the EU may fulfill the ego’s of the cast set out above – but whilst they congratulate themselves on their anti-establishment streak – all the benefits of being an active member of the EU wilt away leaving Britain standing proud, independent, alone – and with egg on her face.

To return once more to “The Life of Brian” Reg pays one final visit to Brian as he awaits crucifixion. Reg, safe and comfortable, congratulates Brian on dying for such a noble cause,

“Your death (Brian) will stand as a landmark in the continuing struggle to liberate the parent land from the hands of the Roman imperialist aggressors, excluding those concerned with drainage, medicine, roads, housing, education, viniculture and any other Romans contributing to the welfare of Jews of both sexes and hermaphrodites. Signed, on behalf of the P. F. J. , etc. ”

The question the UK is going to have to ask herself is this: does she want to martyr herself and withdraw from the EU or does she want to continue enjoying the benefits of remaining an active member?

Should the UK vote no to EU membership not doubt “Reg”, wealthy enough to remain safe and secure from the full impact of withdrawal, will turn up and make a final speech which could read as follows,

“The withdrawal of the UK will stand as a landmark in the continuing struggle to liberate all other EU Member States from the hands of the EU imperialist aggressors, excluding those concerned with drainage, medicine, roads, housing, education, viniculture and any other EU members contributing to the welfare of the UK of both sexes and hermaphrodites. Signed, on behalf of the anti-EU campaigners. , etc. ”

At the end of the day though the EU is no empire. It has no Caesar, no Pontius Pilot and no centurion’s with which to enforce its will. The EU is not about authoritarian rule by a God Emperor.

The EU, unlike the Roman Empire, is a consensual body. The UK has a voice and a seat at the table. If the UK decides to withdraw so be it. The other EU member states, wise to the benefits of membership, will move on with or without the UK. Mr Fargy-Reg-Wargy and his ilk, on the other hand, like Don Quixote in a previous era, are tilting their lances at imaginary windmills.

 

Electromobilité : le plan d’action berlinois

Posted by on 07/04/14

Le 26 mars dernier s’est tenue la seconde conférence sur l’électromobilité dans la ville de Berlin. Les deux autorités en charge, l’agence s’occupant du programme et le Sénat de Berlin, ont ainsi révélé leur plan d’action. Locations de voitures et vélos électriques, production d’énergies renouvelables décentralisées, développement des smart grids…  Alors que de nombreuses stratégies sont déjà mises en place depuis plusieurs mois, voire années, les projets de la ville sont aujourd’hui encore ambitieux.

Alors que Paris vient à peine de réussir à sortir du niveau d’alerte maximum en termes de pollution aux particules fines, une ville comme Berlin surprend par son engagement et montre sans nul doute l’exemple que la capitale française devrait suivre depuis déjà de longues années. Preuve qu’il est possible aujourd’hui de réduire les émissions dans une grande ville sans en faire pâtir les habitants, la ville s’est dotée, ces dernières années, de pas moins de 5 plans d’action : le Plan cadre Berlin Ville d’industries 2010-2020, le Plan de développement urbain Transport, le Plan d’action ProIndustrie, la Stratégie énergétique 2030 et la Stratégie commune d’innovation Verlin-Brandebourg. Une totalité de cinq plans réunis plus  globalement sous l’appellation « Plan d’action 2020 ».

L’enjeu est de taille pour la ville : être reconnue dans le monde entier comme un modèle de l’électromobilité en instaurant une économie forte afin de créer une nouvelle chaîne de valeur. Les transports sont bien évidemment au centre de ce plan d’action, sous toutes leurs formes. La ville développe aujourd’hui un réseau de voitures et de vélos électriques pour les déplacements individuels, mais réfléchis également à développer d’autres modèles de transports personnels comme l’auto-partage. Pour les transports de fret, extrêmement polluants, deux axes sont envisagés. Il serait d’abord possible de remplacer les propulsions habituelles par des propulsions électriques. L’électrification du dernier kilomètre des livraisons ou encore la micro-mobilité électrique pour les livraisons de courte distance, d’autres solutions innovantes existent.

Vous l’aurez compris, Berlin mise sur l’énergie électrique pour réduire au maximum ses émissions. Celle-ci n’est cependant pas infinie et pour mener à bien ces projets, la ville doit également réfléchir à une meilleure gestion de son réseau ainsi qu’à l’intégration de plus d’énergies renouvelables dans celui-ci. Pour cela, personne n’a douté un seul instant : les smart grids constituent la piste la plus intéressante. Capables d’intégrer à un réseau électrique conventionnel de l’électricité provenant de sources d’énergie renouvelable, les réseaux électriques intelligents peuvent également aider la ville à adapter l’offre en électricité à la demande et ainsi éviter les pics de consommation ou les gaspillages.

Les infrastructures de rechargement seront également prochainement repensées. Outre les smart grids, la ville pourrait également faire le choix de décentraliser sa production d’énergies renouvelables à Brandebourg. L’augmentation du nombre de vélos et de voitures électriques en location s’accompagnera du développement de nouveaux types de batteries basés sur l’hydrogène et l’induction. Enfin, la dernière étape de la transformation de Berlin en une capitale mondiale de l’électromobilité passera par une large stratégie de communication. Évènements, salons, et coopérations internationales seront les pendants de cette révolution énergétique berlinoise. Paris n’a plus qu’à en prendre de la graine.

Combating climate change will be a long difficult haul

Posted by on 07/04/14

While the international community is due to finally take serious action against climate change it is worthwhile having a look at Denmark, Sweden and, to a lesser degree, Finland and Norway that have succeeded to generate two thirds of their electricity from renewable sources, mostly from wind and water.

But despite intensive efforts and favourable conditions – zero population growth, large forest areas, a very big hydro power potential and ideal wind conditions – they are still miles away from a fossil-free energy supply which Denmark aspires by 2050.

Still, the international community might learn a few lessons from their experience:

  • build a strong political and popular support.

Without such a support technical efforts will go nowhere. This support is there in each of the countries.

  • set long term objectives, buffered by short-time targets on which to focus concrete action.

    Thus by 2020 Denmark aims to cover one third and until 2050 its entire energy needs from renewable sources.

Similarly the EU operates with 2020/30 targets within a 2050 horizon.

  • put in place a strong institutional framework: a climate and energy ministry and energy agency.

    Denmark has led the way.

  • introduce cost-effective support schemes for accelerating the shift from fossil to renewable energy.

    Denmark has tried a panoply of measures, strongly focused on wind power, its principal renewable source, investment grants to enterprises shifting their energy supply from fossil to renewable sources and recently also premiums for solar power.

    Unlike Germany which has wasted huge amounts of subsidies for photovoltaic installations, not ideal in a country lacking sun during much of the year, the Scandinavian countries have concentrated their efforts on wind energy of which they have plenty. Such a focus on the most effective source of renewable energy is crucial for obtaining cost-effectiveness.

  • offer subsidies only for a limited period (10 years) and adapt them to falling production costs.

    Here too Denmark is a better example than Germany that has offered premiums unchanged for 20 years.

  • invest from the start in energy storage and interconnections for periods without wind or sunshine.

    Here Germany has also failed for a long time.

  • begin with renewable electricity even if heating and transport are more important energy consumers.
  • do not forget pushing for more effective thermal insulation of the building stock, where the Nordic countries have also been outstanding.

  • do not renounce mandatory action, for example energy efficiency standards if you can monitor their implementation.

  • last not least, phase out all direct and indirect subsidies for fossil energy.

In conclusion, if Humanity is serious with reducing green house gas emissions every major energy consuming country must without delay put in place the institutional and legal bases for reducing its fossil energy consumption.

To be effective it must draw up an appropriate strategy containing a long term vision and short term operational measures.

It is up to the UN to invite its most appropriate institution to help countries in that exercise and make sure that those countries implementing effective climate strategies will benefit from the financial assistance that has been promised by the international community.

But even with the most devoted efforts the Nordic countries` experience shows that it will take decades before such policies will produce strong results. Homework should therefore start without any further delay.

 

EU Energy targets for 2030. On the way to 2050?

Posted by on 01/04/14

The European Union strives for less than 2 degrees temperature rise this century in comparison with the pre-industrial times. In order to reach this goal, scientists have calculated that the carbon emission should be reduced by 80% in 2050 (1). There are different ways in which this reduction could be reached: achieve a higher energy efficiency, increase the use of renewable energy, and reduce the share of polluting energy sources are ways to decrease the greenhouse gasses emissions.

Every ten years, the European Commission proposes new mid-term energy targets. The current energy targets are set for 2020, and the first energy proposal for 2030 was recently voted upon in the Parliament. The proposal of the European Commission for 2030 is a 40% reduction of greenhouse gasses and reach a 27% (non-binding) share in renewable energies in the mix. The Parliament voted in favour on a resolution of 40% reduction of carbon emission, 30% share of the renewable energy market and 40% energy efficiency improvement by 2030. The Parliament criticised in this way the proposal of the European Commission (2): the renewable energy target is set to 20% in 2020, and increasing it only by 7% in 2030 would be unambitious. Furthermore, there are no national targets for renewable energy, which makes the Member States unaccountable. Additionally, the energy efficiency should be a very important objective, and there is no target set about this topic in the proposal of the Commission right now. However, the resolution of the EP is not binding, and the final proposal will be voted upon by the new Parliament in October.

In an analysis of the Friends of the Earth,  a decrease of 60% of carbon emission would be in line with the targets of 2050, instead of the 40% proposed right now. In total there should be a reduction of 80% in carbon emission by 2050 to strive for less than 2 degrees temperature rise at the end of this century (compared to the pre-industrial times). The reduction of only 40% in 2030 means that after 2030 there should be still an additional reduction of 40% in 20 years. There are no changes in the Emission Trade System so far, and the carbon prices will be low until 2030 when nothing is done (3). Internationally, Europe will continue the trend of losing its leading position in carbon emission with this proposal. The US and China will probably have more ambitious plans and targets to reduce their carbon emission in the future.

We wonder: where is the voice of the scientist and the youth in this proposal? The knowledge of the scientists is used to support decisions when it is in the benefit of the decision-makers, but non-scientific arguments become suddenly more important when the scientific facts are not pointing in the direction of the interest of the political forces. The youth has the power to reform the present in order to preserve the future; their voice and their concerns should be heard!

For many European citizens, the legislators in Brussels seems to be the big angry power which limits the growth of their countries when they impose a limitation of the carbon emissions. It is the responsibility of governments to explain why these energy targets are so important for the future of Europe, and show that this is the only way for a long term successful economy. We should develop not by bringing the healthy future of our planet and children in danger, but striving for a sustainable Europe.

To the decision makers we would like to say: about the importance of a sustainable future, do not only talk but act accordingly!

Written by Iris Hordijk, Policy Officer of AEGEE-Europe for Sustainability

No pain, no gain – Ukraine’s economic conundrum

Posted by on 27/03/14

President of IMF Christine Lagarde

 

Ukraine just can’t seem to catch a break these days. With the annexation of Crimea by it’s self-proclaimed motherland and a potential military conflict looming on the horizon, the government appears wholly unequipped to deal with the economic calamity that now faces Kiev. All heads have turned towards the IMF as it comes to lift Ukraine out of the doldrums.

 

Past mistakes.

Why is Ukraine’s economy such a mess? Many answers can be found by looking into the country’s troubled past. The Ukrainian economy emerged as one of the weakest in the region following the collapse of the Iron Curtain. It has been mired with inefficiencies, complicated by a lack of structural reforms and plagued by rampant corruption.

In the early 2000’s, prospects began to look up, buoyed by high commodity prices that helped Ukraine’s export-driven economy. The country missed its opportunity to reform, though, leaving the highly subsidised energy sector under the control of state giant Naftogaz, which charged Ukrainian citizens only one-quarter of the cost of importing gas.

This lapse came back to bite during the global financial crisis that hit Ukraine like a high-speed train.  In 2009 alone, Ukraine’s GDP fell by 15%, a devastating blow to a country struggling to recover from the disastrous 90s.

 

No way out?

The recent political crisis has only made matters worse. Following Yanukovych’s decision not to sign the EU Association Agreement, opposition leaders took to the streets and managed to oust him after much internal wrangling. The uprisings placed the country in a political tug-of-war between Russia and the West with neither showing signs of avail. But regardless of which forces prevail in Ukraine, someone will inherit the country’s shambolic financial situation.

Luckily, some aid is already on the way for crisis-ridden Ukraine. On March 5, the EU provided a $15 billion support package, although this is contingent on Kiev signing a deal with the IMF, which will likely inflict a hefty amount of economic pain on the country. The US has also generously given Ukraine $1 billion in cash, upfront and with no strings attached. Unfortunately, this is not enough. The withering Ukrainian economy requires some $35 billion to pay off its outstanding debt, which will mature in the next two years.

Is a new IMF loan really the best way forward for Kiev? The IMF package, agreed upon on March 27, will provide Ukraine’s economy with $14 to $18 billion, but will be subject to Ukraine undertaking some initial measures of reform. In particular, these will entail removing gas subsidies and implementing the flexible exchange rate regime, moves that will be painful and wildly unpopular with already disgruntled Ukrainian citizens. In 2010, the fund had agreed to a $15 billion loan, which it subsequently froze after Kiev refused to touch the delicate issue of gas subsidies for consumers. Is there any reason the situation will unfold differently this time around?

Indeed, IMF conditionality can inflict much damage on an already fragile country’s economy.

A case in point, Hungary was on the brink of insolvency during the financial crisis’ first wave in 2008 and was forced to sign a deal with the IMF. When, in July 2013, relations between the IMF and Viktor Orbán hit an all time low due to the unpopularity of IMF conditions such as austerity and budget cuts, Hungary demanded that the IMF close its office in Budapest and then it paid back the multi-billion dollar loan.

Today, Hungary is enjoying boosted economic performance with the Fidesz coalition denouncing the policies of European austerity and instead focusing on increasing employment figures as well as providing tax cuts for its citizens. The statistics speak for themselves: unemployment in the country stands at 8.9%, the lowest point since 2009, the Hungarian economy is set to grow 2.1%, demand has risen and inflation is the lowest its been in 40 years.

Other countries, like Greece and Portugal, have resorted to the IMF in the past and suffered from endless spirals of debt and recession, raising further doubts about the fund’s effectiveness in tackling grave economic crises.

 

The painful reality.

But is there another choice for Ukraine? While IMF conditionality will likely drive the country into further economic distress, the EU offers a compelling alternative. On March 11, the European Commission came to the decision to offer Ukraine over 500 million euros in trade benefits to prop up the country’s teetering economy. The decision abolishes all duties placed on agricultural goods, industrial products, processed foods and textiles. Such a move will save Ukrainian businesses hundreds of millions, but unfortunately this is not enough and fails to tackle the country’s fundamental problem, endemic corruption.

All players currently trying to rescue Kiev from economic oblivion would be wise to take note of Ukraine’s underlying black market issues. One must not forget that Ukraine’s inefficient economy stems from its pervasive corruption and not from the country’s inability to compete on the global stage.

While Western leaders have been quick to encourage Ukraine in its move away from Russia’s political grasp, it remains to be seen if they are willing to take the steps necessary to address the country’s underlying economic problems.

This answer remains to be seen but, as the situation stands now, it does not appear that any power is willing to jump in and ‘take responsibility for Ukraine’. Even with the IMF loan, Kiev will soon feel the burn of its own transgressions.

 

Ukraine2: Stupid Europeans! Ukraine and Syria are part of global blackmail against you!

Posted by on 20/03/14

Ukraine and Syria are part of the global battle in which Europe is the target, victim and the source of blackmail revenue. Europeans have been behaving stupidly since the 1950s, when the Founding Fathers of the European Communities warned them of the dangers. They ignored the warnings.

What would you call it if you were getting oil at a dollar-and-a-half a barrel and the supplier was making such a profit from it they were living the life of Reilly? You might call it free trade. Both parties are happy.

What do you call it when the supplier raises the price FOUR times and also says that you have to change your foreign policy if you are to get anything at all?

That is blackmail. Stupid Europeans have been grinding their teeth and paying through the nose ever since the 1973 Oil Weapon was deployed.

It only works if the buyer –the Europeans — think that they are incapable of producing energy themselves and must rely on suppliers who turn out to be a cartel or multiple cartels. With all their science and technology can’t Europeans produce energy and electricity and maintain their independence from financial and political exploitation? Who is persuading them to stay on the oil drug? Maybe we should look where oil drug profits are going.

Yesterday it was the Middle East — where Europe got entangled in Arab wars and hatreds. Today Europe is not free from that bowl of spiders. It has also got involved with the Russian energy cartel which works on the same principles of extortion. Now they are competing with each other. The Joker in the power game is shi’ite Iran which could try to block the Mid-East transport routes for oil and gas out of the Gulf. It can also play nuclear blackmail among the neighbouring States. Iran has been fighting in Syria. Qatar, a mere pimple on the east of Saudi Arabia, has the largest Liquid Natural Gas (LNG) operation and one of the biggest gas fields in the world. How will it get its gas delivered if the Strait of Hormuz is blocked? Saudi Arabia and other Gulf States have broken off diplomatic relations with Qatar over its 7.5 billion dollar support for the Muslim Brotherhood in Egypt and refuse to allow it a pipeline across to the Mediterranean.

What plans do the Saudis have if the Gulf is blocked? What if there is again trouble in Egypt and Suez? The Saudis too would like a pipeline to the Mediterranean. But what happens as these players approach the Mediterranean’s eastern coast? They are met first with Jordan, run by the Hashemite family expelled from Mecca, an unstable State carved out of the Jewish Homeland Mandate territory, composed of former PLO refugees and now Syrians. Then the pipeline must find a port — either (horrors!)  in Syria which was run by the pseudo shi’ite Alawite clan as a secular dictatorship or — horror of horrors! –  Israel.

For all the players the competition is about who can leach the most blood from the Europeans before the whole world goes down the tubes.

Europe turned to Russian gas and oil as an alternative when it was still the Soviet Union. Now Russia, troubled by sunni terrorism at home has its own ‘understanding’ with Iran and nuclear exports.

Crimea is a vital warm-water naval base for Russia. (Its other ports are frozen in winter.) It gives it access to Syria. It is is also vital for control of the Mediterranean. In the early 1970s NATO was worried that the Mediterranean was becoming a Soviet lake. The USSR was the main arms supplier to the most populous Arab country there, Egypt. It also controlled the Suez canal. The Soviets had bases along the North Africa coast and in Syria.

Today Egypt has washed its hands of Obama’s USA (that supported the Muslim Brotherhood and undermined Mubarek).  It is now getting arms supplies from Russia. The Saudis, who fiercely oppose the Muslim Brotherhood’s way to establish Islamic global dominance, are changing their long-established policy towards USA. They are pumping tens of billions of dollars into the anti-Muslim Brotherhood Egyptian regime. For a century a religio-industrial compact allowed the USA, the world’s prime capitalist, industrial power and a desert-bound religious sect in Saudi Arabia to dominate world affairs together. The world is now in flux.

In 1973 Europeans were getting oil at under two dollars a barrel from a wide variety of suppliers throughout the Middle East and North Africa. When Arab armies attacked Israel while the nation was fasting on the Yom Kippur holy day, the Arab suppliers, formed their own cartel. With their Oil Weapon, they placed a total embargo on Europe and the USA. They demanded that the West cease from henceforth to support Israel. They declared that any country that did not change its foreign policy would get zero oil. President Nixon considered declaring a state of war.

Thanks to the European Communities each with an energy component (Coal and Steel, Euratom and the ‘Common Market’) Europe was able to survive. It did not have a real common foreign policy nor did it create an energy policy (we still don’t have one!). In 1959 the three Communities had formed an ‘Inter-executive Group’ to coordinate national energy policy. But General de Gaulle not only froze such initiatives he reversed France’s Middle East policy for the sake of cheap Arab oil. That only encouraged the setup for blackmail.

In 1973 Europe was able, however, to buy oil on foreign markets and swap it between Member States in the nascent Single Market to help them survive. Denmark and Holland (who saw no reason not to support the Jewish State of Israel) imported mainly from the Middle East.  Faced with a total cut-off, they were in dire straits. Oil was shared with the other EC countries who imported from elsewhere.

In December 1973 the European Summit in Copenhagen was disrupted by an uninvited delegation of Arab oil exporters. They were determined to see that their Oil Weapon had maximum effect and no ‘European solution’ that favoured Israel and democracy in the Middle East was undertaken.

The effect of the oil embargo was devastating on the economies. Factories closed or went on short time. Motorways were bare of cars and vehicles. There was mass unemployment.

The Arab Oil Exporters quadrupled the price again in 1979! This was the Second Oil Shock. It exercised the ratchet mechanism to boost prices, not untypical of all cartels. The Economist opined on 22 December 1979:

“OPEC’s interests are increasingly inimical to those of the west. … Their underlying interests will push them into actions that harm the rest of the world. … Unrest in the Middle East often takes the form of austere reformist Islam, yet further reducing production. .. OPEC’s existence, as a device for producing a floor (for minimum prices) under past gains, while leaving ‘free market’ forces which are nothing of the kind to push prices further upwards, does indeed reflect the interests of its members. .. When people talk or write about OPEC, in this materialist age, they turn first to the tools of economics. But politics is also a necessary part of the solution to the problem. The west’s governments have to muster political weapons both to achieve their aims at home and to constrain OPEC’s power abroad.”

Cartels benefit from time to time when prices fall. Why? They wipe out any alternative supplier. Energy infrastructure takes time and investment. When oil prices crash, these programmes are binned. As the same article in the Economist prescribed, Europe needs to pass on the full price of oil to the consumer. Even more, it needs to maintain high prices for the long-term, by tariffs if necessary, so that conservation will become a way of life and native energy-making inside Europe is common.

That requires a fully-fledged Energy Community with democratic institutions and powers. How can this be done? It could start by placing solar panels on all buildings, public and private. Europe needs a common, intelligent grid. It could stop using tarmac for roads and replace them with safe, solar panels made out of reinforced glass. What’s glass made of? Sand and we have plenty of that! Europe could thus become a major exporter of electricity to the world! I am sure our scientists can come up with many technologies if given half a chance. Freedom of thought is the great asset of European culture. Other nations with lots of sand seem in a cultural timewarp.

An Energy Community as a new SUPRANATIONAL institution would help resolve the dilemma over Ukraine. About 16 percent of Europe’s gas comes via Ukraine. It could immediately become a member. But it requires major revision of the present EU to make it democratic according to the treaties.

It took nearly two decades for the oil price to fall to anywhere near ‘free market’ levels. That was due to squabble among the Arab OPEC members and world competition but little effort was made by Europeans to gain energy independence to avoid future blackmail. The Shah of Iran one of the most enthusiastic proponents for higher oil prices was replaced in 1979-80 by the shi’ite leader ayatollah Ruhollah Khomeini. Iran promptly got into a war with secularist Iraq. The sunnis were not to happy about the revolutionary terrorism of the shi’ites but both were in agreement of squeezing the Western lemon till the pips cracked.

So what did stupid Europe get? More blackmail by the cartel! By 1999 oil prices had fallen to around 9 dollars a barrel. The Economist magazine with its extensive intelligence and expertise forecast a long-term price of FIVE dollars a barrel. It was not alone. Western oil companies like BP and Shell said the same thing. But they were no longer in control of the game, or the taps. The Arab oil suppliers had nationalized the oil supplies, so many western companies were merely helpers and exporters of this Arab oil. The guys who could turn the taps off at will were at OPEC. When prices rose, they cut off supplies so that oil prices stayed high and rose higher. The others like the subservient western oil companies were left with their own cartels on downstream operations and financial operations. The oil-producers recycled their profits using short-term financial instruments like derivatives or bonds. At compound interest the petro-profits must now amount to a financial bubble multiple times the size of the real economy. (The US Treasury long ago identified five cartels operating in the oil industry at various chokepoints. Today we seem to have more.)

So what happened with the new century? The price tripled immediately in 2000. It then took a rocket trajectory upwards. This was the THIRD oil shock. Oil went from nine dollars to 147 dollars a barrel — an increase 1633 per cent! At that price the oil exporter were extracting around 10 percent or more of world GDP for a product worth a couple of dollars in a free market. The International Energy Agency shows this THIRD oil shock is the most serious one. Oil prices have never been higher in real terms since the modern oil industry began in 1859. No wonder the EU is in the economic doldrums.

It is not only this generation of politicians that are acting stupidly. Immediately after the initiation of the Community system, politicians went into a nationalist relapse. International cartels pick off nation States like minnows! By not acting for decades Europeans have compound interest on their stupidity. Europe is still sleep-walking in a dreamland with its plans for 2020 and 2030.

Today  the implications of this ignorance has moved from amber Stupid to Red DANGER.

The Russian take-over and military invasion of Crimea is part of Russia’s strategy to survive its own uncertain future. Russians are a highly educated people. They are capable of great achievements. But hindered by their own stupid ideologies, from atheistic Marxism to the present Putinism, they have been unable to compete with the West. Dimitry Medvedev wanted to turn Russia into a high tech society — but that requires a free society with open democracy. Instead their economy and all political power is based on the export of gas and oil.

Putin knows the implications full well. He is an expert in oil and gas prices. His whole policy is based on these strategic raw materials. Properly applied these raw materials can lever Russia back to great power status after the collapse of the Soviet Union. He called it the ‘greatest geopolitical catastrophe‘ of the last century. It was a geopolitical disaster, not a communist one. Russia was a centre of a world ideology — communism. It gave the USSR world clout. Putin was the clever KGB officer that thought up the Plan B to restore Russia’s fortunes. He wants to control not only Crimea, but access of non-Russian oil and gas that drives the world economy.

The new key for Russia as a world power is not ideology but energy. Today the EU imports more than half its energy with a third of its gas and oil coming from Russia. Some countries are 90 percent dependent on Russia. Germany is a main customer.

As a KGB officer in Germany he was well aware of Europe’s dependency on imported oil and gas. In his time of secret service office, the 1980s, a major trans-Atlantic row broke out between the USA and Europe about financing Russian pipelines. It nearly tore NATO apart. Mrs Thatcher joined with her French and German colleagues and opposed Ronald Reagan. The Soviet pipeline row became one of the biggest political crises of the West since WW2. (See my book, Russia and the danger for the European Union, pp88ff second edition, published in 2000 and first edition 1995. It proposes a pan-European Energy Community that would drive the democratisation of both the European Community members and the Former Soviet Union and its former satellite States.)

Why did Putin act now? He is in a race against time. Previously Russia had pledged its great support for the international rule of law. Now he has permanently lost any claim to that. The population of Crimea may be pro-Russian. There may be unsavoury characters in Kyiv. Khrushchev, acting as the Dictator of the Proletariat, may have acted foolishly to declare Crimea Ukrainian. But to move in Russian troops, to take-over all the communications, to force a referendum without a debate and then sign it off as a legal act in the Kremlin won him the condemnation of all other countries as a patent lack of legitimacy. Putin retorted that NATO had also broken its promises not to expand. The colour of the Russian policy is clear from the fact that it took over a gas plant outside the area of Crimea.

Acting like a bandit State is a severe loss to Russia’s prestige — after the Sochi Olympic games that won it acclaim. Why did he do it? He faced open hostility with the Saudis over the outcome in Syria, even threats of terrorism at Sochi. Instead Putin moved his armed forces to protect Sochi from terrorism. It turned out (coincidently?) to be very handy for taking over Crimea.

The rapid and smooth turn of events that caught the west by surprise indicate strategic planning. Without the exorbitant price that Europeans are paying for its gas, Russian economy would crash, its people starve. The Russian State and its budget depends on the viability of the huge energy monopoly, Gazprom. For President Vladmir Putin it is now a race against time to save his country. Two factors threaten Russia’s future: price and the bust-up of a cartel operation.

Russia fixed its gas price in parallel with the oil market. Why? This was the highest price Russia could get. When the Netherlands was under total oil embargo, it found it had huge gas deposits. So taking a leaf from OPEC, it set the price as high as it could to be able to survive. Russia merely copied this ploy, although there is no good reason why European consumers should support another cartel dictating prices.

There is no real free market in oil and gas. It is run by numerous cartels. This has been going on for more than a century. In the 1950′s the US Treasury identified FIVE cartels that worked in conjunction to control high prices to the customers. They ranged from exploration cartel, to down stream retailing and we can now add a financial cartel that recycles vast amounts of oil and gas profits through banks and derivatives that are multiple size of the ‘real economy’. You can control the price by stopping research, drilling, turning off the oil taps, creating refining bottlenecks or applying the massive oil profits to control the economy. Some analysts estimate that Goldman-Sachs boosted the price of oil by 30 dollars a barrel before the 2008 crash.

Russia’s gas price is now threatened by shale gas. The USA is producing massive quantities and this has hugely cut price of gas. If Europe produces its own gas in such quantities in a free market or imports gas from the USA — bang goes the Russian-based gas cartel. Today European industries pay more than twice as much for electricity as the USA, and pay four times the price for gas, according to BusinessEurope, the companies lobby group! That is the measure of a cartel vampire.

US President Obama wanted to declare red lines over the dubious origin of poison-gas weapons in Syria. However Putin took his ‘smart pills’ and made Obama and the State Department with its close links to Saudi oil look stupid. The greatest scandal is religious persecution and ethnicide that is happening by the invaders. Syria used to have vibrant Christian communities since the time of Christ. The Jews, who were there even longer, preserving precious manuscripts over many centuries, have now disappeared.

Meanwhile the massacres of Christians in Syria go unreported by the West. Why is the media muted? The destabilization of all countries in the eastern Mediterranean is only part of a global power game. The revolutionary Islamists who want to ‘free Syria’ behead Christians and those who are unable to pay the ransom after kidnapping. Christians who don’t convert or agree to become dhimmis (subject peoples) and pay the dhimmi taxes are treated in the same way.

The West’s leaders are numbed into silence at Islamist atrocities by decades of blackmail. They need to start taking anti-stupid pills.

 

 

Berlin Speech : Top German EP candidates answer my ’6 key issues’, except on Ukraine!

Posted by on 20/03/14
On Monday March 17, I addressed a Berlin debate between top candidates, heading party lists into the European elections: Alexander Graf Lambsdorff MdEP (FDP / ALDE), David McAllister MdL (CDU / EPP), Birgit Sippel MdEP (SPD / Socialists) and Gabi Zimmer MdEP (Die Linke / Left alternative). And last but not least, because she is [...]

Berlin Rede : Deutsche EP Spitzenkandidaten beantworten mein ’6 Kernfragen’, schweigen aber über die Ukraine

Posted by on 20/03/14
Am Montag, dem 17. März, hielt ich eine Ansprache anlässlich einer Debatte in Berlin zwischen den Spitzenkandidaten der Parteilisten für die Europawahlen: Alexander Graf Lambsdorff MdEP (FP / ALDE), David McAllister MdL (CDU / EVP), Birgit Sippel MdEP (SPD / SPE) und Gabi Zimmer MdEP (Die Linke / Europäische Linke). Und nicht zuletzt, denn Sie [...]

USA tackles coal-fired power plants

Posted by on 20/03/14

President Obama will enter history as the most committed and successful US President in the fight against Climate Change. His goal is to reduce greenhouse gas emissions by 17 per cent from 2005 to 2020. He will do essentially by exploiting the executive powers of the Environmental Protection Agency (EPA), against tenacious resistance of the Congress.

The EPA has introduced increasingly stricter fuel-efficiency standards for passenger cars which have turned American gas-guzzlers into modern cars with low fuel consumption, comparable to European and Japanese ones.

It is engaged to do the same with heavy-duty trucks in the next few years.

Even more important, it has started tackling emissions from power plants.

The USA has already achieved big progress in reducing CO2 emissions by switching from coal to shale gas.

In parallel, the EPA is presently engaged in issuing rules for reducing CO2 emissions from new and existing coal-fired power plants, which will have a deep impact on power generation in the USA.

New coal-fired power plants will have to reduce their C02 emissions to no more than 0.5 tons per MW electricity generated compared to 0.8-0.9 tons per MW for the most efficient power plants currently in operation. That requires a big efficiency jump through investing in technologies like combined cycle (power +heat) or carbon capture and storage (CCS), which is, however, still expensive and unproven.

Investors will therefore be likely to shun away from coal-fired power and rely even more on shale gas as the main feed-stock for electricity generation, certainly as long as shale gas remains as cheap as during the last few years.

The same standards becoming also applicable to existing power plants many old ones which are no longer suited for refitting will be decommissioned in the coming years.

Imposing a cut of CO2 emissions from coal-fired power plants by roughly half through improved technology constitutes a courageous act by the US Administration.

Hopefully, it will set an example for the rest of the world. Indeed, coal still accounts for some 40 per cent of global inputs for electricity generation. It is the single major source of C02 emissions and Humanity will increasingly turn to coal as oil and gas reserves will deplete in the course of the century.

The 20 biggest emitter countries should therefore urgently get together and explore the most suitable ways of following the American example and introduce similar fuel emission standards. That would be a giant step in the fight against climate change.

Eberhard Rhein, Brussels, 12/3/2014

 

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