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The EU's Hypocritical Pollution Tax Is Paying For Fossil Fuel Expansion
You'd think they would have learnt their lesson from Nordstream, but nope!
The EU has done some commendable work trying to get on track to save the planet from our self-made apocalypse. They no longer directly fund fossil fuel extraction, are a significant player in international climate talks and tax those that pollute the environment. But sadly, it turns out that tens of millions of dollars worth of that pollution tax money is being invested in a new natural gas pipeline. The EU’s reasoning for this hypocritical spending is out-of-date, misguided and downright dangerous. What’s more, this pipeline project mirrors the deeply flawed Norstream and Nordstream 2 pipelines in more ways than one. So, what are the dangers of this back-door fossil fuel funding? And why has the EU done this?
Okay, so let’s start with this tax and how money from it is funding this new pipeline. The EU’s emissions trading scheme taxes companies that pollute the environment. Some of this tax money goes into the EU’s Modernisation Fund, which is meant to help “accelerate the transition to climate neutrality” by building sustainable infrastructure in the poorest EU countries. But this fund is donating a whopping €86 million ($92 million) to the new Tuzla-Podisor pipeline that will send natural gas from Romania’s Black Sea to three Romania gas power plants and some of Romania’s neighbouring countries.
Now, as I’m sure you know, natural gas is a fossil fuel, and its use contributes to climate change, making the use of this tax money in this way absurdly hypocritical. Especially as the IEA said back in 2021 that fossil fuel expansion (such as building new infrastructure) has to stop immediately if we want to meet our climate targets. Despite this, the EU has tried to justify this spending by saying the gas will help Romania get off coal and, “as such, can contribute to emissions reductions.” In other words, this gas is a transition fuel.
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Now, the notion that gas is better for the environment than coal is correct. Per kWh of energy, gas has about half the emissions, and it produces far less waste, particulates, radiation and pollution than coal. However, natural gas still produces around a hundred times more emissions than nuclear, wind or solar, so gas itself is far from eco-friendly.
The idea of using gas as a transition fuel dates back to the ’90s and early ’00s. Back then, wind and solar were more expensive than solar as the factories that produce the panels and turbines hadn’t yet scaled up, and the technology wasn’t yet mature. So it made sense to phase out the more polluting coal power and use gas instead to lower emissions without breaking the bank. Then, once renewables were cheaper, gas could be phased out for them, and we could reach net-zero.
But in 2023, this idea is now old and buried. For one, we didn’t phase out coal in the early ’00s, accelerating climate change to the point where we can’t afford the carbon emissions of widespread gas usage (hence the IEA stance of no more fossil fuel expansion). But renewables are now cheaper than gas per MWh, so there is no financial reason to need a transition fuel.
The unsubsidised average LCOE (Levelised Cost Of Energy) of gas with combined cycle (the most efficient and cheapest form of gas energy) is $70 per MWh. In comparison, onshore wind (which would be used in Romania) and solar have an unsubsidised average LCOE of $50 and $60 per MWh, respectively. In other words, gas is, on average, 27% more expensive per unit of energy than renewables.
There is also a political issue with this pipeline. Cast your mind back to early 2022, when Russia invaded Ukraine. At the time, most of the natural gas used in the EU came from Russia via the Nordstream and Nordstream 2 pipelines. Putin engaged in energy-based blackmail, threatening to cut off this supply if the EU helped Ukraine. The EU helped Ukraine anyway, and a massive energy crisis hit the EU, one which it is still discovering. Now, this new pipeline isn’t supplying Russian natural gas, but the gas field it uses is in the Black Sea. Russia has a massive presence in the Black Sea, and while Ukraine has recently pushed them back there, there is still a chance that Russia will want to expand into this former Soviet territory. Especially when considering their economy is mainly fossil fuel-based and dying on its arse thanks to international sanctions. Putin needs to do something to prop up the economy, and claiming these fertile gas fields for himself would definitely help.
In comparison, renewables have no such energy insecurity, as they don’t require fuel. Sure, a lot of their hardware comes from China, meaning that building renewables isn’t that secure (as relations with China are thinning), but operating them is far more secure than gas. You’d think the EU would have learnt this lesson from the Norstream pipelines, but it seems they haven’t and are willing to risk more energy security threats.
There is one final reason why Romania and its Neighbours are far better off with renewables than gas power: their energy mix. One of the arguments against renewables is that they aren’t reliable, as the Sun doesn’t always shine and the wind doesn’t always blow. But nuclear and hydro make up 20% and 28% of Romania’s power mix, respectively, and its neighbour’s energy mix is similar too. These levels are high enough that Romania could throw away its entire fossil fuel energy infrastructure and replace it with renewables and energy storage and not have any energy reliability issues.
Okay, so there has to be a good reason for this decision from the EU. It is detrimental to the planet, the EU’s credibility and their own security, so there must be a damn good reason! Well, cost.
You see, while gas is more expensive per unit of energy than renewables, it costs less to build gas power plants than wind or solar farms. Onshore wind costs $1,300 per kW of capacity (i.e. how much power it can produce), and solar costs $950 per kW of capacity. In comparison, natural gas power plants cost only $812 per kW of capacity. This means the upfront cost of gas is far lower. This is why I believe the EU supports this pipeline so that the upfront investment can go further than if they supported renewables.
In other words, they are cheaping out on “sustainable” infrastructure in poorer countries.
This all reminds me of Terry Pratchett’s Disk World character Sam Vimes’ boots theory, which goes as so: “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example… A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”
By using out-of-date climate advice and cheap infrastructure, the EU is not only damaging the environment, but it is also labouring the people of Romania with more expensive energy than necessary and potentially undermining their energy security if the geopolitical tensions of the area impact the Black Sea. It’s wet feet all around, and the EU doesn’t seem to care.
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