A couple days ago, European Commission President Ursula von der Leyen gave a speech on the “State of the European Union” in front of the European Parliament in Strasbourg. She took the opportunity to make certain announcements, in particular on the energy transition referencing to a hydrogen bank project. Europeanscientist has interviewed the Italian-Belgian energy specialist Samuele Furfari, current president of the European Society of Engineers and Industrialists. Back in the days, he used to serve as a senior civil servant in the Directorate General for Energy of the European Commission (1982 and 2018). Author, among other things, of the book Hydrogen Utopia, he formulates here an enlightened analysis and a sharp criticism of the new plan as well as of the EU’s strategic choices contrary to the report for the Prodi commission in which he had actively participated.
The Europeanscientist : What did you think of the last State of the Union speech and the measures proposed by Mrs Von der Leyen?
Samuel Furfari : One may be surprised by her determination, since she repeated the words ‘I want’ six times. For an institution that does not have decision-making powers, since the European Commission is not the EU legislator, this seems surprising, to say the least.
The word solidarity appeared ten times. It was mostly used to assure that the EU will remain in solidarity with Ukraine. But the President did not use it in the context of energy policy, and with good reason, since her demand for solidarity last June in the form of a 15% reduction in natural gas consumption in the Member States for the benefit of states in a supply shortage situation – i.e. Germany – was not well received by the Member States; the minimal agreement reached in the Council is not a ‘proof of solidarity’ at all.
In a twist of logic, she was pleased to announce that the gas delivered through the pipeline from Russia is now only 9%. This should be frightening given Germany’s overdependence on Russian gas. What is presented as a success is sending shockwaves through his country, since 94% of the natural gas used in Germany is for thermal purposes, for which the renewables and hydrogen that Germany and the European Commission are calling for can do little.
The most important part of the energy speech is the recognition of the need to reform the electricity market. This is indeed an absolute necessity, because what we are experiencing is not sustainable. People will suffer from energy restrictions, and energy bills are exploding with impacts in all consumer goods. These crazy prices jeopardise the competitiveness of large industry, especially chemicals, and SMEs, as the rest of the world has not followed the same energy policy as the EU.
I would like to make it clear that, contrary to what many peddle, this failure is not the failure of liberalisation. Indeed, when Jacques Delors proposed the creation of a single market for goods and services by the end of 1992, it was also necessary to create this single market for electricity (and in a second phase also for natural gas). It was never about liberalisation, but about creating a large single market where operators and customers were free to set up or buy wherever they wished; it was about ‘opening up the market’. This is not just a matter of semantics. It is the hatred of the law of the market that still prevails in the EU that has transformed the notion of the ‘opening of the energy market’ into ‘energy liberalisation’. The best example is that the largest electricity company, the French EDF, is a state-owned company, which is the opposite of liberalisation.
This market opening started well, but in 2005 Angela Merkel demanded – in fact imposed – the obligation to produce renewable energies which were and still are outside the law of the market because they are expensive. The proof is that this obligation had to be forced – ‘mandated’ – by two successive directives (2009 and 2018) and that a third one will soon reinforce this mandate. The opening of the market has been manipulated in this way, and it is good that it is no longer called a market, but liberalisation is obviously even less appropriate. As long as the most expensive electricity production is mandated, ‘market opening’ cannot work successfully.
So, it is not the war in Ukraine that is responsible, but the obligation to produce wind and solar electricity and to give it dispatching priority in the grid.
TES. : One of the key measures in this speech is the hydrogen bank. You have written a book called Hydrogen Utopia. What do you think of this EU initiative? Is Brussels swimming in utopia?
S.F. : It seems that the idea of the hydrogen bank was decided without the consent of the other European Commissioners. This is probably why there is no information in this speech about this announcement, which even seems to be aired without an impact assessment.
What is the point of such a bank? The European Commission is already free to distribute funds as it sees fit, since in the framework of the post-Covid recovery it has received a generous envelope for decarbonisation, i.e. for the production of renewable and alternative energies. This bank would be endowed with 3 billion – 3000 million! – which will be distributed to develop a parallel market to the vast global hydrogen market – it is said – of ten million tonnes. The world produces 130 million tonnes of hydrogen a year without subsidies, mainly from natural gas – much of it with cheap Russian gas. It is used to reduce pollution from fuels, to upgrade the less noble part of oil into light oil products that are much more valuable and less polluting. But above all, hydrogen is the basis to produce ammonia, which in turn is the raw material to produce fertilisers and thus for reducing hunger in the world.
When we know that Russia is a major manufacturer of hydrogen and the leading exporter of nitrogen fertilisers, which are essential for the world’s food supply, we are left stunned by the idea of burning hydrogen produced in the EU with the help of subsidies. Burning hydrogen is like burning a Louis Vuitton handbag to produce heat.
I recall that in its REPowerEU strategy on 18 May 2022 for its move away from Russian gas, the European Commission announced its intention to import hydrogen from Ukraine ‘as soon as conditions allow’. But how is this possible when the country is so dependent on Russia for energy, where wind farms are almost non-existent, let alone the luxury of solar panels? The Dnieper-Donetsk region – where war is raging – accounts for 90% of Ukraine’s natural gas production and is likely to be lost for some time, as is the Skifska Black Sea gas basin to the west, off Crimea. In 2019, almost half (45%) of the coal consumed in Ukraine was imported and Ukraine bought 35% of its energy consumption from abroad. In 2020, four nuclear power plants with 15 reactors generated more than 51% of the total electricity supply. It is therefore understandable that the Zaporižja power plant, the largest nuclear power plant in Europe, has attracted worldwide attention. This green optimism towards a country that will have to undergo a profound energy reconstruction is surprising. Therefore, there is no green electricity in Ukraine, and it will be a long time before the country can afford it. It is surprising that the EU is willing to abandon fossil fuels and almost nuclear power and import electricity produced in a country that uses only that.
All this seems to prove that hydrogen is nothing more than a political catalogue that has little to do with factual analysis and a systemic and geopolitical vision. In my book ‘The Hydrogen Illusion” I give many reasons why this pipe dream imposed by Germany to save its EnergieWende will not come true.
This money would have been a thousand times more useful for insulating public buildings, which are often energy sinks and will remain so because the public authorities are too indebted. Financing hydrogen instead of insulating local authority buildings is an appalling aberration.
TES. :How do you view the development of the energy price crisis? How much of the responsibility is linked to the war in Ukraine? Should we persevere in planning the energy transition as the EU wants to do?
S.F. : Energy prices started to rise a long time ago. In my book “Life without modern energy”, I wrote in 2016, “in the EU, the price of electricity for domestic use rose by an average of 4% per year from 2008 to 2012, or 20% in five years. In France alone, the Energy Ombudsman estimates that 3.8 million households are in fuel poverty, i.e. around eight million people.” Before the Ukraine war, in UK fuel poverty was striking 20 million people.
The war in Ukraine reveals the consequences of the European energy policy of recent years.
I would like to point out that this drift is recent. European Scientist has already published my views on this issue, recalling how the Prodi Commission, with Loyola de Palacio as Vice-President in charge of energy, had a clear vision of what needed to be done to ensure the EU’s security of energy supply: diversify energy sources (the current European Commission is doing the opposite as it only advocates renewables and hydrogen), diversify supplier countries (and we have seen our dependence on Russia) and diversify supply routes and means (and we see the glaring lack of gas, but also electricity infrastructure).
In 1973, during the first terrible oil crisis, the European Commission at the time reacted very well: it launched a technological programme called the “Oil and Gas Demonstration Programme”, which made it possible to invent new technologies for exploiting North Sea hydrocarbons and to get us out of the clutches of OPEC. It accompanied the extraordinary development of nuclear power and launched a demonstration programme to use coal in power plants in the cleanest way possible, because at that time a lot of electricity was produced from oil products. This enabled us to overcome not only the 1973 crisis, but also the 1979 crisis. Hats off to the European Commission at the time!
Today, instead of safeguarding adjustment variables in the very complex energy equation, the EU is doing the opposite by eliminating them and betting everything on decarbonisation while despising nuclear electricity which does not produce CO₂.
I’m sorry to hear EU leaders saying we need to accelerate the current energy policy when their failure is so obvious. Do they really want people to continue to be unable to pay their bills and be cold?
This post is also available in: FR (FR)