Energy

Europe’s Fossil Fuel Interests Ask For Government Support


Britain’s oil and gas sector has called for government help as some producers shut down oil fields in the North Sea. 

Czech prime minister Andrej Babis has urged the European Union to scrap its recently unveiled Green Deal, arguing that resources should be directed to containing the Covid-19 outbreak instead. 

A top Polish official, Janusz Kowalski, has said that Europe’s carbon trading market — effectively a tax on coal plants and other producers — should be shut down to allow coal producers to increase output. 

In some corners of Europe, fossil fuel interests are lobbying hard for government relief, a tactic also being deployed in the US. The industry has been hit with twin crises: demand for gasoline and other fuels is cratering as people stay home to slow the pandemic, while a Saudi-Russia price war has simultaneously flooded markets with crude oil. Brent crude futures were trading earlier today at around a 20-year low $23 per barrel, down from nearly $60 a barrel a little more than a month ago. 

The calls for support come at a sensitive time. The European Parliament adopted a package of climate policies known as the Green Deal only months ago, committing the bloc to a binding target of net-zero carbon emissions by 2050. But its estimated $1 trillion-plus price tag has raised eyebrows and many aren’t sure whether to take Europe at its word. 

With the jury still out on whether the pandemic will pose a threat to Europe’s green ambitions, Poland may be a country to watch. 

Some observers worry that the Covid-19 pandemic is supplying Poland’s fossil fuel-friendly government with excuses for abandoning its commitments to phasing out coal. 

“Merkel and Macron have both funneled huge amounts of money into industry” and even suggested they are open to taking equity stakes in key companies, said Michal Hetmanski, an analyst with the Warsaw-based think tank Instrat Foundation, referring to Emmanuel Macron of France and Angela Merkel of Germany. “Given those examples, perhaps no one will mind if Mateusz Morawiecki [Poland’s prime minister] hands some cash to coal miners.” 

What is more, this country of 38 million was until recently in danger of failing to reach its EU emissions reduction target for 2020, which calls for increasing the share of renewables in its final energy consumption to 15%. But now electricity demand has plummeted close to 10% in the first half of March, forcing some coal plants to idle. Poland will probably meet its 2020 target after all — potentially handing policymakers a justification for relaxing future commitments, according to Hetmanski. 

The economic crisis caused by the COVID-19 pandemic will temporarily contribute to reducing harmful emissions in China and Europe, including Poland,” he said. “But this success would be a result of a coincidence rather than the ambitious effect of policies implemented.”

What steps Poland takes to lift up its distressed coal sector, if any, could also reveal the extent of a recent reshuffling of priorities that top officials have hinted at. 

To the surprise of many, Poland recently created a new climate ministry and appointed to it not an ideologue or political official but a respected technocrat, Michal Kurtyka. Kurtyka is a former civil servant and presided over the 2018 United Nations Climate Change Conference in Katowice

In a sign that Kurtyka could have a hand in steering the government’s response toward renewables rather than away from them, he sent a letter last week to the European Union officials urging them to develop a stronger supply chain for the wind and solar industries. Poland imports wind and solar farm parts heavily from China, where the shut-in of much manufacturing recently has disrupted the flow of materials to Poland. 

“Our goal should be to build a strong European zero-emission industry, which in the long run will help diversifying our imports thus improving our security of supply,” Kurtyka wrote in the letter, which was seen by Bloomberg. 

Elsewhere, too, there are signs that the fossil fuel sector’s cries for relief may not find as receptive an audience as in the US, where the Environmental Protection Agency (EPA) recently relaxed its enforcement standards on pollution. 

In Britain, no support appears on the way for hunkered down North Sea oil producers, although Boris Johnson’s Conservative government has said it will pay 80% of the wages of anyone facing unemployment. Czech prime minister Babis may oppose taking the Green Deal forward, but his government may not have much say in the matter.

If European Union officials have signaled they are listening to anyone, it may be to the more than 30 energy groups that recently sent a letter to the European Commission calling on it to “fully integrate” any stimulus package with the Green Deal in order to boost job creation in the green energy sector as part of the economic recovery. 

The Commission could well do just that. Earlier today it began public consultations to tighten its 2030 emissions reduction target, from 55% to 50%. 





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