EU invests 300 billion euros in green energy

The European Union (EU) is investing 300 billion euros in the transition to green energy and the rejection of Russian fuel, the head of the European Commission (EC) Ursula von der Leyen said on August 29 during a speech at the XVII International Strategic Forum in Bled, Slovenia.

“Now the EU, as part of the REPowerEU initiative (a European plan to move away from dependence on Russian energy resources. – Vedomosti), will allocate 300 billion euros of investments in order to make a green transition and end the era of Russian fossil fuels in Europe,” said von der Leyen (quote according to TASS). According to her, this is necessary to exclude the possibility of “energy blackmail” from Russia and completely abandon fossil fuels from the Russian Federation.

The head of the EC added that a third of all rare earth elements that are necessary for green energy are mined in China, and the EU should not become dependent on China.

Von der Leyen also noted that the agency is developing a plan for urgent reform of the electricity market in the EU against the background of the rise in gas prices. “We need a new market model for electricity that will work and bring back balance to the European economy,” von der Leyen said.

The statement of the head of the EC was made against the backdrop of a new round of gas prices in Europe. August 19 “Gazprom”said that he would stop gas supplies via Nord Stream 1 from August 31 for maintenance and scheduled preventive work. If technical malfunctions are not found, fuel pumping will resume on September 2 in the amount of 33 million cubic meters. m per day.

After this announcement, prices for September futures on the ICE exchange began to grow and by August 26 reached $3,500 per 1,000 cubic meters. m. On August 29, exchange prices for gas in Europe fell below $2,900 per 1,000 cubic meters. m after the statement by German Deputy Prime Minister Robert Habek that underground gas storage facilities (UGS) are filling up faster than planned, despite the limitation of supplies from Russia.

The European Commission announced the transition to renewable energy sources (RES) back in December 2019. Then the so-called European Green Deal was adopted, according to which the EU countries should become carbon neutral by 2050. For this, it was planned not only reduce CO2 emissions, but also from 2026 introduce a cross-border import duty. About 50 countries announced the refusal by 2040 of coal, which is considered a dirty fuel due to high CO2 emissions (Vedomosti wrote about this on February 1).

The International Energy Agency (IEA) estimated investments to achieve the Green Deal goal at $2.7 trillion from private companies and $1.2 billion from government funding. At the same time, in its May forecast, the IEA indicated the expected record volume of renewable energy commissioning in the world – at the level of 320 GW of power capacity. The previous forecast for inputs was increased for the EU by 3%, China – by 16%, Latin America – 17% (Vedomosti wrote about this on May 11).

At the end of July, the EU member states agreed from August 1, 2022 to March 31, 2023, to reduce gas demand by 15% compared to the average consumption level over the past five years. The corresponding resolution was signed by the EU Council on 5 August. As part of this plan, EU members will voluntarily reduce gas consumption and choose their own measures to achieve this goal. However, in the event of an “union warning” about the threat to energy security, consumption reduction will become mandatory.

According to Kirill Rodionov, an expert at the Institute for the Development of Fuel and Energy Complex Technologies, the current energy crisis has led to a surge in coal-fired generation, which grew by 14% in seven months of 2022 in annual terms, to 247 TWh. At the same time, the share of coal in the generation structure increased only to 16% (in January-July 2021 – 14%), Rodionov added. According to him, the potential of coal remains limited due to the withdrawal of these generating capacities.

The current energy crisis will lead to an expansion of the geography of the use of renewable energy sources and the number of sources used and ways to store them, the expert points out. In his opinion, the EU countries will start using not only wind and solar generators, but also hydrogen, and zinc-bromine batteries will also be used for energy storage, which do not require the use of special cooling systems.

Stock market expertBCS The world of investment” Yevgeny Mironyuk said that a significant part of the energy transition with a significant reduction in CO2 emissions will be completed by 2030. But the prospect of reducing emissions to zero by 2050 will depend on the unity of position of all EU members and on the economic stability of the association. Mironyuk recalled that in the summer of 2020, RES accounted for more than 40% of the total generation of electricity and heat. According to the expert, the EU does not count on the long-term use of mothballed coal-fired generating capacities. “More likely, this is an emergency measure designed to prevent an avalanche-like growth in gas prices,” Mironyuk explained.

Analysts say the energy transition will increase the EU’s dependence on rare earth metals (REM) supplies from China, but there are ways to diversify supplies. China controls, according to various estimates, about 90% of the rare earth metals market, so the real dependence of the EU on China may be more than 30%, says the head of the securities market analytics department Alfa bank Boris Krasnozhenov. Some of the rare earth elements are mined in Australia, America, Russia, and the United States can reopen their projects, the analyst added. “But there is no getting away from China in this segment, at least in the medium term,” Krasnozhenov summed up.

Head of the Moscow Energy Center B1 (formerly EY) Olga Beloglazova added that in order to achieve the set climate goals, Europe will need 35 times more lithium by 2050 compared to the current level of its consumption, and 7-26 times more rare earth metals. According to the expert, by 2026 the entire global market for processing products using REMs may double compared to the level of 2021.