Tag: Environment

Navigating Environmental Policy Consistency Amidst Political Change

Posted on May 6, 2024 | Policy Brief

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Europe, like other parts of the world, currently grapples with the dual challenges of environmental change and democratic backsliding. In a context marked by rising populism, misinformation, and political manipulation, designing credible sustainable climate policies is more important than ever. The 2024 annual Energy Talk, organized by the Stockholm Institute of Transition Economics (SITE), gathered experts to bring insight into these challenges and explore potential solutions for enhancing green politics.

In the last decades, the EU has taken significant steps to tackle climate change. Yet, there is much to be done to achieve climate neutrality by 2050. The rise of right-wing populists in countries like Italy and Slovakia, and economic priorities that overshadow environmental concerns, such as the pause of environmental regulations in France and reduced gasoline taxes in Sweden, are significantly threatening the green transition. The current political landscape, characterized by democratic backsliding and widespread misinformation, poses severe challenges for maintaining green policy continuity in the EU. The discussions at SITEs Energy Talk 2024 highlighted the need to incorporate resilience into policy design to effectively manage political fluctuations and ensure the sustainability and popular support of environmental policies. This policy brief summarizes the main points from the presentations and discussions.

Policy Sustainability

In his presentation, Michaël Aklin, Associate Professor of Economics and Chair of Policy & Sustainability at the Swiss Federal Institute of Technology in Lausanne, emphasized the need for environmental, economic, and social sustainability into climate policy frameworks. This is particularly important, and challenging given that key sectors of the economy are difficult to decarbonize, such as energy production, transportation, and manufacturing. Additionally, the energy demand in Europe is expected to increase drastically (mainly due to electrification), with supply simultaneously declining (in part due to nuclear power phaseout in several member states, such as Germany). Increasing storage capacity, enhancing demand flexibility, and developing transmission infrastructure all require large, long-term investments, and uncompromising public policy. However, these crucial efforts are at risk due to ongoing political uncertainty. Aklin argued that a politics-resilient climate policy design is essential to avoid market fragmentation, decrease cooperation, and ensure the support for green policies.  Currently, industrial policy is seen as the silver bullet, in particular, because it can create economies of scale and ensure political commitment to major projects. However, as Aklin explained, it is not an invincible solution, as such projects may also be undermined by capacity constraints and labour shortages.

Energy Policy Dynamics

Building on Aklin’s insights, Thomas Tangerås, Associate Professor at the Research Institute of Industrial Economics, explored the evolution of Swedish energy policy. Tangerås focused on ongoing shifts in support for nuclear power and renewables, driven by changes in government coalitions. Driven by an ambition to ensure energy security, Sweden historically invested in both hydro and nuclear power stations. In the wake of the Three Mile Island accident, public opinion however shifted and following a referendum in 1980, a nuclear shutdown by 2010 was promised. In the new millennia, the first push for renewables in 2003, was followed by the right-wing government’s nuclear resurgence in 2010, allowing new reactors to replace old ones. In 2016 there was a second renewable push when the left-wing coalition set the goal of 100 percent renewable electricity by 2040 (although with no formal ban on nuclear). This target was however recently reformulated with the election of the right-wing coalition in 2022, which, supported by the far-right party, launched a nuclear renaissance. The revised objective is to achieve 100 percent fossil-free electricity by 2040, with nuclear power playing a crucial role in the clean energy mix.

The back-and-forth energy policy in Sweden has led to high uncertainty. A more consistent policy approach could increase stability and minimize investment risks in the energy sector. Three aspects should be considered to foster a stable and resilient investment climate while mitigating political risks, Tangerås concluded: First, a market-based support system should be established; second, investments must be legally protected, even in the event of policy changes; and third, financial and ownership arrangements must be in place to protect against political expropriation and to facilitate investments, for example, through contractual agreements for advance power sales.

The Path to Net-Zero: A Polish Perspective

Circling back to the need for climate policy to be socially sustainable, Paweł Wróbel, Energy and climate regulatory affairs professional, Founder of GateBrussels, and Managing Director of BalticWind.EU, gave an account of Poland’s recent steps towards the green transition.

Poland is currently on an ambitious path of reaching net-zero, with the new government promising to step up the effort, backing a 90 percent greenhouse gas reduction target for 2040 recently proposed by the EU However, the transition is framed by geopolitical tensions in the region and the subsequent energy security issues as well as high energy prices in the industrial sector. Poland’s green transition is further challenged by social issues given the large share of the population living in coal mining areas (one region, Silesia, accounts for 12 percent of the polish population alone). Still, by 2049, the coal mining is to be phased out and coal in the energy mix is to be phased out even by 2035/2040 – optimistic objectives set by the government in agreement with Polish trade unions.

In order to achieve this, and to facilitate its green transition, Poland has to make use of its large offshore wind potential. This is currently in an exploratory phase and is expected to generate 6 GW by 2030, with a support scheme in place for an addition 12 GW. In addition, progress has been achieved in the adoption of solar power, with prosumers driving the progress in this area. More generally, the private sectors’ share in the energy market is steadily increasing, furthering investments in green technology. However, further investments into storage capacity, transmission, and distribution are crucial as the majority of Polands’ green energy producing regions lie in the north while industries are mainly found in the south.

Paralleling the argument of Aklin, Wróbel also highlighted that Poland’s high industrialization (with about 6 percent of the EU’s industrial production) may slow down the green transition due to the challenges of greening the energy used by this sector. The latter also includes higher energy prices which undermines Poland’s competitiveness on the European market.

Conclusion

The SITE Energy Talk 2024 catalyzed discussions about developing lasting and impactful environmental policies in times of political and economic instability. It also raised questions about how to balance economic growth and climate targets. To achieve its 2050 climate neutrality goals, the EU must implement flexible and sustainable policies supported by strong regulatory and political frameworks – robust enough to withstand economic and political pressures. To ensure democratic processes, it is crucial to address the threat posed by centralised governments decisions, political lock-ins, and large projects (with potential subsequent backlashes). This requires the implementation of fair policies, clearly communicating the benefits of the green transition.

On behalf of the Stockholm Institute of Transition Economics, we would like to thank Michaël Aklin, Thomas Tangerås and Paweł Wróbel for participating in this year’s Energy Talk.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Nuclear Renaissance: Powering Sweden’s Climate Policy

Posted on April 15, 2024 | Policy Brief

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The current Swedish government has put nuclear energy front and center of their climate policies, with a goal of two new reactors in commercial operation by 2035, and around ten new reactors by 2045. In light of this revived focus, this policy brief tackles the following question: is a large-scale expansion of nuclear energy an environmental and economically efficient solution to achieve Sweden’s climate policy objective of net zero emissions by 2045? To answer this, three important aspects are analyzed: potential emission reductions, the cost-effectiveness of such abatement, and the practicality of the proposed timelines. As a case study, we draw lessons from the large-scale build-out of nuclear power in France in the late 1970s. The results show that France significantly reduced emissions of carbon dioxide (CO2), at a net economic benefit, and with an average reactor construction time of around six years. However, today’s situation in Sweden contrasts sharply with France in the 1970s. Electricity production in Sweden is already low-carbon, the cost of alternative zero-carbon electricity sources has plummeted, and construction costs and timelines for nuclear power have steadily increased since the 1970s. Therefore, new reactors in Sweden are likely to yield only modest emission reductions at a relatively high abatement cost, and with construction times around two to three times longer than those achieved by France.

A Renewed Focus on Nuclear Energy

When the current government in Sweden, led by Prime Minister Ulf Kristersson, came into power in 2022, they swiftly made changes to Sweden’s environment and climate policies. The Ministry of Environment was abolished, transport fuel taxes were reduced, and the energy policy objective was changed from “100 percent renewable” to “100 percent fossil free”, emphasizing that nuclear energy was now the cornerstone in the government’s goal of reaching net zero emissions (Government Office 2023, Swedish Government 2023). This marked a new turn in Sweden’s relationship with nuclear energy: from the construction of four different nuclear power plants in the 1970s – of which three remain operational today – to the national referendum on nuclear energy in 1980, where it was decided that no new nuclear reactors should be built and that existing reactors were to be phased-out by 2010 (Jasper 1990).

Today’s renewed focus on nuclear energy, especially as a climate mitigation policy tool is, however, not unique to Sweden. As of 2022, the European Commission labels nuclear reactor construction as a “green investment”, the US has included production tax credits for nuclear energy in their 2023 climate bill the Inflation Reduction Act, and France’s President Macron is pushing for a “nuclear renaissance” in his vision of a low-carbon future for Europe (Gröndahl 2022; Bistline, Mehrotra, and Wolfram 2023; Alderman 2022).

France As a Case Study

In the 1970s, France conducted an unprecedented expansion of nuclear energy, which offers valuable insights for Sweden’s contemporary nuclear ambitions. Relying heavily on imported oil for their energy needs, France enacted a drastic shift in energy policy following the 1973 oil crisis. In the subsequent decade, France ordered and began the construction of 51 new nuclear reactors. The new energy policy – dubbed the Messmer Plan – was summarized by the slogan: “All electric, all nuclear” (Hecht 2009).

To support the expansion of new reactors, the French government made use of loan guarantees and public financing (Jasper 1990). A similar strategy has recently been proposed by the Swedish government, with suggested loan guarantees of up to 400 billion kronor (around $40 billion) to support the construction of new reactors (Persson 2022).

France’s Emissions Reductions and Abatement Costs

To make causal estimates of the environmental and economic effects of France’s large-scale expansion of nuclear energy, we need a counterfactual to compare with. In a recent working paper – titled Industrial Policy and Decarbonization: The Case of Nuclear Energy in France – I, together with Jared Finnegan from University College London, construct this counterfactual as a weighted combination of suitable control countries. These countries resemble France’s economy and energy profile in the 1960s and early 1970s, however, they did not push for nuclear energy following the first oil crisis. Our weighted average comprises five European countries: Belgium, Austria, Switzerland, Portugal, and Germany, with falling weights in that same order.

Figure 1 depicts per capita emissions of CO2 from electricity and heat production in France and its counterfactual – ‘synthetic France’ – from 1960 to 2005. The large push for nuclear energy led to substantial emission reductions, an average reduction of 62 percent, or close to 1 metric ton of CO2 per capita, in the years after 1980.

Figure 1. CO2 emissions from electricity and heat in France and synthetic France, 1960-2005.

Andersson and Finnegan (2024).

Moreover, Figure 1 shows that six years elapsed from the energy policy change until emission reductions began. This time delay matches the average construction time of around six years (75 months on average) for the more than 50 reactors that were constructed in France following the announcement of the Messmer Plan in 1974.

Table 1. Data for abatement cost estimates.

Andersson and Finnegan (2024).

Lastly, these large and relatively swift emission reductions in France were achieved at a net economic gain. Table 1 lists the data used to compute the average abatement cost (AAC): the total expenses incurred for the new policy (relative to the counterfactual scenario), divided by the CO2 emissions reduction.

The net average abatement cost of -$20 per ton of CO2 is a result of the lower cost of electricity production (here represented by the levelized cost of electricity (LCOE)) of new nuclear energy during the time-period, compared to the main alternative, namely coal, – the primary energy source in counterfactual synthetic France. LCOE encompasses the complete range of expenses incurred over a power plant’s life cycle, from initial construction and operation to maintenance, fuel, decommissioning, and waste handling. Accurately calculated, LCOE provides a standardized metric for comparing the costs of energy production across different technologies, countries, and time periods (IEA 2015).

Abatement Costs and Timelines Today

Today, more than 50 years after the first oil crisis, many factors that made France’s expansion of nuclear energy a success are markedly different. For example, the cost of wind and solar energy – the other two prominent zero-carbon technologies – has plummeted (IEA 2020). Further, construction costs and timelines for new nuclear reactors in Europe have steadily increased since the 1970s (Lévêque 2015).

Figure 2 depicts the LCOE for the main electricity generating technologies between 2009 and 2023 (Bilicic and Scroggins 2023). The data is for the US, but the magnitudes and differences between technologies are similar in Europe. There are two important aspects of this figure. First, after having by far the highest levelized cost in 2009, the price of solar has dropped by more than 80 percent and is today, together with wind energy, the least-cost option. Second, the cost of nuclear has steadily increased, contrary to how technology cost typically evolves over time, meriting nuclear power the “a very strange beast” label (Lévêque, 2015, p. 44). By 2023, new nuclear power had the highest levelized cost of all energy technologies.

Regarding the construction time of nuclear reactors, these have steadily increased in both Europe and the US. The reactor Okiluoto 3 in Finland went into commercial operation last year but took 18 years to construct. Similarly, the reactor Flamanville 3 in France is still not finished, despite construction beginning 17 years ago. The reactors Hinkley Point C in the UK were initiated in 2016 and, after repeated delays, are projected to be ready for operation in 2027 at the earliest (Lawson 2022). Similarly, in the US, construction times have at least doubled since the first round of reactors were built. These lengthened constructions times are a consequence of stricter safety regulations and larger and more complex reactor designs (Lévêque, 2015). If these average construction times of 12-18 years are the new norm, Sweden will, in fact, not have two new reactors in place by 2035. Further, it would need to begin construction rather soon if the goal of having ten new reactors by 2045 is to be achieved.

Figure 2. Levelized Cost of Electricity, 2009-2023.

Source: Bilicic and Scroggins (2023).

Sweden’s Potential Emission Reductions

The rising costs and extended construction times for new reactors are notable concerns, yet the crucial measure of Sweden’s new climate policy is its capacity to reach net zero emissions across all sectors. Figure 3 depicts per capita emissions of CO2 from electricity and heat production in Sweden and OECD countries between 1960 and 2018.

Figure 3. Sweden vs. the OECD average.

Source: IEA (2022).

In 2018, the OECD’s per capita CO2 emissions from electricity and heat averaged slightly over 2 metric tons. In comparison, Sweden’s per capita emissions at 0.7 metric tons are low and represent only 20 percent of total per capita emissions. Hence, the potential for substantial emission cuts through nuclear expansion is limited. By contrast, Sweden’s transport sector, with CO2 emissions more than two times larger than the emissions from electricity and heat, presents a greater chance for impactful reductions. Yet, current policies of reduced transport fuel taxes are likely to increase emissions. The electrification of transportation could leverage the benefits of nuclear energy for climate mitigation, but broader policies are then needed to accelerate the adoption of electric vehicles.

Conclusion

As Sweden rewrites its energy and climate policies, nuclear energy is placed front and center – a position it has not held since the 1970s. Yet, while nuclear energy may experience a renaissance in Sweden, it will not be the panacea for reaching net zero emissions the current government is hoping for. Expected emission reductions will be modest, abatement costs will be relatively high and, if recent European experiences are to be considered an indicator, the aspirational timelines are likely to be missed.

Considering these aspects, it’s imperative for Sweden to adopt a broader mix of climate policies to address sectors such as transportation – responsible for most of the country’s emissions. Pairing the nuclear ambitions with incentives for an accelerated electrification of transportation could enhance the prospects of achieving net zero emissions by 2045.

References

  • Alderman, L. (2022). France Announces Major Nuclear Power Buildup. The New York Times. February 10, 2022.
  • Andersson, J. and Finnegan, J. (2024). Industrial Policy and Decarbonization: The Case of Nuclear Energy in France. Working Paper.
  • Bilicic, G. and Scroggins, S. (2023). 2023 Levelized Cost of Energy+. Lazard.
  • Bistline, J., Mehrotra, N. and Wolfram, C. (2023). Economic Implications of the Climate Provisions of the Inflation Reduction Act. Tech. rep., National Bureau of Economic Research.
  • Government Office. (2023). De första 100 dagarna: Samarbetsprojekt klimat och energi. Stockholm, January 25, 2023.
  • Gröndahl, M-P. (2022). Thierry Breton: ’Il faudra investir 500 milliards d’euros dans les centrales nucléaires de nouvelle génération’.  Le Journal du Dimanche January 09, 2022.
  • Hecht, G. (2009). The Radiance of France: Nuclear Power and National Identity after World War II. MIT Press.
  • IEA. (2015). Projected Costs of Generating Electricity: 2015 Edition. International Energy Agency. Paris.
  • IEA. (2020). Projected Costs of Generating Electricity: 2020 Edition. International Energy Agency. Paris.
  • IEA. (2022). Greenhouse Gas Emissions from Energy (2022 Edition). International Energy Agency. Paris.
  • Jasper, J. M. (1990). Nuclear politics: Energy and the state in the United States, Sweden, and France, vol 1126. Princeton University Press.
  • Lawson, A. (2022). Boss of Hinkley Point C blames pandemic disruption for 3bn delay. The Guardian. May 20, 2022.
  • Lévêque, F. (2015). The economics and uncertainties of nuclear power. Cambridge University Press.
  • Persson, I. (2022). Allt du behöver veta om ’Tidöavtalet. SVT Nyheter. 14 October, 2022.
  • Swedish Government. (2023). Regeringens proposition 2023/24:28 Sänkning av reduktionsplikten för bensin och diesel. State Documents, Sweden. Stockholm, October 12, 2023.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Exploring the Impact from the Russian Gas Squeeze on the EU’s Greenhouse Gas Reduction Efforts

Posted on March 14, 2023 | Policy Brief

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Throughout 2022, the reduction in Russian gas imports to the EU and the resilience of European energy markets have been subject of significant public discourse and policy-making. Of particular concern has been the EU’s ability to maintain its environmental goals, as substitution from Russian pipeline gas to liquified natural gas and other fuels such as coal, could result in increased emissions. This brief aims to reevaluate the consequences from the loss of Russian gas and the EU’s response to it on greenhouse gas emissions in the region. Our analysis suggests that the energy crisis did not result in a rise in emissions in 2022. While some of the factors that contributed to this outcome – such as a mild winter – may have been coincidental, the adjustments caused by the 2022 gas squeeze are likely to support rather than jeopardize the EU’s green transition.

Energy markets in Europe experienced a tumultuous 2022, with the Russian squeeze on natural gas exported to the region bringing a major shock to its energy supply. Much attention has been devoted to the effects of the succeeding spiking and highly fluctuating energy prices on households’ budget and on the production sector, with numerous policy initiatives aimed at mitigating these effects (see, e.g.,  Reuters or Sgaravatti et al., 2021). Another widely discussed concern has revolved the consequences of the gas crisis – such as switching to coal – on the EU’s climate policy objectives (see e.g. Bloomberg or Financial Times). In this brief, we analyze and discuss to what extent this concern turned out to be valid, now that 2022 has come to an end.

We consider greenhouse gas (GHG) emissions stemming from the main strategies that allowed the EU to weather the gas crisis throughout 2022 – namely the substitution from Russian gas to other energy sources. These strategies include increased imports of liquified natural gas (LNG), a lower gas demand, and an increased reliance on coal, oil, and other energy sources. We also discuss the implications of the crisis for climate mitigation in the EU and try to draw lessons for the future.

Substitution to LNG and Pipeline Gas from Other Suppliers

Prior to 2022, Russian natural gas largely reached Europe by pipeline (92.4 percent in 2021 according to Eurostat). More than half of these pipeline imports, 86 billion cubic meters (bcm), were lost during the 2022 Russian gas supply squeeze, predominantly through the shut-down of both the Yamal and the Nordstream pipelines. 57 percent of this “missing” supply was met through an increase in LNG imports from several countries, the largest contributor being the U.S. Another 27 percent of the “missing Russian gas” was substituted by an increase in pipeline gas imports from other suppliers, with the UK (20 percent) and Norway (7 percent) taking the lead.  A substantial part of the replaced gas was stored, rather than combusted. With this in mind, here we concentrate on the upstream emissions associated with this change – i.e., emissions that occurred during the extraction, processing, and transportation. The change in the combustion emissions is postponed to the next section.

There is an ongoing debate in the literature on whether the greenhouse gas pollution intensity of LNG is higher or lower than that of gas delivered through pipelines – prior to final use. In comparison to pipeline gas, LNG is associated with emissions resulting from energy-intensive liquefaction and regassification processes in upstream operations as well as with fuel combustion from transportation on ocean tankers. For both LNG and pipeline gas it is also crucial to consider fugitive methane emissions, as methane has up to 87 times greater global warming potential than carbon dioxide in the first 20 years after emission, and up to 36 times greater in the first 100 years. One source of methane emissions is leaks from the natural gas industry (both “intentional” and accidental) since methane is the primary component of natural gas. Both LNG and pipeline gas infrastructure are subject to such leaks, and the size and frequency of these leaks during transportation varies greatly depending on the technologies used, age of infrastructure, etc. Further, the risk of these leaks may also be different depending on the technology of gas extraction.

Currently there is limited knowledge about the size of greenhouse gas emissions, including methane emissions resulting from leaks, from specific gas projects. Until recently, most estimates were based partially on self-reported data and partially on “emission factors” data. Modern and more reliable methods, for instance satellite-based measures for methane emissions, suggest that the resulting figures are greatly underestimated (see, e.g., Stern, 2022; IEA; ESA) but the coverage of these new estimates is currently limited.

As a result, there is considerable disagreement in the literature on the emissions arising from Russian pipeline gas imports vs. LNG imports to the EU. For example, Rystad (2022) argues that the average LNG imports to Europe have a CO2 emission intensity that is more than 2.5 times higher than that from pipeline gas from Russia (although they do not explicitly state whether these figures include fugitive methane emissions). On the contrary, Roman-White et al. (2019) suggest that the life-cycle GHG emission intensity of EU LNG imports (from New Orleans) is lower than EU gas imports from Russia (via the Yamal pipeline).

For the purposes of this exercise, we choose to rely on middle-ground estimates by DBI and Sphera, which assess GHG emission intensity along different Russian gas import routes (DBI, 2016) and across different LNG suppliers to the EU (Thinkstep –  Sphera, 2020). This allows us to account for substantial heterogeneity across routes.

We also account for the change in upstream emissions associated with the switch from imports of pipeline Russian gas to pipeline gas imports from Norway and the UK. For this, we approximate the GHG emission intensity of the new flows using the estimate suggested by Thinkstep –  Sphera (2017).

The results of our assessment are presented in the top three rows of Table 1. They suggest that a substitution from Russian gas imports to LNG imports and pipeline imports from other sources resulted in an increase in upstream GHG emissions by approximately 14 million tons (Mt) of CO2eq. Details on calculations and assumptions are found in the online Appendix.

Table 1. Change in EU GHG emissions resulting from Russian gas squeeze.

Source: Authors’ own calculations based on DBI (2016), McWilliams et al. (2023), Sphera (2017; 2020), and IEA (2022). See the online Appendix for more details on assumptions, calculations, and sources. Note: Billion cubic meters (bcm) and terawatt-hours (TWh).

The Decline in Gas Demand and the Switch to Other Fuels

A decrease in gas use in the EU constituted another response to the Russian gas squeeze. Gas demand in the EU is estimated to have declined by 10 percent (50 bcm or 500 TWh) in 2022 with respect to 2021 (IEA, 2022). Part of this decline was facilitated by switching from gas to other polluting fuels, such as oil and coal. The extent to which switching occurred however differed across the three main uses of gas; power generation, industrial production, and residential and commercial use. Below we discuss them separately.

Power Generation

At the onset of the 2022 energy crisis, a prevalent expectation was that there would be significant gas-to-coal switching in power generation. However, gas demand for power generation, which accounts for 31.4 percent of the gas demand from EU countries (European Council), increased by only 0.8 percent in 2022 (EMBER, 2022, p.29), implying that there was no direct substitution from gas-fired to coal-fired generation.

One of the reasons to why there was no major switching to coal in spite of the increase in gas prices is that CO2 emissions are priced in the Emissions Trading System (ETS) program, and the average carbon price has been growing recently, reaching an average of around €80/ton in 2022.  Given that coal has a higher emission intensity than gas, the carbon price increases the relative cost of coal versus gas for power generators.

Instead, the decline in demand came from industry, residential and commercial use, which together account for nearly 57 percent of the EU’s gas demand (European Council).

Industry Use

For the industry, IEA calculations (2022) suggest a demand drop of 25 bcm, which would correspond to approximately 50 Mt CO2eq. However, half of the industrial gas reduction came from gas to oil switching. Based on our estimates, this switch implies an additional 41 Mt CO2eq emissions, considering both upstream emissions and emissions from use in furnaces (assuming this to be the prevalent use of the oil that substituted gas, see McWilliams et al., 2023). The remaining half of the industrial demand decline resulted from energy-efficiency improvements, lower output, and import of gas-intensive inputs where possible (ibid.). These changes are either neutral in terms of life-cycle emission impact (import increases) or emission-reducing (efficiency improvements and lower output).

Residential and Commercial Use

Residential and commercial use represented the remaining part of the 500 TWh gas demand decline. In this case, lower gas demand is unlikely to imply massive fuel switching to other fossil fuels, simply because of the lack of short-term alternatives. For example, European households use gas mostly for space heating and cooking, and albeit both higher use of coal for home-heating (BBC) and a surge in installations of heat pumps (Bruegel, 2023 and EMBER, 2023) have been reported, the net change in emissions resulting from these two opposite developments is likely relatively minor as compared to other considered sizeable changes.

The Rise of Coal

As observed, there was no direct switch from gas to coal in European power generation. However, coal generation in the EU did increase by 6 percent in 2023 (IEA, 2022), to help close the gap in electricity supply created by the temporary shut-down of nuclear plants in France and the reduced performance of hydro. In our calculations we assume that in a counterfactual world with no Russian gas squeeze, gas-fired electricity would have covered most of the gap that was instead covered by coal. Therefore, we estimate that, as an indirect result of the Russian gas squeeze in 2022, CO2eq emissions increased by 27 Mt, specifically because of the ramp-up in coal generation (see the second section in Table 1).

Gas Shortage and the EU’s Climate Objectives

In recent years, the EU has made substantial progress in climate change mitigation. Despite widely expressed concerns, it achieved its 2020 targets – reducing emission by 20 percent by 2020, from the 1990 level. However, its current target of a 55 percent net GHG emission reduction by 2030, requires average yearly cuts of 134 Mt CO2eq, from the 2021 level. This is an ambitious target: while the emission cut between 2018 and 2019 exceeded this level, the average yearly cut between 2018 and 2021 however fell short (Eurostat).

The question is if the Russian gas squeeze can significantly undermine the EU’s ability to achieve these climate goals?

First, based on our assessment above, the changes prompted by the Russian squeeze – namely a move from pipeline-gas to LNG, a decline in gas demand and an increase in coal and oil use – made 2022 emissions decline by 18 Mt CO2eq. This suggests that the energy shock prompted overall emission-reducing adjustments in the short run. One important question that arises from this is therefore how permanent these adjustments are.

The increased reliance on LNG (and other gas suppliers) is likely to be permanent as a return to imports from Russia is hardly imaginable and as the 2022 surge in LNG imports entailed significant investments and contractual obligations. According to our estimates, overall, this shift is going to cause a relatively modest increase in yearly CO2eq emissions, approximately 10 percent of the needed emission reduction outlined above. Moreover, this is accounting for emissions throughout the EU’s entire supply chain – which is increasingly advocated for, but not currently applied in the typical emission accounting. It is, of course, important to make sure that ongoing LNG investments do not result in “carbon lock-ins”, postponing the green transition.

The decline in gas demand is a welcome development for climate mitigation if it is permanent. Part of the decline, from improved energy efficiency or installation of heat pumps, is indeed permanent. However, European households also responded temporarily (to warmer than usual winter and high gas prices (for instance by reducing their thermostats). Their behavior in the near future will therefore depend on the development of both these variables.

Overall, our assessment is that the Russian gas squeeze did force some adjustments in demand that might translate into a permanent decline in greenhouse gas emissions.

The question however remains of how the shortage of gas can be met in a scenario with higher gas demand due to, for instance, colder winters. In terms of climate objectives, it is of paramount importance that coal-powered generation does not increase (which would happen if, for instance, the price of gas continues to raise due to shortages). In this sense some lessons can be learned from the response to the shortage in electricity supply following the exceptional under-performance of nuclear and hydro in 2022. Wind and solar, which provide the lowest-cost source of new electricity production, in combination with declines in electricity demand, were able to cover 5/6 of the 2022 shortage created by the nuclear and hydro shock (EMBER, 2023), thus relegating coal to a residual contribution. We expect this pattern to emerge also in the future in the presence of other crises. However, we also caution that the lower production of electricity was at least partially caused by the dramatic heatwaves and droughts experienced throughout the summer in Europe. These events are likely to happen more often in the face of climate change. European policy-makers should therefore carefully assess the capacity of the EU energy system to address potentially multiple and frequent shocks with minimal to no-reliance on coal, in a scenario where also reliance on gas needs to be in constant decline given the Russian gas squeeze and unreliability.

Finally, the dramatic circumstances of 2022 led the EU to adopt the REPowerEU plan, which outlines financial and legal measures to, among other things, speed up the development of renewable energy projects and induce energy-saving behavior.

The outlined observations lead us to conclude that the Russian gas squeeze is ultimately unlikely to sizably reduce the chances of the EU reaching its climate goals, suggesting that the 2022 concerns in this regard were somewhat exaggerated. Nonetheless, learning from the costly lessons of the 2022 energy crisis is crucial for efficient policy making in the future.

References

Online Appendix

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Climate Risk Perception and Green Behavior in Belarus

Posted on January 23, 2023 | Policy Brief

Toxic smoke stacks emitting carbon pollution and causing climate change and representing climate risk perception

Understanding how people perceive climate risks and what factors influence this perception is important for a shift towards more sustainable consumer behavior and thus a reduction of greenhouse gas emissions. This policy brief presents the results from a survey  on the attitudes to climate change and environmentally responsive behavior among the urban Belarusian population aged 18-75. The findings show that 72.7 percent of the respondents consider climate change as a threat to the country in the coming 20 years. This climate risk perception, however, does not fully result in more sustainable consumer behavior in Belarus. The survey also reveals that the mass media, with the exception of the Internet, have no influence on the formation of people’s attitudes toward climate change.

Global warming constitutes one of the major threats to humanity and an obstacle to achieving sustainable development. 72 percent of global greenhouse gas emissions are attributed to households (IPCC, 2022), underlining the importance of individual behavioral changes to tackle global warming.

Acknowledging climate change as a risk is a precondition to shift people’s behavior towards sustainable practices (Le Coq and Paltseva, 2021). Thus, the objective of the study underlying this brief is to analyze whether the population in Belarus considers climate change as a threat, and which factors and media channels might have an effect on such perceptions. Additionally, the brief will explore whether climate change risk perceptions actually translate into more environmentally sustainable consumer behavior.

Climate Change as a Threat

The online-survey was conducted in April, 2022 among the urban population in Belarus aged 18-75. The purpose of the survey was to collect individual data on environmentally responsible behaviors and climate change perceptions. The sample includes 1029 individuals and is representative by age, gender and region. According to the survey, 72.7 percent of the respondents consider climate change as a threat to the country in the coming 20 years.

To explore which demographic and socio-economic variables (e.g., education, age, gender, income, and mass media) influence the perception of climate change as a risk among the Belarusian population, we employ a logistic regression model. The results reveal that gender, personal experience of extreme weather events and exposure to climate change information on the Internet play an important role in forming climate change risk perceptions among Belarusians, as depicted in Table 1.

Table 1. Determinants of Climate Change Risk Perception

Note: Media channels are measured on a 5-point Likert scale where 0 denotes “Don’t use this media”; 1 “never” up until 4, “very often”, answering the question “How often do you come across the information about climate change, environmental problems or sustainable lifestyle on the following media?”. Standard errors are in parentheses, *** p<0.01, ** p<0.05 and * p<0.1

Women are 6.1 percent more likely to consider climate change as a threat than men. This could be due to a higher level of empathy exhibited by women, making them more worried about consequences of extreme weather events and environmental protection and more sensitive to the risk of environmental degradation (Milfont and Sibley, 2016). Respondents with personal experience from, or those who have close persons having suffered significant damage from severe weather events such as floods or violent storms in the past two years, are 25.2 percent more likely to perceive climate change as a risk. Thus, personal experience of severe weather events is one of the main factors that impact climate change risk perception. The literature also confirms that climate beliefs are linked to these experiences (see for instance Spence et al., 2011; Dai et al., 2015; Demski et al., 2017 and Bergquist et al., 2019).  Interestingly, out of all types of mass media included in the analysis (TV, newspapers, radio and the Internet), only exposure to environmental information on the Internet makes individuals 5.5 percent more likely to take climate change seriously. This indicates that nowadays people in Belarus get independent analytical and expert information on climate problems mainly from the Internet.

Environmentally Responsible Behavior

The same survey data was used to analyze environmentally responsible behavior among the Belarusian population. Although more than 72 percent of the respondents consider environmental change as a threat, the climate risk perception does not fully project into more sustainable behaviors – even within this subgroup. As illustrated in Figure 1, this belief is very well translated into such environmentally responsible actions as water saving, energy saving, mobility and repairing. The share of people engaged in these activities on a regular basis account for 62-73 percent.  These behaviors are however financially beneficial to the practitioner, and may largely be because of economic reasons rather than an effort to minimize the impact on the environment. At the same time, the survey shows that people in Belarus less often engage in such environmentally friendly actions such as waste separation, reduced use of plastic bags or use of own bag when shopping (see Figure 1). These actions are not linked to any financial benefits and are often associated with higher time costs (e.g., waste separation) or loss of convenience (e.g., decreased plastics use). This suggests that environmentally responsible behavior among the Belarusian population is largely determined by external factors, rather than a product of intrinsic care of the environment.

Figure 1. Frequency of Environmentally Responsible Behaviors Among the Respondents who Consider Climate Change as a Risk

Note: Distribution of the answers to the question “Could you please evaluate on a scale from 1 (never) to 4 (always) how often you engage in these behaviors for environmental reasons?” Mobility represents walking, biking or using public transportation instead of a car. Repairing means choosing to reuse or repair something (e.g. clothes) rather than to throw it away.

Conclusion

Survey results show that the urban population in Belarus recognizes global warming as a serious problem, with 72.7 percent of the respondents seeing climate change as a threat to the country in the next 20 years. However, these beliefs have not yet fully projected into green consumption behavior.

With this in mind, efforts to shift Belarusians towards environmentally responsive behavior should be strengthened. Endeavors need to be made to raise public awareness of environmental issues and to promote a sustainable lifestyle among the Belarusian population. In particular, and in addition to the Internet, the role of mass media (such as television, radio and print media) to deliver the message on the need for more sustainable consumption and greater involvement in environmentally friendly actions, ought to be increased.

References

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