Streetwise Professor

May 4, 2019

Germany and Sweden Want to Reduce CO2 Emissions in the Worst Way–and Are Succeeding!

Filed under: Climate Change,Economics,Energy,Politics,Regulation — cpirrong @ 5:46 pm

I’ve written often about the economic nightmare that are renewables, specifically wind and solar power. They are terribly inefficient because they are intermittent, and they are diffuse. The intermittency requires maintaining substantial backup capacity. Their diffuse nature means that they are incredibly land intensive. I should also add that renewable energy sources are not miraculously located where loads are. Indeed, they are often located far, far away from load, and therefore necessitate substantial investment in transmission.

How inefficient? This recent University of Chicago study documents that the difference in cost between renewable and conventional generation dwarfs any possible benefit from CO2 reduction. To reprise the old joke: governments that subsidize renewables want to reduce CO2 emissions in the worst way, and they have.

Heretofore the Germans have been the world’s leader in renewable idiocy, with their Energiewende debacle, which has raised power costs to among the world’s highest, and not led to decreases in CO2 emissions (due mainly to the intermittency problem mentioned above). Well played! So how are the Germans going to deal with this? Perhaps by making electricity MORE expensive, by adding a CO2 tax on top of the CO2 cap and trade scheme.

I would say that will be hard to top Germany’s leading position in the ranks of renewables retards, but the Swedes are giving it a gallant try. So get this. The Swedes are replacing cheap zero carbon power (from four nuclear plants) located near load centers like Stockholm with expensive zero carbon power produced my windmills in the frozen back of buggery in the far north of Sweden. One big problem, they are woefully short of transmission capacity from back of buggery to the places where Swedes actually live and work.

This will make power more expensive, and is already constraining economic activity in Sweden. Moreover, it is raising the risk of blackouts.

So the Swedes may be replacing reliable carbon free electricity with electricity free electricity. That will be fun in the winters, eh?

Realistic people who believe that it is necessary to reduce carbon emissions understand that nuclear power is the efficient way to do so, and will become even more efficient with the development of new reactor technologies. It would be far more economical to invest in improvements in nukes than vast wind and solar projects.

But the Swedes appear to still be in the thrall of post-Three Mile Island hysteria (note that the decision to close the plants was made in 1980, a year after TMI) just as the Germans responded to post-Fukushima hysteria by deciding to close all their nukes.

That is, the energy policies of supposedly sophisticated societies are being driven by bugbears and bogeymen–a morbid obsession with CO2, and a view of nuclear power shaped by a nearly 40 year old Jane Fonda movie. This is leading them to force people to rely energy sources that are monstrously inefficient, making said people poorer. (Not to mention that a monomaniacal focus on CO2 leads them to overlook the total environmental impact of wind and solar, which is not a pretty picture.)

The Swedes are also leaders in a modern-day Children’s Crusade (that worked out great the first time, right?) to impose their climate bogeymen on the rest of the world. A rather unfortunate Swedish teenager is going around lecturing the world on the need for drastic action on CO2 now. This is an emotionally manipulative use of children as a substitute for actual argument and analysis and facts. Cynically, it exploits the reluctance of people to criticize children (even though they know nothing, or next to it), especially ones (in the words of the immortal Hank Hill) that ain’t right.

And behold what policies the Swedes want to visit on the rest of us. What they do in Sweden is their business, but they should keep their noses out of everyone else’s.

Makes me more glad than ever that my ancestors bugged out for Minnesota 140 odd years ago. But recent research suggests that they are to blame for Sweden’s current idiocies! I’ve long hypothesized that more independent souls are far more likely to emigrate, leaving the conformists behind. And recent research focusing on Scandinavia provides support for this hypothesis:

The researchers suggest the migration flows, which were small relative to the native population of America but equivalent to about 25 per cent of the total population of Scandinavia, changed the character of Norwegian and Swedish society by removing the most ambitious and independently-minded people.

So Scandinavia’s loss was America’s gain. And if their energy policies are any indication, they are still paying the price today.

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  1. I suppose this is why the German establishment is so desperately eager to finance Russian and Iranian terrorism: they know they need to maintain that base load somehow, and closing down nuclear and Braunkohle does not leave them many options. At least in case of WWIII they will not have to answer for the Energiewende debacle.

    But it does not look much better on the other side, either. I’ll just leave this tweet here:

    Steven Pifer

    Regarding #Russia & #Venezuela:
    – Pompeo, May 1: Russia’s interference is “destabilizing” Venezuela
    – Bolton, May 1: “it’s not where the Russians ought to be interfering”
    – Trump, May 3: Putin “is not looking at all to get involved” in Venezuela
    Do they talk to each other?

    Comment by Ivan — May 5, 2019 @ 12:58 am

  2. In the late 70s an Open University research group developed the idea of ‘energy accounting’ and Ian Boustead turned it into a commercial success, for a while.
    The idea was that instead of pound notes a project (a building or a windmill, say) should be measured by its energy consumption, from cradle to grave.
    That included energy costs of sourcing the materials to energy costs of disposal at end of life.
    You can envisage the scale of the process and the amount of data required.
    In those days the worst of all possible worlds was to create electricity, transmit it over many miles, and turn it back into heat.
    In the UK we now ship US wood chips across the Atlantic to burn in an old coal fired power station, transmit the electricity and turn it back into heat.
    This is the result of an unthinking and unknowledgeable focus on carbon dioxide as the single parameter of virtue.
    Based on this people of good intention are wreaking havoc on our environment and committed researchers from those days have given up in despair.

    Comment by Adrian — May 5, 2019 @ 3:18 am

  3. You’d be surprised what children can comprehend. As the current track record stands, adults have acted the way we would expect children to act:

    Tell them CO2 is an issue, what do they do? They buy large vehicles that emit more of the gas. Show them a few ice cubes and tell them climate change isn’t real. How do many of them react? They believe this idiotic nonsense as if they’ve never heard of the fact that while it’s one season in one country it’s concurrently another elsewhere on this planet.

    Apparently the word “global” is incomprehensible to many adults when it comes to anthropogenic global warming and the resultant accelerated climate change. It’s also apparently hard for many adults to do basic math that high school kids would easily manage such as calculating the percentage in terms of mass of our emissions relative to atmospheric mass estimates or a direct measure of ppm released anually based on available data excluding any natural sequestration. I’ll give you a hint “professor”, it’s multiple times higher than the annual increase in CO2 ppm we see in our atmosphere.

    As for blackouts, I haven’t heard of any that would warrant mention in Germany even while they are currently running up to 77% renewable energy in their grid. This year, the average for multiple months has been close to or above 50% and there were 16 days in a row where the average was about 60% or above.

    Comment by David Jones — May 5, 2019 @ 3:55 am

  4. Btw, since CO2 respects no national borders what countries emit per capital and in general is very much everyone else’s business since we all have to suffer the consequences of overindulgent, rampant emissions.

    The only region to have reduced emissions last year was the EU so these countries are clearly doing something that works.

    How you lower your emissions is your business but when you don’t lower per capita and general emissions substantially and instead increase emissions while at the same time pushing the fuels that are costing this issue globally as much as humanly possible, it becomes everybody’s business.

    Comment by David Jones — May 5, 2019 @ 4:09 am

  5. “intermittent, and … diffuse”: in other words, they are low-density both in time and space. I used to sympathise with the idea of wave power – far higher density is available. Alas, that high density lies behind how hard it’s proving to make the idea practical and economic.

    An aside: an entrepreneur once sought my advice on wave power: I declined his offer when I realised that he didn’t distinguish it from tidal power.

    Comment by dearieme — May 5, 2019 @ 6:09 am

  6. My son tells me (so I can avoid doing any research, or bearing responsibility for a lie) that NASA is designing a new Mars Rover, shortly to be launched. The Rover will be powered by a small nuclear plant and thus independent of solar power source, immune to dust storms and take up much less space.
    If it is possible to safely launch a nuclear plant into space then I want one in my back yard.

    Comment by james harries — May 5, 2019 @ 6:34 am

  7. I don’t really understand the hate for wind and solar. You live in Texas. West Texas wind costs ~$15/MWh to put in the ground, today. That’s with a $30/MWh tax credit for the first ten years, so if you do the math on levelizing it, it’s say a $28/MWh resource without subsidies. Sure, individually it’s quite unreliable but add lots of turbines and law of large numbers makes that output quite predictable. Maybe wind isn’t enough. Solar in TX is $25 MWh, with the 30% ITC so $33 or so without. Again, individually unpredictable but collectively pretty easy to forecast well.

    New gas is a $50-60/MWh levelized resource (with cheap American gas, much more with TTF based pricing). Sure it’s dispatchable, but I can buy a lot of batteries in addition to wind and solar on the $30/MWh cost advantage and erode most of that dispatchable benefit from gas (e.g. frequency regulation, spin, etc).

    Nuclear is say a $200/MWh resource without counting the massive subsidies (backstop insurance) needed. How is that competitive unless miracles are assumed?

    Looking at the world today, I can’t see any reason not to go 80+% wind and solar with a chunk of batteries and some backstop gas thrown into the mix. It’s the cheapest option on the board, has a pretty good emissions profile, and those that have gone the furthest in that direction (e.g. California) have had no reliability issues to speak of. Of course, they are paying a high cost because they did a lot of contracting in 2008-2010 before the cost curve came down on wind/solar but that doesn’t matter for contacting today or what should be done. I would note, that’s what direction the Texas grid is going and not because of policy mandates but because it makes economic sense.

    Comment by WBP — May 5, 2019 @ 3:40 pm

  8. @WBP–Read the U Chicago piece. The basic point is that “levelized cost” is BS. And at the end of the day, if what you say is correct, how come there is a very strong positive correlation between fraction of power generated with renewables, and power prices?

    Comment by cpirrong — May 5, 2019 @ 9:12 pm

  9. Every time I hear an environmentalist harping about carbon emissions I feel like pouring a gallon of oil paint down a mountain stream.

    Comment by I.M. Pembroke — May 5, 2019 @ 10:11 pm

  10. ‘The idea was that instead of pound notes a project (a building or a windmill, say) should be measured by its energy consumption’: my memory – open to correction – was that there turned out to be a strong positive correlation between the cost in pound notes and the “energy cost”. Rather unsurprising, I’d say.

    ‘add lots of turbines and law of large numbers makes that output quite predictable’: nope. It might if each turbine were exposed to winds that were uncorrelated to the winds that affected the other turbines, but that’s not how weather works.

    ‘those that have gone the furthest in that direction (e.g. California) have had no reliability issues to speak of’: in Denmark and South Australia they have had serious problems, and that’s even though Denmark has indirect access to the equivalent of pumped storage in Norway.

    ‘It’s the cheapest option on the board’: then why the need for holy writ about it? If it were cheapest everyone would be doing it spontaneously.

    Comment by dearieme — May 6, 2019 @ 8:50 am

  11. I had seen this study a few weeks back and am not the most impressed with it. It is basically a correlation study and did seem to dig too deep into underlying causes.

    That said, I think the issue is more one of misguided regulations that impose high costs on consumers as opposed to possible alternatives. I think Texas has been actually highly successful with minimum of direct regulations and I think @WBP totally misses this the value of the Texas approach.

    ERCOT (grid operator for roughly 80% of the state) is an Energy Only market. The RFP, ambitious when passed was rapidly exceeded by actual economics that made wind viable without direct consumer generation subsidies. But the second policy action was the effective subsidy with the CREZ lines. This was an $8 Billion investment, these are regulated utility investments, so a rough cost of service would be about $1 Billion per year. Depending on sources you read, you can say it was about 10 GW incremental capacity on the low side or 20 GW capacity on the high side. That would give one about a $15 to $30 GWH cost. But what the legislation did was merely add it to the general rate bases for the various utilities. give “rolled” in “postage stamp” rates so all consumers bear the costs on all electricity consumed which makes the cost much lower on average at roughly $3/GWH. Now everybody pays it, although different rate groups and utilities probably have different effects.

    Impact on deregulated customers is somewhat masked by the relative disinterest or lack of sophistication of consumers who are able to buy from any one of scores of marketing companies. A lot of people are either poor shoppers, poor at understanding or just don’t care that much. So the stats that the EIA collects greatly overstates what a Streetwise Consumer can get for a rate. Commercial and Industrial customers have done fairly well.

    The other aspect of Texas is that those CREZ lines is they are not fully loaded when the sun shines most of the time because high winds are a mostly nighttime phenomenon. So a lot of capacity will be available for utility scale solar. That is the next wave of development. Quite simply, the most expensive place to put solar panels is on the roof of an existing house. Utility scale can undercut that cost by a factor of three.

    That brings up the issues with California and many other states and Germany. They pushed solar very early when costs are high and have market structures that will be imposing those costs for a long period of time. Further, California has so much “social” subsidies in their rates that their costs to consumers are easily two to three times what rates are in Texas or even Washington State. On the margin they are charging many consumers $330/Gwh (33 cents per kwh). Put those numbers in your Tesla and see how much you save against even California Gasoline (you won’t).

    Finally, since Texas is energy only entry has been easy for combined cycle plants and the Texas fleet is very modern and we have the lowest heat rates. ERCOT and the market has effectively integrated the renewables.
    What will be interesting is we will have a very low reserve margin in TExas this summer, so there will be a lot of real world natural economic tests of the Texas approach.

    I am well prepared to cut back on the AC this summer and I’d much rather have the Texas way of doing things that the approach of California, NY, MA, NJ and many other states and the approach of the SC and GA New Nuke Construction boondoggle.

    Comment by JavelinaTex — May 6, 2019 @ 9:47 am

  12. Play stupid games, win stupid prizes.

    Re. emigration: as they say about Scotland, ‘Anybody with any ‘get up and go’, got up and went.

    Comment by Global Super-Regulator on Lunch Break — May 7, 2019 @ 12:07 am

  13. Not particularly impressive piece for an academic, but I guess this blog isn’t subject to the usual peer-review process (given the comments to date…). More a case of pick two of the worst examples of countries who are not exactly blessed with renewable resources who just so happen to be top of the American right’s bete noir list (Sweden? Grrr! Germany?? Double GRRR!!) – a bit of red meat for your readers, no doubt. Why didn’t you pick somewhere like us in the UK and Denmark, with our enormous and growing offshore capacity (no problem with land there), or numerous other countries with growing onshore capacities (Spain, Portugal)? Spoiler alert for Craig’s readers: Wind (and PV) is performing rather well is other parts of Europe and beyond.

    FWIW I’m as ambivalent to renewables as I am to nukes or gas generation (depending on its source). Each has their merits and disadvantages, but of course you know this.

    PS It does make me LOL heartily when people cite nuclear and government subsidies in the same piece without any hint of irony, as in nuclear the mother-of-all-beneficiary-of-global-government-subsidies-for-the-past-century-and-for-centuries-to-come…

    Comment by David Mercer — May 7, 2019 @ 4:45 am

  14. “Nuclear” and “efficient” should never, ever be used in the same sentence. From a thermodynamic POV, maybe the worst efficient conversion possible. Yes, I am a nuclear engineer, no I didn’t design, or work on TMI or Chernobyl. The only thing that makes nuclear workable is the super high specific density of the energy. Fission is second only to fusion(we will never harness that) for energy density. The conversion steps are almost comical to the point of absurd. This is only compounded by the triple stage condensing type used in the EU.

    Not just that, but the true reality life-cycle costs of nuclear power are astronomic. Burying spent nuclear fuel in caverns for thousands of years of decay is idiotic. But – breeder reaction cycle would be ideal, if the politicians would shut the hell up and let us do nuclear power correctly. A U-233/235 or one of the Pu type of breeder reactors would provide enriched fuel for more than a thousand years. The fuel would outlive the reactors by many renewal cycles. Even a poor efficiency breeder is a 100 times better than light water.


    Comment by doc — May 7, 2019 @ 6:04 pm

  15. @doc Reminds me of a presentation I recently attended on the progress of research into fusion (I live quite close to JET). Despite all the incredible physics, materials, engineering etc going on, the researchers conceded that any device would ultimately still be a giant kettle generating superheated steam for turbines.

    Funny also you should mention breeders. Way back when I used to be involved in handling spent fuel from Dounraey (first job out of uni). Always thought it was a ‘least-worst’ option. Maybe the Chinese will resurrect interest in it as they have with Thorium.

    Comment by David Mercer — May 8, 2019 @ 2:40 am

  16. 1. Unreliable wind and solar are screwing up grids all over the world, not just in Germany and Sweden. The only careful studies I’ve seen of “deep decarbonization” imply that the deeper you go the lower the final fraction of solar and wind you should see and the more nuclear power.
    Batteries and other forms of electricity storage (pumped storage is probably the most practical now) are orders of magnitude too expensive to be taken seriously as important components of the electricity supply.

    2. Nukes have become extremely expensive to build, but mostly because of a) collapsed supply chains and a loss of competence due to the extremely low build rates over the last decades and b) ratcheting up of safety requirements so that their deaths per kilowatt-hour, already the lowest of all power sources, now have to be orders of magnitude lower than alternatives. How could older plants be built and remain profitable but newer ones are uneconomic? It’s the consequence of years of anti-nuke public policy.

    3. Fusion seems unlikely to be a practical power source unless the even higher Coulomb barrier for p-b11 fusion can be overcome, since that reaction releases almost all of its energy in the form of electrons that could be directly converted into useful power without the giant teakettle and turbines. A D-T reactor whose energy is mostly emitted via neutrons (!) not only retains the teakettle and turbines but compounds that with a nasty set of problems of embrittlement and neutron absorption.

    Comment by srp — May 8, 2019 @ 7:05 pm

  17. @CP:

    1. I said in my comment that buying renewables 10 years ago sucked. It doesn’t today but PPAs from 2010 or so are $150+/MWh. So no shit that the buyers from then have higher than average power prices. Early adopters paid a huge premium for that position but that doesn’t matter now so spending a bunch of time driving in the rearview mirror (i.e. this paper) is junk at best.

    2. I’m not sure why you’re calling levelized cost of energy BS. That’s how literally the driver of how stuff is financed in competitive markets – I get my project LCOE and then try to line up a hedge that leaves me in the money after slippage. I’m being a bit simplistic because there’s reliability (i.e. LOLP vs energy needs) but for the sake of simplicity, it’s a good metric.

    3. I read the paper for the first 15 or so pages and it made no sense unless you assume the writer has no idea about actual wholesale markets or utility operations. They compare levelized renewable costs to marginal gas costs at one point. The third point in the opening section is “cheap supply causes prices to go up”. Seriously? Are they even trying? “RECs represent the cost of producing (italicized) renewable energy relative to the least expensive alternative”. Except marginal cost of producing wind and solar is $0 or less, so that makes no sense unless they meant levalized cost instead of “cost of producing”, which is a very different concept. The model presented ignores ELCC/TOD modeling, etc. I’m embarrassed for them.

    Comment by WBP — May 8, 2019 @ 11:06 pm

  18. LCOE is bullshit if you’re interested in impact on retail prices. it ignores that real power demand is not level and that different power sources impose costs and benefits on one another. California now has to pay other places to take its excess power that occurs at the wrong times, while paying extra-high prices for power that is needed at the right times.

    Comment by srp — May 9, 2019 @ 5:53 pm

  19. You think the Swedes and Germans are dumb. Have a look at Australia. A massive energy exporter is blowing up coal powered generators and replacing with renewables. From cheapest electricity to most expensive in the space of 10 years.

    You could not plan such stupidity.

    Comment by TAFKAS — May 9, 2019 @ 11:30 pm

  20. @David Jones: What “accelerated climate change”? Hurricanes, droughts, floods, tornadoes, and extreme weather events have seen no material change in rate or intensity over the past 100 years.

    For a graphical summary of extreme weather and its lack of 20th century increase that even “high school kids would easily manage,”, see Jim Steele’s post here:

    Extreme weather is worse in a colder world, by the way, not a warmer one, because a cold global climate has a steeper pole-equator temperature gradient. The large aeolian dust deposits of the ice ages testify to this.

    The entire alarm about CO2 rests in climate models. And climate models are predictively useless. See here:

    See also my seminar on the large uncertainties in climate model projections of global air temperature, here:

    There have been no identifiable negative impacts of CO2 emissions. Given that, you have no business criticizing the CO2 emissions of others (or of anyone, for that matter). The only known impacts of CO2 emissions are positive: a 15% increase in agricultural yields and a general greening of the global ecosphere since 1980.

    See David Burton’s analysis here: DB is a physicist.

    NASA’s qualified recommendation relies upon projected drought and high temperatures to imply increased CO2 could have a negative effect on agriculture.

    See here:

    But these negative effects are projected using unreliable climate models. They’re a fantasy of danger set against a reality of improvement.

    The whole CO2-global warming thing is an exersize in false precision. Foolishness made to look like science. In short, it’s a crock.

    Comment by Pat Frank — May 10, 2019 @ 11:03 am

  21. I reviewed the UofC paper and found it to be generally useless. It might be correct, but I am not sure it has much to offer. Reminds me of some economics studies trying to correlate crude oil and natural gas prices in the US. Yeah, you will find a correlation but there is nothing useful in making any real world economic decision. There might be a real useful study, it might even prove the authors claims (which I think are likely true) but this study isn’t it.

    That said, I would most like to see dis-aggregated data (none is provided). What I find interesting are the very low net percentages of net requirements, the huge spread of time and finally the huge cycle in natural gas prices over this time period. For example, in Texas, you have the 1999 regulation, that completely unbundled the power system (for most of Texas) that effectively allowed natural gas cost to set the power prices. So with the huge run up in natural gas over the following decade, were the costs caused by the renewable standard or natural gas prices? Of course one also has to recognize the RPS was part of the political creation of the deregulated unbundled market.

    Another interesting point that would support the authors thesis is that the many of the states with the greatest percent development have the no, low or the latest standards (Dakotas, Oklahoma & Kansas). Iowa was early (and low); Texas’s CREZ system was built in the second half of they study period (6 to 12). Also, many of these states all had much higher coal generation which meant they had very cheap power and increased emissions regulations (on real pollution) may have played a role in increasing power prices as much or more as the RPS mandates. Another confounding issue is that many of these states are exporters of power to adjacent states that added RPS (Minnesota).

    Getting to the bottom line, I found the cost of mitigation of CO2 to be the most interesting (but not sure of validity in real world terms). If accurate, it would be damning as the costs per ton are quite high – an order of magnitude unweighted ($300 to $464/ MT) a factor of five weighted ($130 to $190/MT).

    Apparently this paper got on the radar screen of some of “GND” apologists and fellow travelers. I wanted to post my views of the paper before reading other critics (who are more likely to be political than usefully analytical).

    I have spent my career in natural gas and related industries; corporately, at times associated with independent power. I turned down an opportunity to start out in Nuclear Engineering (I staunchly support keeping and extending the life of current facilities). I am an agnostic empiricist; I want things that work, scale and don’t break the bank. Also living through the un-bundling of Electric Power era makes me question “markets only” dogma; the DOUGs won (and the only people I know who concur are people who understand some combination of commodity trading and utility cost of service regulation).

    Anyway Prof, great blog, wish you had been my prof when I took commodity markets & trading.

    Comment by JavelinaTex — May 11, 2019 @ 8:16 am

  22. @TAFKAS–Oh I know. Australia is another poster child for renewables idiocy. I’ll write about it soon . . . the BBG article presented a target of opportunity. I’m sure there will be a similar opportunity re Australia soon. Your next blackout, perhaps.

    BTW thanks for the shout-out in at Catallaxy.

    Comment by cpirrong — May 12, 2019 @ 9:27 pm

  23. Here is an article I wrote the day after South Australia went back to the 1800’s Professor. Some good graphs captured that curiously cannot be found on the Net anymore!

    The government at the time “motored” the turbines for optics in the days after the event – true spin doctoring!

    Comment by Crankshaft — May 14, 2019 @ 2:26 am

  24. @Crankshaft–Thanks! I will read with interest.

    Comment by cpirrong — May 14, 2019 @ 7:40 pm

  25. All is well DownUnder, Professor. The Aussie voter saw through the renewable energy BS and voted for a reliable electrical grid.

    Faith in democracy restored!

    Comment by Crankshaft — May 18, 2019 @ 9:42 am

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