Climate has always taken a back seat, but the narrative pushed it to the front. The war in Ukraine has revealed that security is the priority, says proffesor Mariusz Ruszel from Rzeszów University of Technology, President of the Ignacy Łukasiewicz Institute for Energy Policy in an interview with BiznesAlert.pl.
BiznesAlert.pl: Russia’s invasion of Ukraine changes a lot, including in the context of energy. The security paradigm has transformed. In the face of these changes, is the EU’s current climate-neutral policy sustainable?
Prof. Mariusz Ruszel: One of the consequences of the war in Ukraine will certainly be a change in the dynamics of this process. Before the war, many countries and energy companies in the EU pledged to achieve climate neutrality by 2050. At the same time, many countries have recognised gas as a transitional fuel in the energy sector, as a bridge to renewable energy sources. What was evident before the invasion began was the high volatility in the price of energy resources, both oil and gas. The price of CO2 emission allowances was also unsustainably high. Even before the war, the International Energy Agency was pointing to the fact that a coal renaissance was coming. What happened in Germany in 2021, I mean a hike in CO2 emissions caused by an increase in coal usage for power generation, had started before the war. Coal started to come out of the shadows last year. This was, because its price stabilized. The war led to a frantic search for non-Russian gas, increasing pressure on its prices. Coal will benefit even more from competitiveness. The war will also negatively affect renewable energy sources. Smelters located in Ukraine do not work, which means that large amounts of steel needed for the development of renewables will not reach the European market. This means a possible slowdown in the energy transition in Europe, as individual renewable energy installations will become more expensive. This, in turn, will result in two processes. The first, which is already taking place, namely a coal Eldorado and growing revenue stream for coal mining companies. The second is that it is impossible to fully replace Russian gas with LNG supplies. This is due to the architecture of the European gas pipeline networks, which were built to facilitate a certain, mainly eastern, source of gas supply. A sudden change in this direction is not possible in all countries in the short term. One problem is the parameters for pressure drops, as well as the throughput of individual interconnectors, whose transmission capacities are contracted at almost 100 percent, while network codes and the “use or lose” principle do not function fully. Because of this the passability of these connections is limited. All this means that countries that still have a functioning coal power industry will prolong the operation of coal blocks for some time. The dilemmas in terms of redefining the architecture of energy security will be one of the main topics of the VII Scientific Conference “Energy Security – Pillars and Development Perspective”, which will be held on September 12-13, 2022 at the Ignacy Łukasiewicz University of Technology in Rzeszów. The event is supported by NATO.
Before the war, there were lively discussions about nuclear energy, for example, with regard to the EU taxonomy. Under the current conditions, are there any prospects for a faster development of this energy sector in Europe?
Firstly, there should be a change in the timescales for nuclear power plant shutdowns in countries that already have such power, and which, before the crisis, intended to abandon it. Countries that do not have this kind of energy may start to think about procuring it. It is not possible to abandon Russian gas, coal and at the same time not to invest in nuclear energy without damaging energy supplies. It is not possible to base the system on RES without developed energy storage, which is required to stabilize the network. Polish technology companies are dynamically developing this market. Small nuclear reactor (SMR) technologies can be the future of nuclear power, especially from the point of view of energy-intensive enterprises. For these companies, the small atom sounds particularly attractive. SMRs have been also acknowledged by the political class as they were added to Poland’s Energy Policy until 2040, which already mentions the development of this type of nuclear energy. I think that in the taxonomy, for example, the definition of green hydrogen will be modified. I believe that hydrogen will be split into two kinds- one that is emission free, and another that is not. The same can happen in the case of gas, that is, the inclusion of biomethane. The crisis will change the way we think about these things.
So is climate protection taking a back seat in the energy transition?
Yes, I think that’s what’s happening. Climate has always taken a back seat, but the narrative pushed it to the front. The war in Ukraine shows that security is the priority. The war has put some things back into place in terms of how we talk about them. Today, in the debate on transition, politicians have a choice between climate and security and choose the latter.
We need to talk about Poland in this context. How are we prepared for these changes?
A lot of good work has been done in Poland in the last few years. This is due to several politicians who have been consistent in their actions. We have an LNG terminal, it is being expanded, we have an expanded transmission infrastructure, we have access to the Lithuanian market, we have access to the Norwegian shelf through the Baltic Pipe, we have not given in to the trend of gas storage privatization, even though there were such plans. We haven’t allowed hostile takeovers. We have signed a number of gas contracts with the US and Qatar. That’s a really positive thing. However, domestic gas extraction is the proverbial fly in the ointment, as it is way behind our potential. The last gas deposit in Poland was opened in 2013, and the potential is much greater. Production has been stable for years at less than 4 bcm a year. Domestic gas is much cheaper than imported gas and has an impact on the Energy Regulatory Authority’s tariff for final customers. The more gas we have, the more stable the prices for the clients will be. Now is the time for reflection. Perhaps now is the time to reconsider whether we should return to the development of shale gas extraction, which was unprofitable at previous gas prices. Ignacy Łukasiewicz showed us the courage to think and above all to act, which is what we are trying to do within the framework of the project – History of the Energy Sector at the I. Łukasiewicz Institute for Energy Policy in cooperation with Bank Gospodarstwa Krajowego and the PGE Foundation – especially now in 2022, when we are celebrating the 200th anniversary of Łukasiewicz’s birth.
Interview by Mariusz Marszałkowski