22.10.2021.
Author: Kori Udovički, PhD
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The Serbian public is under the misconception that green energy is somehow „to blame“ for the energy crisis. Even worse, the impression has been created that it is good that Serbia is „not giving up“ its coal, just a few weeks before the crucial global climate summit in Glasgow. However, even if it were true that green policies are „to blame“ – it would be a big mistake to rejoice that we have ignored this effort so far. Global warming has brought an unusually large number of examples of extreme climate events in the past year alone, for which green energy is actually the only „cure”. Humanity is running out of time to keep global warming between 1.5-2oC – the limits beyond which our life on Earth would become unbearable. If we miss that train, Jeff Bezos is preparing for Mars. And where will Serbia go? Awareness of the necessity of change has entered the main political currents with full force with the adoption of UN Agenda 2030… We are still ignoring it.
The concern of the Serbian public about the energy crisis is subsiding, but the completely wrong impression remains that green energy is somehow „to blame“ for it. Even worse, the impression has been created that it is good that Serbia is „not giving up“ its coal, just a few weeks before the crucial global climate summit in Glasgow. It is not even mentioned in Serbia. Some of the recently adopted green European policies have contributed to the additional „surge“ in energy prices, but the causes of the current crisis are different. One is the broader unpredictability of supply and demand (not just for energy) in the context of the global economic recovery from the pandemic crisis, especially in the case of China. The second is the increased manifestation of climate change, for which green energy is actually the only „cure“. However, even if it were true that green policies are „to blame“ – it would be a big mistake to rejoice that we have ignored this effort so far. Humanity is running out of time to keep global warming between 1.5-2oC – the limits beyond which our life on Earth would become unbearable. If we miss that train, Jeff Bezos is preparing for Mars. And where will Serbia go?
The pandemic and the unstoppable growth of Chinese demand
During last year's lockdown, fossil fuel prices plummeted – oil even had a negative price at one point! Just as the slow global transition to green energy sources was not „to blame“ for that, so the „rush“ in that direction is not to blame for their dizzying rise now. This time, on top of the already widespread difficulties in predicting demand for everything, including energy, came an unexpected, record-high increase in Chinese demand for thermal energy (gas, coal, nuclear energy). In the 12 months ending in August, Chinese consumption increased by as much as 14% compared to the previous period, even though its economic growth is relatively slow. China's demand for gas grew even faster, but not because China gave up coal, but because its consumption, which is at a record level, grew more slowly. Coal production would have increased even more if the safety standards for mine operations had not been tightened after a series of accidents in which miners lost their lives.
China has not given up coal, nor is it (yet) reducing its production. For now, it is only (reasonably and understandably) trying to meet its insatiable energy needs with an increasing share of renewable energy and a much slower growth in coal consumption. Although there is no doubt that it has embarked on the path of renewable sources due to its traditionally long-term view of the future, the fact is that the unbearable pollution of Chinese cities has provided an even more urgent motive. It is also evident that in this specific case, the problem lies primarily in the imbalance in the Chinese energy market – to which the Chinese authorities have responded in the only possible way in recent days – by raising electricity prices for industry, while for households, for now,.
Extreme climate and geostrategy
On the other hand, global warming brought an unusually large number of examples of „extreme climate events“ last year, which affected both the surge in demand and the drop in energy production. First, the winter was extremely cold and the summer extremely hot, so energy consumption (especially gas) in winter for heating and in summer for cooling devices increased. At the same time, due to extreme rainfall and floods, coal production in Indonesia and Colombia, key suppliers to the world market, fell, and drought (you guessed it – again extreme) in Brazil reduced Brazilian hydropower production and drastically increased its coal and gas imports. On top of all this, the underperformance of wind turbines in the North Sea due to unusually weak winds.
should also be mentioned. Geostrategic factors, which are not the subject of this text, should also be mentioned here. It is certain that Russia „hesitated“ at least a little with gas supplies in the hope of encouraging the opening of the Nord Stream 2 pipeline. On the other hand, China's difficulties were also contributed to by sanctions on the supply of coal from Australia (which are now, however, quietly circumvented).
If only the problem were the accelerated transition to green energy! On the contrary, greenhouse gas emissions are at a record level. Accelerating the construction of renewable energy generation capacity is the only possible long-term response to this, and to the broader climate crisis. The International Energy Agency estimates that public sector construction is currently three times lower than necessary to keep global warming below the desired limit. Fortunately, the EU's response to the current situation is to increase planned investments in the energy transition. However, it is questionable whether the current crisis will weaken the measures that the world will be prepared to commit to in Glasgow. And it is necessary is that they finally produce real changes in the way we live.
Substitution of theses instead of a clear account
On this issue (as on many others), a substitution of theses is persistently being presented to the Serbian public.
„Coal ensures our energy independence.“ And what would be the problem if we relied „independently“ on our own renewable energy? Relying solely on coal secures us for the next 30 years, with discord and a lack of minimum solidarity with the responsible world and our descendants. By relying on renewable sources, Serbia can ensure its „independence“ for „ages and ages“ because there is no doubt that Serbia is significantly endowed with this potential (although we still don't have an honest assessment of how much, and at what cost) and, let's be clear, for now, „reliance on renewable sources“ certainly includes the necessary reliance on thermal energy for so-called „baseload production“. „With coal, we can sell electricity when it's expensive and buy it when it's cheap.“ We can do this even if we start gradually replacing coal with renewable sources.
Energy independence is a privilege of a small number of countries, which Serbia certainly is not among. But even they, not only the USA but also, for example, Saudi Arabia, have enthusiastically started investing in renewable sources. The fact is that renewable energy requires more energy trading, and for us, this means deeper integration with the European energy market. But relying on gas, which has been highlighted positively these days, does not bring energy independence; let alone oil. I'm not sure we're getting gas at an exceptionally favorable price – but if that were true, it would be even clearer that there is no independence there. In economics and politics, no one gives anything away for free.
The real reason for resistance to green energy in Serbia is political economy. One aspect is that it undoubtedly (for now) costs more than coal-based energy. Another is that a whole range of powerful, and even many corrupt, interests are tied to coal. These are difficult factors for a populist government. However, they are not insurmountable – one only needs to consider that the cost of fossil energy should also include what it costs us in health and in corruption.
Responsibility of „ordinary“ citizens
The fundamental question, however, is responsibility. We can argue about how much „small and poor“ Serbia should contribute to the fight against climate change. But we cannot ignore this fight. It is irresponsible, and also wrong, to lull ourselves into the notion that the green transition is something imposed on us by the „evil West.“ On the contrary, the strongest pressure for action has been created by „greens“ who have demonstrated for years against global capital and the powerful, and as such were „marginal“ in relation to the main political currents of the West. The facts about climate change are persistently pointed out by the panel of the United Nations, convened three decades ago, which today numbers more than 600 of the most eminent global experts. The most vulnerable to climate change are actually the poorest – their small island nations, for example, will be submerged, and their arduous semi-desert agriculture will be completely thwarted.
Awareness of the necessity of change has entered political mainstream with full force with the adoption of the UN Agenda 2030, i.e., the global sustainable development goals back in 2015. We are still ignoring them. But fortunately for our grandchildren, „ordinary“ citizens of the West are increasingly engaged, and awareness is now reaching an increasing number of „powerful people.“ This May, in one day, an „ordinary“ judge in the Netherlands ordered the company Royal Dutch Shell to reduce its net emissions by 45% by 2030, and a small, so-called „activist“, hedge fund „Engine No 1“ achieved a victory for a similar change in the policy of the largest oil company in the USA – ExxonMobil. The fund achieved this by engaging in raising awareness among large shareholders, which are the pension funds of ordinary people, to vote for change at the company's assembly. On the same day, shareholders of Chevron, the second-largest American company, also voted for emission reductions. It is no longer important whether shareholders vote this way out of awareness for the future of their children, or because it is foolish to hold shares in a company that does not accept the fact that demand for their product will fall, and perhaps one day disappear. What is important is that it indicates that there is no longer any doubt about the change.
At the beginning of the text, I made a small joke. The richest man in the world, the owner of Amazon, Jeff Bezos, recently made his first space flight in his private rocket: he doesn't say he's preparing an escape to Mars, but believes that humanity will have to move its polluting production „somewhere out there.“ I trust that this will not be necessary. In any case, Serbia cannot and should not try to remain „independent,“ but rather isolated and poor. The green transition leads us to the future. It is better to manage this journey ourselves, wisely and responsibly using our potential, than to be forced by someone while we lag behind.
