All options are on the table
The last week’s developments are existential for Europe, and defence and energy policies have moved from being uncoordinated among European countries to be a supranational issue. Europe’s dependency on Russian gas and oil has weakened Europe’s military flexibility and as a result Europe’s energy policy will be totally changed in the years to come. Germany has basically said that all options are on the table including nuclear, coal, and LNG. The German Chancellor Scholz said in the Bundestag on Sunday that "We must change course to overcome our dependence on imports from individual energy suppliers".
LNG terminals and nuclear power plants are longer term solutions, and renewable energy projects such as solar and wind are medium-term solutions because scaling these projects up takes a long time. In addition increasing the mix of renewable energy sources come with extra costs in terms of energy storage to mitigate the intermittency of renewable energy production spikes.
Europe is galloping into a ‘gas crisis’ and given the recent mild weather in Europe means that Europe will likely get through this cold period, but the pressure is on for European countries to fill up natural gas storage before next winter and Russia will likely not be a helping hand here. Germany has said that it is already building up coal reserves and will extend the life of coal power plants. Many gas power plants can be switched to coal, so the rebirth of coal in the energy policy is very likely at this point in history.
Realistically the only short-term solution Europe has to its energy crisis and to change its energy security policy at the maximum speed is by focusing on coal power plants. There is plenty of coal reserves in the world with the US having 24% of the world’s coal reserves and Australia with the third largest reserves at around 14% of the world’s coal reserves. Coal is cheap, it is great for baseload electricity production, Europe can get massive amount of coal from geopolitical partners, but it is dirty which is a problem relative to climate change and the green transformation.
Combining coal power plants with carbon capture
Coal power plants are the quick and scalable solution to lower the impact from Russian natural gas, but environmental groups among voters would resist. However, one strategy could be to accelerate coal power plants with the contingency of implementing carbon capture storage (CCS) as fast as possible. Is it even possible?
First of all, it is important to notice, that when energy policy becomes a critical national security issue, the equation is no longer a free market decision; just like the green transformation is a policy decision that dilutes free market forces. The extra cost of CCS on top of coal power plant costs might just be the cost of energy independence from Russia and Europe will have to swallow that cost in the short term.
The good thing about CSS is that the technology is already here and it is coming down fast. The report Technology Readiness and Costs of CCS (March 2021) from the Global CCS Institute is a good 50 pages report providing the highlights of the technology.
CCS is basically a three-stage process of first capturing carbon emissions from industry and power plants and transport that CO2 via ships, trucks or pipelines, and the final step is the storage which requires the CO2 to be compressed to very high pressures of minimum 74 bar which can be achieved at depths of minimum 800 meters. Storage is typically done in depleted oil and gas fields or saline formations. The picture below shows the process of carbon capture in a power plant.