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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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IEA Chief: Don’t Blame Renewables For Europe’s Energy Crunch

  • IEA Chief: The energy squeeze in Europe has nothing to do with the continent's energy transition plans
  • European utilities are stocking up on coal in anticipation of lower renewable energy output volumes during the winter
  • Spain has warned the European Union that its energy transition plans may not survive the test of sky-high electricity prices

The energy squeeze in Europe has nothing to do with the continent's energy transition plans, the head of the International Energy Agency Fatih Birol told the European Parliament's energy and environment committees.

"It is inaccurate and unfair to explain these high energy prices as a result of clean energy transition policies. This is wrong," Birol said, as quoted by Reuters. Further, he added that EU governments needed to keep their eyes on reducing global warming, even when times are volatile, referring to the sky-high gas prices in Europe.

The official did not miss the chance to take a stab at Russia, either, saying, "Some major suppliers are reluctant to send additional gas in these difficult days to Europe and elsewhere, even though in my view it was an opportunity to underscore that they are a reliable supplier," echoing his own earlier remarks that urged Russia to send additional gas volumes to Europe.

Gazprom has insisted that it has fulfilled its contractual obligations to European clients, and no one in Europe is disputing that. However, questions are being asked about Gazprom supplying less gas on the spot market and into its own storage facilities across Europe, which the state giant has explained with the prioritization of filling up its domestic storage.

Meanwhile, European utilities are stocking up on coal in anticipation of lower renewable energy output volumes during the winter, Bloomberg reported, citing Citigroup commodity analysts.

"A tight gas market should continue to pull EUA [EU carbon emission permits] prices higher," Citigroup analysts led by Edward Morse said. "Furthermore, coal use in Europe is expected to increase through winter, on lower renewables power generation and planned closures of some nuclear power generation capacity."

What's more, Spain has warned the European Union that its energy transition plans may not survive the test of sky-high electricity prices. In a letter, Spain said the EU's efforts to keep emissions in check "may not stand a sustained period of abusive electricity prices."

By Irina Slav for Oilprice.com 

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  • Mamdouh Salameh on September 28 2021 said:
    IEA Chief Fatih Birol is in a muddle about energy policies because he has to serve various interests. That is why his utterances on energy are sometimes contradictory. Examples abound.

    When the IEA chief claims that the energy squeeze in Europe has nothing to do with the continent's energy transition plans, he is trying to curry favour with the European Union (EU) and the environmental lobby. Fatih Birol must know full well that the EU’s rash policies to accelerate energy transition at the expense of fossil fuels and the incessant pressure by environmental activists and divestment campaigners on the European oil supermajors to divest of their oil and gas assets have been adversely affecting production and also investments without affecting the global oil demand for them thus creating an oil supply deficit and skyrocketing oil prices.

    Taking a stab at Russia is one way of endearing himself to his masters in Washington DC. However, the truth is that Gazprom has fulfilled its contractual obligations to the EU and no one in Europe is disputing that. Russia won’t be pressured to ship extra gas supplies to the EU via Ukraine. If the EU wants more gas supplies, then the onus is on it to stop playing politics with Nord Stream 2 and facilitate the issuing of a temporary operational licence to enable it to bring 50 billion cubic metres (bcm) of additional Russian gas supplies to the EU. The IEA chief should know by now that the EU needs Russia far more than Russia needs it. The EU can’t replace Russian gas supplies while Russia has all the options it needs. It can easily shift its earmarked supplies to the EU to China instead and also to Japan and India as well.

    Another example of his muddle is that a month ago, Fatih Birol called for stopping any new investment in oil and gas production and exploration from 2021 onwards in what became known as the net-zero emissions 2050 roadmap. But it was overwhelmingly ridiculed and dismissed with the Saudi Energy Minister Prince Abdul Aziz bin Salman calling it dismissively as la-la-land roadmap. Yet a few days later, he called on OPEC+ to increase oil production in support of the Biden administration asking OPEC+ to increase production.

    Yet, Spain contradicted the IEA chief when it warned the EU that its energy transition plans may not survive the test of sky-high electricity prices.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on September 29 2021 said:
    Actually the USA is sending massive cargos of lng to Brazil instead of Europe because of an horrific drought in Brazil and the fact that the Brazilian economy is far less a competitor and an obvious cooperator with US and Canadian economic growth plans.

    "Europe has to compete on the open market for supply" and quite simply but for distributed grid in Germany this would not even be possible at the moment ("King Coal" not oil in the least.)

    Hydroelectric power is a highly unstable fuel source as China has now proven beyond all doubt...with many other examples easy to sight going on decades now (Venezuela.)

    Oil cannot be used as a substitute for grid scale electric power and hence my view of the correct current price in US Dollars for oil still being on or about *NIL* as it simply does not work well for electricity production with plain old wood chips a better substitute.

    Either way this remains a stupendous shortage of US Dollars problem at the moment for the World and not an energy crisis which has already left the building as a wholesale catastrophe for Europe and China.

    Hard to see what the energy demand is period when the electricity is not there in the first place.

    Should make for an interesting IEA report today absolutely! No power crisis in the USA in the least at the moment.

    Long US Treasuries
    Strong buy
  • Allen Kellaway on September 29 2021 said:
    "Don’t Blame Renewables For Europe’s Energy Crunch"
    There was a blackout in Texas last February. We were without electricity for 27 hours in 0 degree weather. Damn officials who had shut down twelve coal power plants said the same thing.

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