InFocus Energy 2017/4. by Antall József Tudásközpont

IN FOCUS

2017. 4th Issue Free of Charge

Energy

Principles

Resources & Technology

Geopolitics WELCOMING WORDS

WELCOMING WORDS

Energy Overvoltage in the world of power

The creation of this issue was supported by the ALTEO Group.

All rights reserved. Articles to be found in this publication are the intellectual property of the Antall Jรณzsef Knowledge Centre. No part of this publication may be reproduced, distributed, or transmitted

in any form or by any means, including photocopying, recording,

or other electronic or mechanical methods, without the prior written permission of the publisher.

WELCOMING WORDS

TABLE OF CONTENTS 74–76 5 -

Welcoming words 77–80 -

6–7 8–15 16–21 -

Principles Basic facts Interview with Attila Chikán Jr., CEO of ALTEO How Energy and Technology Have Been Changing Society

81–85 86–88 89–93 94–95 -

24–27 28–30 31–35 36–40 41–44 45–47 48–51 52–55 -

57–62 -

63–67 67–68 70–73 4

Resources & Technology Big Bicture The Future Role of Nuclear Energy Renewable Energy Sources—Is this the long-expected breakthrough? Energy Carriers I—The Limits to Conventional Resources Energy Carriers II—Renewables as the tools of energy independency Energy Mix—Baseload and Peaks, or Renewables and Flexible Backup? Smart Grid—The Dream of Prosumers Subventions on the Energy Market

Geopolitics Interview with Pál Ságvári, Ambassador-at-Large for Energy Security at Ministry of Foreign Affairs and Trade of Hungary Smoke-tinted Green—Energiewende in Germany German and French Lessons about Energy Transition China’s Energy Policy Priorities

WELCOMING WORDS

96–99 100–102 103–106 107–111 -

The Legacy of the Fukushima Daiichi Accident—Stricter Regulations versus The Black Swan Theory Significant still Complementary— NATO’s Contribution to Energy Security Revolving around 2020: Climate and Energy Policies in the UN and the EU Natural Gas as a Bridge to a Lowcarbon EU Society From the Caspian to the Red Sea— New Opportunities for Europe’s Energy Security An Era of Low Oil Prices: Challenges Ahead of OPEC The Economics of Environment: Will We Ever Stop Using Fossil Fuels? Coal Dust and Mirrors: Trump’s Promise to the Miners A Watershed Moment—Energy Policy Lessons from the 2013–2015 Drought in Brazil The Global Strategic Significance of Energy Storing

112–119 -

TOP5

120–121 122–123 124 -

Antall József Knowledge Centre Introduction Events New releases of the publishing office

130 -

Next Issue In Focus: Germany

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Lectori Salutem!

Introduction

Life requires energy.

The big picture of the issue of energy is actually

tion, cities, or even computers.

local pieces, major constraints directly determining

Since it is vital, without it there can be no producThere are several services we could live without,

but energy is not one of them. The reason for it is

the fact that the energy is one of the most important

a mosaic. As we progress from the big picture to energy-related decisions are revealed.

Humanity is struggling globally in order to find

a sustainable way of ensuring energy supply. To

hence the most precious thing in the world.

understand and overcome the obstacles at hand, the

zine is to provide a comprehensive picture of several

security in connection with geopolitics, economics,

The aim of the current issue of In Focus maga-

aspects of energy, from the definition of kWh to possible scenarios for the future of global energy needs.

The issue also looks at the newest technical solutions, electric cars, and energy efficient households. Due to its heavy impact on society, the energy

aspects of climate change-related survival, supply and culture have to be taken into consideration. Is there a right balance between these various

aspects? Can this puzzle be solved? Will single efforts imply global changes?

In this issue, we first highlight global figures, facts,

industry is one of the most important and innova-

and tendencies, and then, based on them, we are

This fact made it an exceptional pleasure to talk

has to face, as well as global processes and the

tive strategic sectors aiming at future solutions.

to national and international representatives of this sector. Some of them will participate in the SUSCO

focusing on the most relevant challenges each country various connections between these elements.

As an environmental engineer, I am especially

Budapest 2017 conference, which coincides with the

grateful for the help that I have received from my

I would like to express my gratitude to guest edi-

among them historians, an economist, an American

publication of this issue of In Focus.

tors Cecília Varsányi and Mihály Kálóczy, as well as

the other experts of Antall József Knowledge Centre for this remarkable and niche issue. I would also like

to give special thanks to Attila Chikán Jr., president

and chief executive officer of ALTEO Group for his

colleagues at the Antall József Knowledge Centre—

studies major and few international relations and international laws experts. Thanks to them we

are able to present this complicated topic from a multitude of perspectives.

time and support.

Ádám Kégler

Editor-in-Chief

Mihály Kálóczy

Editor, Project manager

Antall József Knowledge Centre WELCOMING WORDS

PRINCIPLES

BASIC FACTS We consume energy. You and me. Energy is the property necessary to move a car or build a house, to heat or boil water or coffee, to light a bulb—in the terms of physics.

• A traditional light bulb used 100 W. An average LED light bulb in a household uses 15 watt.

The energy’s International Standard of Unit (SI) is the joule.

E R GY

Potential chemical mechanical

Kinetic sound electrical

nuclear

radiant

gravitional

thermal motion

One minute operation of an 1,000 MW power plant is enough to: • boile 600,000 cup of tea water • supply a car with energy for almost 14 and a half months • supply a household with electricity for more than 4.5 years • light a 15 W LED bulb for almost 127 years. Yes, it’s more than the lifespan of the bulb. 6

PRINCIPLES

• MHI-Vestas V164 is one of the biggest wind turbine in the World. It has 8 MW nameplate capacity. • A modern nuclear power reactor (Yangjiang 3, China) has an equivalent of 1,000 MW net capacity, which is 1 GW in other words. • Old power plants, e.g. C.W. Burdick, USA, have about 187 MW natural gas and fuel oil capacity.

• One joule is a tiny little amount of energy, so if you like to boil water to make a cup of tea, you will need about 100 kJ, e.g. 100,000 J. A cup of gasoline contains about 8 MJ of energy.

• The combined output of a Tesla Model S’s front and rear motor is up to 581 kW. Its battery can contain 100 kWh, which is 360 MJ energy. An average car uses about 50 GJ of fuel per year.

• In a typical lightning strike, 500 mega joules of electric potential energy are converted into the same amount of energy in other forms, mostly light energy, sound energy and thermal energy.

• The motor power of an average vacuum cleaner is 1200W.

WHAT IS WATT? WHAT? Watt is the unit of electrical and mechanical power. Electrical power is defined as the rate at which electrical energy is supplied to a circuit or consumed by a load. One watt is defined as the energy consumption rate of one joule per second, or as the current flow of one ampere with voltage of one volt.

1 Watt =

1 Joule 1 sec

= 1V x 1A

Imagine a water faucet in your home. The water output (in our above mentioned formula measured in Watts) of your water faucet depends on the pressure and the amount of water passing through the hose.

• 159 liter of crude oil = 1 BOE = 164 m3 of natural gas • Global average energy consumption of a household was roughly 3,500 kWh in 2010.

Taking this example, we can equate water pressure to electrical voltage, just as water-pressure is the driving force behind water flowing through a hose. (Measured in volts). Besides, water flowing through a hose (for eg. litres per minute) can be considered as electrical current flow, measured in amps. PRINCIPLES

THE FUTURE OF ENERGETICS IN HUNGARY, EUROPE, AND THE ROLE OF RENEWABLES AND OTHER TECHNOLOGIES Interview with Attila Chikán Jr, CEO of ALTEO Group

“IN THIS SYSTEM, THERE ARE NO MORE TABOOS; THE WORD “IMPOSSIBLE”—WITHIN THE CONTEXT OF THE LAWS OF PHYSICS, OF COURSE—HAS TO BE FORGOTTEN.” • In 2010, ALTEO debuted on the Budapest Stock Exchange. • In 2015, the company successfully bought the Sinergy Energy Service Provider, Investor, and Consultant Ltd, previously belonging to the ELMŰÉMÁSZ group. After the successful transaction, the ALTEO Group became an unavoidable actor in the energetics sector. • In the same year, its revenue was 10.70 billion HUF, which was a record accomplishment in the history of the company. This amount would not remain unsurpassed, however, as the association’s revenue totalled almost 14 billion HUF in 2016. 8

PRINCIPLES

• The ALTEO Group owns and operates 23 power station units in total, which have an electricity-producing capacity of 167 megawatts and heat-producing capacity of 842 megawatts. A considerable part of the company’s power plant park uses renewable energy sources—among others, the group owns 4 wind turbines, 2 hydropower stations, and several alternative gas supplied units.

The field of energy supply is no longer defined solely by gigantic, multi-billion-euro projects, but also by small enterprise and family-level investments. What is the role of big energy service companies in a market such as this? Today’s world is going in a direction where companies consciously stand up for their own strategy. With regard to sustainability, I like to quote the CEO of non-energy-related service company Unilever, Paul Polman: “The real role of businesses is to not be a bystander but to be an active participant in making this system work.” In the world of energy, companies and governments count as perhaps the two most influential centres. US President Donald Trump’s decision to (re) open coal mines, for example, obviously sets back the proliferation of renewables, but the federal government’s influence on economic affairs is very limited. The role of the state is often taken over by companies, especially since renewable energy management and climate protection represent more of a business in that companies make a profit on them. Even Texas stands up for renewables, although there are few states in the USA which are more interested in the fossil business. After all, as Milton Friedman has said: “The business of business is business”. But coming back to the question of roles, I have to say that, in this system, the most important word is partnership. The companies have to reach a level where they have real partners in governments, so the consumers—us—use an energy system with adequate security, reasonable cost, taking the climate protection angle into account. How do you see the role of ALTEO as an energy service company and its performance on the stock market? For me, success on the stock market is only a consequence—although it is a very objective unit of measurement, because it shows how investors judge the company—but it is very important to have it correspond to the real performance of the company. As a dynamic company, we constantly reassess and change, today we are exactly where we would like to be at this time. Of course, I see much work ahead of me. More than I see behind me.

How should we imagine ALTEO’s service activity and how should a service provider handle the entire system? We buy and sell energy, but we don’t only have industrial consumers—some of them are smaller enterprises. Although we don’t have residential customers, we provide almost 3000 supply locations in the small and middle sized enterprise sector. It is easier to work with big companies, because, since their demands are easier to anticipate, we can decide how to optimise their consumption and expenses. With small consumers, this is often not the case. All in all, I could say that this system must be handled with flexibility. The gist of it is that smaller, customised services allow flexibility, and, thanks to these, we have a system where we can serve any demand. So the question follows: What is there demand for? The answer is high-level supply security, cost-effectiveness, and climate protection. We must strive for the optimum of these factors at all times. This is the reason why we have our own power plants, based on either renewables or natural gas, because today in Hungary supply based only on renewables is only possible in very special cases. Concerning power plants, which one is more typical: investment in weather dependent, so-called intermittent, or weather independent, controllable renewables? All of them are controllable in their own way, as each one can be turned off and, technically, “turned down.” Only the KÁT system (obligatory feed-in-tariff for certain energy types—ed.) is an exception, but even here we are not talking about the fact that the relevant power plant technology wouldn’t allow regulation, but that this is a subsidy system for certain power plants, which allows and encourages its members to always produce into the network. All renewables are special in their own way. Sun, wind, and hydro turbines have their own controllability. I would also like to add that the latter actually helps the first two. So does biomass and biogas. On the whole, a wellmanaged portfolio is more adaptable than using only one technology. But certain technologies PRINCIPLES

are evolving at an unbelievable pace, not just in that they are getting cheaper and more efficiently, but regarding the regulations as well. The ALTEO Group follows precisely this principle: We don’t choose only one technology but diversify our portfolio. Which international trends cannot be left out of consideration for your portfolio and when creating your investments? There are two trends in the world that must definitely be considered. The first one is that it is possible to develop a more efficient energy strategy even on a smaller scale—even for households—and companies should definitely take advantage of this. The expression PROsumer (producer-consumer) came into being for a reason, as it is not only about the fact that energy production occurs in smaller batches, but that in certain cases it cannot be decided if we are talking about a producer or a consumer. Today, even on the scale of a household, a heat-pump, a solar panel, or a solar collector with the pertaining smart grid or microgrid ensure great flexibility. This represents a transformation, but what is its true essence? When Henry Ford started machine-production, he was thinking in terms of one model only. They manufactured one type of car and flooded the world market: “You can have your car in any colour you want, as long as it’s black.” This is exactly what the energy market looked like 20 years ago. If we look at the car industry today, we see that two identical cars are not being produced: I can basically plan my own car. And this is what is currently happening in the energy market. But for this, we need to transform even our thinking in a very radical way. “In this system, there are no more taboos; the word “impossible”—within the context of the laws of physics, of course—has to be forgotten.” Secondly, the existence of climate change cannot be contested. We need to start dealing with climate protection and sustainability in a very conscious way. Everyone thinks that this means selective collection and the use of renewables. Both are very important, but we haven’t by far depleted our possibilities. I would like to name 10

PRINCIPLES

SUSTAINABILITY DOESN’T ONLY MEAN THAT SOMETHING IS VERY CLEAN AND VERY GREEN, BUT THAT IT ALSO WORKS ECONOMICALLY. THAT’S WHY IT IS SUSTAINABLE, THAT’S WHY THEY INVEST IN IT. only one further example, which is always a sensitive issue for everyone: the management of one’s own consumption or rather the limiting thereof. In Hungary, very few people are willing to deal with this problem; everyone considers it an atrocity, even if the mere possibility of it comes up. Of course, we are not talking about drastically reducing our comfort level, but we must keep in mind the fact that, by 2050, nine billion people will have to live among adequate conditions on the planet. Is it a part of this transformations process that big companies involved in fossil energy, such as Shell, are investing more and more into renewable energy sources? The first and more direct reason is that these companies have huge capital and want to invest it into projects that promise good return—perhaps into something that will be worth it in the long run as well. With these companies, the reason for these particular investments is the same as for all others: Renewable energy has come so far that it

counts as good business. Sustainability doesn’t only mean that something is very clean and very green, but that it also works economically. That’s why it is sustainable, that’s why they invest in it. The other reason is the consumer, the voter—namely: us. Companies that neglect and ignore climate protection and the spread of renewables are growing less presentable, however professional their marketing or CSR operations are. We will eventually reach a point where the consumer will not choose a company which cannot show substantive accomplishments concerning these questions. They will not buy their cars, fill up at their gas stations, use their washing powder etc. On the other hand, those who show leadership in this regard will have a significant advantage. Again, it is good business because it is driven by consumer demand. Let’s take the biggest German energy service companies E.ON and RWE as an example. Where renewable energy usage didn’t exist in the past, it has by now grown into an independent business branch and thus the biggest corporations have branched out. These companies are consciously preparing for renewables and innovative methods continuing to bring about breakthroughs in the future. E.ON is expecting that, by 2020, the sales returns from the ‘smart energy’ sector in Germany will be bigger than from traditional natural gas and electricity trade. The energetics revolution does not have to be about old large companies going bankrupt. This is a realignment, an emphasis shift, which could proceed smoothly if corporations figure out these changes in time. Let’s take MVM as a Hungarian example, which has also started dealing with renewable energy. In short, as the old saying goes: “If you can’t beat them, join them.” You are leading the charge in a new development—more specifically, you have set out to develop the model for integrating renewables into the electricity system. This development is about creating a control centre which is capable of integrating energy storage solutions and weather-dependent renewables, among others, well and in a cost-

COMPANIES ARE CONSCIOUSLY PREPARING FOR RENEWABLES AND INNOVATIVE METHODS CONTINUING TO BRING ABOUT BREAKTHROUGHS IN THE FUTURE. effective way into the electricity system. This control centre is called VPP: virtual power plant. This is useful because we want to use renewables even when the “sun is not shining,” and VPP offers a means of reasonable optimisation. With the help of VPP, it does not fall on the entire Hungarian electricity system to manage the power plants in it, but on us, because, when integrated in the control centre, the issue does not even appear from the perspective of the Hungarian electricity system. For example, if we optimise 10 wind turbines indoor and have them work as timetable conservator while integrated into a control centre, these produce renewable energy with no or little extra optimisation demand. Would this system work if connected to the MAVIR system? Yes, our control centre is now providing system level services to MAVIR for the regulation of the electricity system countrywide. In Hungary, there are few dozen so-called balance circles, with consumers and traders, and all of them need to be self-adjusting so that production and consumption are kept in balance. Of course, if PRINCIPLES

this always worked as intended, we wouldn’t have MAVIR. That’s why its own equalising balance circle came to be—so that this balance would last. There is of course another balance circle, which entails those often weather-dependent renewables which can have their production taken over by the system, and which sometimes tip the scales one way or another. For producers, the KÁT is the best thing in the world and they would never leave it, but no power plant receives it for a full life span. By the early 2020s, Hungary’s over-300 MW wind turbine capacity will be out of the KÁT system: This amount is significant from the perspective of the Hungarian system and critical from the perspective of the domestic renewable energy, so it wouldn’t make sense for it to become unutilised. And we would like to contribute to the operation of the system, so the aim is to use the equalising balance circle only minimally and solve the equalising part mostly ourselves. And we won R&D funding exactly for this purpose: to find a solution, which we will provide via energy storage, electricity-based heat production, and many other solutions. The European heat production is heavily dependent on the Russian natural gas. Would the American LNG (liquified natural gas) or other sources mean a new kind of bargaining position? It is worth making it clear that, if we only take Hungary as a basis, a mid-size industrial company in the USA produces more gas than our whole country. Our 8-billion cubic metres are just enough for the Russians to take us seriously, but building huge conspiracy theories based on this amount is completely pointless. By the way, the Russians are professionals, they will not allow themselves to not provide natural gas to an EU Member State, because the principle is the important part, not the size of the country. The ALTEO Group follows this principle as well, and none of our consumers will fail to be supplied, no matter the size. I don’t feel that Russian gas import creates a huge dependence. I see a fundamentally wellworking gas market—although the gas molecule comes from the same place as 10 years ago,— 12

PRINCIPLES

which has undergone radical transformation. Let’s think about the diversified Austrian, Slovak, and Ukrainian delivery directions. American LNG could only tank prices significantly if it were much cheaper with delivery included than the Russian gas, which I don’t find very likely. The question about us joining the Croatian or Polish LNG terminal project, which in theory might lead to a drop in prices, would be interesting only in a strategic sense, as we would have an alternative source. It is a political question whether we see this dependency as a danger so serious that we would be willing to assume the cost of development even if it poses a risk economically. This is a beautiful example of political decision-making, and, of course, there are multiple answers to this question. Now that we’ve talked about natural gas, let us speak about district heating. As far as I know, you would support the development and the further extension of the district heating systems. Absolutely. From an energy management standpoint, the district heating system is in many cases more effective than an individual one. In case of a new investment—for example, when establishing a city district or an industrial area,—I can hardly imagine that there is anything more competitive than district heating. Of course, it has to be of adequate size, because one cannot build an effective district heating system out of one hundred apartments. All this cannot be left up to chance; the decision needs to be based on careful preliminary efficiency calculations. It is important that the district heating system be suitable for development and expansion: Betterquality maintenance contributes to higher supply security and lower costs, which in turn results in lower emission in the long run. Is it not a problem that this is a centralised solution and not a decentralised one per apartment? Not necessarily. Obviously, it is worth comparing centralised and decentralised gas heating. And if someone installs an alternative—a heat-pump solution, for example,—they have to consider

the costs. As I said, it is sustainable if it makes business sense. But an industrial park could be supplied with central heat several times more efficiently than if each company were producing its own heat. This setup is still decentralised, because it is not part of a big central system. It seems that renewables will bring about a world of decentralised energetic systems. Let’s take a look into the future: What costs will this produce in the long run and what effects might such an arrangement have on the national economy? There are multiple components that factor into the price of energy, but the decentralised system will result in the lowest possible prices. This doesn’t necessarily mean that prices will be lower than today, but it will yield the lowest of all possible future prices. Today, in several cases, we don’t pay the real price of a particular kind of energy, and as long as we have this tendency, it is very difficult to talk about sustainable energy supply and climate protection. Thus, there is less pressure to be more economical. This situation encourages exactly the opposite of the direction that I was prognosticating: let’s rethink our own consumption. In an ideal world—and this absolutely needs to be said—energy prices would be higher. This doesn’t mean that energy wouldn’t be affordable, because the GDP per capita would also be higher, but energy would be more expensive compared to other products. In today’s price system, energy doesn’t represent its own costs correctly. We must stem the tide of declining costs and understand that the cheapest kind of energy is the energy that remains unused. Furthermore, this often also works with easily reachable solutions. If in Europe, for example, we could change the business culture and it wouldn’t be compulsory to go to work in trousers and a jacket in 40 °C weather, then I could sit here in T-shirt and shorts and we would only need to cool down the office by 8 °C compared to the outside environment. To achieve this, cultures in a thousand places would need to be changed, but let’s be honest, they would look at me in a strange way, because

some environments demand appropriate clothes. Thus, when it’s 40 °C outside, we cool down our offices by 15 degrees on average. By how much would Hungary’s energy consumption decline at the top of summer if we committed to these simple things? Around 5-600 MW, if not with 1,000 MW. Cooling is very energy-demanding and expensive. These things would have to be very radically, thoughtfully changed by limiting ourselves. Do you think that there will be a time when renewables will not need to be subsidised against fossils? Of course. Recently, in a winning tender in Denmark, the produced wind power’s prices were around 40 % less than the current KÁT prices in Hungary. This is above today’s market price, but around the price which the Rothschild Report calculates with regard to Paks II1 (65 EUR/MWh). The subsidy provision will not last forever, unless we keep subsidising the other fossil competitors. Nevertheless, if we wish to have a power plant functioning with only coal technology or build a gas power plant, then those need to be subsidised as well somehow, and production needs to be secured with a long-term feed-in contract to ensure that the investment is worth it. So it is not renewable energy that is too expensive—it’s the current prices that are too low. Thus, the global conversion to renewables will take around 20-30 years. Do you expect a major technical turning point in energy management? Do you believe that a single technology can offer a solution, or do you think that only several small improvements and a diverse system will be able to handle the challenges of energy supply? Perhaps both? It is always worth looking back on the past for the sake of the future—the investigation of history can be very useful. The past shows us that there have indeed been big breakthroughs and that these breakthroughs repeatedly brought organic 1. The Paks Nuclear Power Plant (Hungarian: Paksi atomerőmű), located in Central Hungary, is the first and only operating nuclear power station in Hungary. It operates with four reactors generating 2000 MWe power. PRINCIPLES

development in their wake. For example, what happened with solar panels in the last 15 years cannot even be categorised precisely: Although the process was rapid, it is debatable how long we can talk about organic development and from what point would it count as a breakthrough. In any case, an astonishing development took place concerning the relationship of efficiency and cost. So we can expect breakthroughs for sure. And where it will end is yet to be seen. It is natural that these developments cost large amounts of money, but we tend to forget that this was also the case with all other technologies. A hundred years ago, everyone was involved in the development of coal technologies, but no one talks about how much money it cost—not to mention the damage it did to the environment. And let’s not even mention nuclear developments for military purposes: Obviously, we cannot even ballpark the price, but it was presumably more than what we are currently investing in renewables. With every new technology, it is the same: In the beginning, it naturally keeps swallowing money. One key to success in economic policy for a particular country is making the right bets for investment. Based on the experiences in France and Germany, what could be a sustainable model for closing the economic gap for a third world country? How could they accomplish a frogleap? We’ve known for a long time, thanks to economic history, that those that have nothing have a certain advantage when creating a system, because they can start with the most advanced solution. This is what Japan did after World War II. Let’s create a utopia and take, for example, an African country, with a sponsor behind it, who is willing to finance economic development, and let’s assume that the warlords don’t take all the money. In such an ideal situation, first I would urge the people to create a decentralised system, adequate for their own consumption. It is important whether we are talking about Swaziland, Eritrea, or Congo in a rainforest. Sun is everywhere, although too much heat is not good for these technologies, but let’s set 14

PRINCIPLES

that aside for now. In a desert there is wind, in a rainforest there is biomass, and elsewhere there is biogas, but the point is that a bottom-up approach should be followed, based on real demands. If there is absolutely nothing in place, then nuclear energy is the solution, but such a power plant is ideal only if it can be built in two years and the investment pays off in thirty years, so that the plant does not still take away resources seventy years later. This is the hard part: It takes a while to build and needs to be operated for a long time. In the meantime, it can become obsolete. If someone tells me that they have an old-timer Mustang, I say that is very nice, I like old cars too. But if they say they use it as a taxi, that is embarrassing. How resilient does an energy mix need to be? In Brazil, climate change caused a neverbefore-seen drought and energy deficiency. It seems exclusivity can be a problem, whatever the energy source. Doesn’t this principle negate the security principle of the common electricity network? I agree: If we only invest into renewables, it can’t be in only one direction. One must know how to build a portfolio. The two principles don’t negate each other, but elevate the question to a higher level. For example—and obviously, this would be the perfect case— in Hungary, issues related to nuclear energy should perhaps be decided not nationally, but on an East-Central European level. It would be a prettier new world if this kind of cooperation existed between countries. We would do much better in general. But sometimes the reason why there is electricity scarcity in a country can be the same as anywhere else, and it doesn’t matter that we are connected. In the case of the price peak this January, the prices jumped from 30-40 EUR up to 150-180 EUR in only a matter of hours. Among the many reasons, an Austrian network maintenance, a -20 °C cold, and smaller problems in some power plants were to blame. The Austrians indicated the maintenance beforehand, but there was still not enough electricity available when it was needed.

Does a Central European load balancing centre exist? It has not been properly established yet. There is one for base load, but system security is expensive. Many have judged Hungary for its investment in gas storage capabilities. This was a strategic decision and is by no means black or white. It is a typical case of insurance. When someone asks “Why did you get an insurance? Nothing will happen to you!”, 99 times out of 100 they will be right. But I wouldn’t challenge everyone who has an insurance in place. The whole thing relates to the weighing of the costs and chances, and this is true in the electricity system as well. There exists a really serious cooperation in this regards, and it is worth deepening, because it is the best for us all. Furthermore, there is this huge country close to us, Germany, and Ohm’s Law is still in effect, the laws of physics remain: Electricity flows in the direction of less opposition. Concerning the aforementioned price change, Ohm’s Law equalised us very well: Electric power came from other countries because we are connected. But we must also be able to pay for it afterwards, it must be accounted for. Of course, I am half joking now. And if there is a problem on the Germans’ end, they drag down the entirety of Central Europe. Our cooperation should be deepened.

to be dust-free, and this requires electricity. Thus, supply security is very important. During one such power cut, an automotive company lost thirty million EUR in just two hours. It also is worth spending on supply security, because the best solution is not always the cheapest. Supply security, cost effectiveness, climate protection— this is the Holy Trinity of energy management. Every company has an optimum point. The person who can offer a real solution while ensuring the competitiveness of the company will be successful. Your results on the stock market also confirm this. Thank you very much, this is what we are working on. The short term offers much freedom, but in the long run, one can only fare well with appropriate transparency and decency—these mechanisms have to be in place. This is the only permanent virtue out there.

How will Ohm’s Law apply to big investors? In which direction should they go? First, towards renewables—I say this as a CEO. Second, towards the control centre, namely the virtual power plant system-level service, because the more renewables there are, the greater the challenge and opportunity that regulation represents. As an investor, one must look at the three biggest problems, because if I can solve those, it will make me money. This kind of thinking is very important, and this includes energy storage too. And third, they should move towards support for individual energy strategies. For example, if there is a breakdown in a painting plant, all the paint needs to be scrubbed off and repainted regardless of what phase they were at, because a factory needs PRINCIPLES

HOW ENERGY AND TECHNOLOGY HAVE BEEN CHANGING SOCIETY Tamás Péter Baranyi

The world’s energy consumption and the means to satisfy it are now in ferment. If this indeed means a shift to clean energy, it is a welcome development for nature, but what it might bring upon humanity is still an open question. In order to gain deeper insight into the potential social changes that it might inflict on society, we shall see through the history of the past centuries. At the earliest stages of human history, certain forms of biomass were the sole providers of energy—in most cases, this meant wood. Individual heating and cooking needed wood to be burnt—this is something our ancestors relied upon and this is precisely what we still do when hiking in nature. As agriculture and

manufacturing began to expand, they also necessitated the use of water mills, of which the first ones, designed to grind corn, were discovered in the Middle East. In the Roman Empire, water mills were used throughout Italy and beyond. During the Middle Ages, even windmills spread across the continent. From Water to Steam The ‘long’ 19th century brought about even larger changes in humankind’s history than the ‘short’ 20th century: The era began with an unprecedented acceleration in production and capital accumulation, which in turn led to the commercialisation of a series of technologies,

Vintage steam engine at a rural train station. These were the ones that revolutionised transport in the 19th century. 16

PRINCIPLES

including new ways of harnessing the power of steam. While the first known steam engine was invented by Heron of Alexandria in the 1st century, James Watt’s 1781 model was capable of producing roughly 10-horsepower motion, and the circumstances were rife in Britain to begin mass production. The use of steam power was kick-started: Steam locomotives and steamboats were introduced sometime around 1812 and 1815, resulting in increased efficiency of travel and transportation on land and waterways. Moreover, these technologies transformed the main source of energy for humankind: It was no longer water but steam. Such a transformation made energy production easier, a little more portable, and, most importantly, cheaper. Towns could now be established farther from waterways and began to be built around factories that used steam power. Coupled with other factors, this was the very fact that enabled the Americans to conquer the Wild West. The capacity to locate population surpluses, the rise of the industrial working class, and the emergence of socialism as an ideology were main results of this technological transformation. The only problem with the steam engine was that it required heating. And heating necessitated coal. Coal, previously reserved for personal Peppered moth evolution Coal was indeed so widespread in the 19th century that it visibly changed the ecosystem. At the beginning of the century, peppered moths were predominantly light in colour, although specimen with dark shades could also be occasionally, but much rarely, observed. By the end of the century, dark ones outnumbered the light ones, because they had a better capacity to camouflage themselves on trees, and thus did not fall prey to predators as often. Why is it, then, that in 1800, light-coloured peppered moths were the more frequent? Because back then, tree barks were lighter, while almost 100 years of coal burning darkened them to such an extent that it did not provide a natural hideout for lighter-colour moths. Later, however, as pollution decreased, brighter moths also came back.

heating, became indispensable to the world economy. This time, there were no countries that emerged by virtue of their exclusive ownership of coal. Rather, some countries that had both coal and iron were in a good position to create modern industries: Britain, the U.S., Russia, France, Germany, and also tiny Belgium, were starters in this late-19th century contest that was ultimately won by America and its industrial trusts.21 Mass Production and the Petroleum Industry As the rise of steam power went hand in hand with the industrial revolution, the rise of petroleum came to be associated with mass production. The automobile industry was based on the internal combustion engine (1876, Otto & Daimler) and Karl Benz’s patent of the modern car (1879). Émile Peugeot (1890) and the Renault Brothers (1899) followed suit. The United States soon took the lead, and by 1929, there were over 32 million cars in the U.S., one for every five citizens. Mass production of cars, coupled with heavy industrialisation in Germany, the U.S., and most of all, in Russia and the Soviet Union, propelled oil to become the dominant source of power in the 20th century. With the advent of armoured vehicles and airplanes, oil became a tool for fighting wars. The 1965 movie Battle of the Bulge clearly reminds us how the Second World War was also about gaining control of the resources to be able to keep fighting. In peacetime, however, oil brought about unprecedented changes. It had many remarkable features, such as portability (once extracted, it actually flows), stability (does not go away), and extreme energy capacity (more than coal). Mass production and mass industrialisation could not have happened without the convenient power source that was oil—and, conversely, oil could not have taken over all other means of energy without mass industry. But petroleum energy significantly differed from steam power in that one either already had access to it or had to buy it—unlike, for example, water. (Coal was also a trade item, but 2. 1. Eric Hobsbawm: Age of Revolution, 1789-1848. Random House, London, 1962 [1996]. PRINCIPLES

there was not yet that much demand.) Up until the 1970s, however, oil prices were cheap and stable. Cheap energy heralded an era in Europe and North America in which industry, production, and consumption were constantly boosted by cheap energy. Much of the birth of the modern Western ‘welfare state’ can be traced back to the availability of cheap energy. Oil has, of course, made only a small number of countries rich: Larger ones with enough space to contain oil fields, like Russia (with Baku being the first place on Earth with a modern oil industry) or North America, and some smaller ones, typically in the Middle East. While oil was more of a benediction to the West, it is difficult to draw the balance in the Middle East. Though it propelled some countries to high affluence (especially Saudi Arabia and the Emirates), it helped local elites in their efforts to defer economic reforms (Algeria) or was simply used to keep the regime in power (Libya, Iraq), while it put the region in the apex of world politics. There are opinions that civil wars, coups, countercoups, the Israeli–Palestinian conflict, and sectarian violence were all but facilitated by the presence of an abundance of oil.32 Nuclear Energy—A Broken Promise? Major scientific discoveries added to the prevalence of oil: the discovery of X-rays by the German Röntgen and radioactivity by the French Marie Curie. It was not until the 1940s, however, that someone tried to harness the power of radioactivity on a large scale. In war, however, like in love, people are not fastidious. In the framework of the Manhattan Project, the first successful test of an atomic bomb was conducted on July 16, 1945, which was followed by the bombs dropped on the Japanese cities of Hiroshima and Nagasaki (6 and 9 August). The world learned about the devastating nature of fission, and it clearly dominated the collective imagination of world politics throughout the 1950s. Houses blown away like cardboard models and images of a Third World War haunted 2. Daniel Yergin: The Prize. Simon & Schuster, New York, 3. 1991 [2012]. Forthcoming in Hungarian language, to be published by AJKC in 2017. 18

PRINCIPLES

the minds of the public. When the world found itself indeed on the edge during the Cuban Missile Crisis of 1962, the superpowers embarked on a détente that was meant to reduce the possibility of war. Nuclear power was not entirely about destruction, but also about creating a new kind of energy and using it for good purposes. Civilian nuclear power originated in the Soviet Union in 1954 with the Obninsk Nuclear Power Plant, and was followed by one in Northern Britain (1956) and in the U.S. state of Pennsylvania (1958). Nuclear plants that generated electricity soon became major contributors to the energy needs of humanity. Moreover, nuclear energy had a very promising advantage over other energy sources: it had the capacity to democratise energy distribution among nations. Earlier, there were always upstream and downstream countries when it came to making use of a river’s energy; later those who possessed oil were in a better position than those who had to purchase it. Now, with a tiny amount of uranium, one could generate energy in a location where the categories “upstream” and “downstream” were no longer applicable. At least that was the idea, and this is why so many countries launched their own nuclear projects. Nuclear projects, however, were always connected to nuclear arms. The issue became a hot topic in the 1960s during the cautious talks about a comprehensive non-proliferation treaty on nuclear arms. Non-proliferation means the ‘horizontal’ spreading of nuclear weapons, that is, the prospect that more and more countries could possess an atomic bomb. Such fears were prompted by the fact that France (1960) and China (1964) developed their own devices against the will of their allies (U.S. and Britain on one side, the Soviet Union on the other). To prevent further proliferation, the U.S. and the USSR decided to draft a Non-Proliferation Treaty (NPT), which all sovereign nations were expected to join. It was of course a thorny issue: Those who already had the bomb (great powers) appealed to the consciousness of smaller states not to develop further bombs, while having the bomb had uncontested advantages, such as power status and regime stability. Resolution to this question came from the fact that nuclear energy is twofold:

Small states gave up their demand for arms in return for great power help in developing their own nuclear plants for peaceful reasons. As most countries accepted these terms (except India, Pakistan, Israel, North Korea), nuclear energy became widespread, while fears that nuclear weapons might wash away the fabric of civilisation have since receded. Still, nuclear energy has not fulfilled the promises it brought: It did not take over the share of hydrocarbons, while the technologies and the capital to build plants remained in the hands of great economic powers, and thus it did not result in a revolution of energy politics.34 Oil, Gas, and the End of the Cold War Natural gas, originally a by-product of oil production, was rediscovered in the 1960s as a cheaper substitute for oil. Russia started to explore and exploit gas fields, as well as oil, in territories farther away in Western Siberia in the 1960s. It was harder to extract resources there, and harder to get it to the markets, so building gas pipelines in the 1970s and 1980s required the help

of all COMECON45 members, including Hungary. However, bringing in new resources did not resolve the energy problem in the bloc, and though it did boost the Soviet economy for a while, it could not prevent its downfall. Why is that? In 1973, the Yom Kippur War, a short but intense conflict between Israel and its Arab neighbours broke out. It did not last long, but it had a lasting impact on world history. After the war, the Organisation of Petroleum Exporting Countries (OPEC), mostly consisting of Arab countries, decided to ‘punish’ those who supported Israel with arms shipments during the war. This became the ‘oil embargo’ which caused the massive ‘oil price shock’ in 1973. Coupled with a similar shock in 1978, this event erased the notion of ‘cheap energy’ forever. Gas prices ran amok, lengthy queues became common at gas stations, people were anxious to get fuel, and it was not clear if it would ever come to an end. It affected not only personal lives and fuel supplies, but had a huge impact on economies around the world. At first glance, this development seemed good for the Soviet Union as the largest producer and seller of

4. 3. Marc Trachtenberg: The Structure of Great Power Politics. In: Cambridge History of the Cold War. Vol. 2. Crises and Détente. Cambridge University Press, New York, 2010.

5. 4. The Council for Mutual Economic Assistance was an economic organization from 1949 to 1991 under the leadership of the Soviet Union. It mainly consisted of communist states.

Cities and Suburbs The location and the shape of cities around the wall is by no means coincidental. In the Middle Ages and the Early Modern Period, most townships were located at a 8 km distance from one another, because without cars, it was the largest distance one could comfortably walk while leaving enough time to buy and sell goods on the market. Put differently, a 16 km radius was the commuter zone at that time.16 As water was a main energy provider and a means of transportation, most cities were located around the coasts or the banks of a river. In fact, medieval London, like most cities, was made up of narrow districts running along the river. In the United States, in

contrast, towns mostly sprawl in all directions, because they were planned and established after the spread of steam energy and automobiles. From the 1960s on, the rich started to move out to the suburbs, and thus the city centre ceased to be a status symbol for them. (Except in some cases, like New York, which is built on an island.) How we live, walk, and move about in a city is also profoundly shaped by energy. In oil-rich Arab counties like Bahrain or Kuwait, there are hardly any sidewalks. Why? Because no one walks more than a couple of meters in such heat if there is practically free energy to use in cars. In other countries, for instance Japan, where modern industry, economy, and education are among the best, with practically no natural sources of energy, different outlooks and attitudes toward walking, driving, and littering emerged.

1. Richard Holt & Gervase Rossner: The Medieval Town, 6. 1200–1540. Routledge, London, 1990 [2014]. 98-100.

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From Curfew to Sleep Deprivation

Nevertheless, there was collateral damage done

as it provided the means to light our houses

and our global footprint. Since we were no longer

Electricity irreversibly changed the human condition,

and cities continuously, safely and affordably. Obviously, this was not always the case: in ancient times, people used firelight and depended on the

same technology for centuries, which consisted of a vessel—oil or fat as fuel—and a wick. It had many

downsides: It had to be tended to continually, it stank and produced a lot of smoke, so much so over time it discoloured the ceiling. Also, using an open

flame at home was a lethal danger—just take a look on the Great Fire of London in 1666 to get an idea about fire hazards at the time. In some medieval

towns, people were ordered to put out cooking fires after dinner for safety reasons. After putting out

the light, they did not go out of the house often, as the absence of street

lights invited robberies and accidents. That is why this period of

the day was called “curfew”, from the

French word couvre-

feu (lit. cover the fire),

which we now use for times when it is not allowed to go out to the streets.

forced to go to bed early, we did not go willingly. It was not necessarily about the amount of sleep

but the quality of sleep, as light smog and audio smog disturbed the sleep of many people even if

they went to bed early. A recent study published in Nature by Dr. Charles A. Czeisler goes even further, stating that artificial lights harm our sleep in

a more sophisticated way. As our ears are not only used for hearing but also to help with balancing,

our eyes are also not only used for seeing but also to influence our circadian clocks. As he explains, when our eyes are exposed to artificial light, it

stops sleep-promoting neurons and activates

arousing neurons, leading us to feel less sleepy, and thus resulting in

the upending of our circadian

rhy thm.

This problem may get

worse with the spread of LED technologies,

to the colours of which our eyes are even more sensitive.

The wider distribution

of private devices, like

tablets or telephones

Serious changes did not happen up until the

(with LEDs), are also contributing to both waste and

first running on natural gas in the earlier years of

example, as the cost of light production fell sixfold,

18th century, which saw the arrival of streetlights— the 19 th century, and then electricity. It not only

lengthened the time people could dedicate to

work or entertaining themselves, but also removed

dangerous and foul-smelling elements of lighting from the house. With the invention of the light bulb, nothing could stop the installation of electrical grids spanning entire countries with cheap and

comfortable light. Electricity had its own dangers

but was much better than having naked fire in our

houses. It had a liberating effect: People could go to bed later, work more, drink more at night, and

enjoy increased safety on the roads and in the cities.

by electric lighting: Our natural sleep schedule

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sleep deprivation. “Between 1950 and 2000, for

UK per capita light consumption rose fourfold. This increasing light consumption has paralleled the

rise in sleep deficiency,” the professor explained.

This is a serious problem for both our mental health and the environment. As more and more people are living in cities, with most of them having access

to electricity and using it in a wasteful manner,

the problems connected to this technology will

eventually rise. If we want to avoid these negative effects, we will need to go unplugged and cut down our wasteful consumption.

wisdom involved, played a major part in the fall of the Soviet Union and thus in overcoming the postwar division of Europe.75

A 20 th century nightmare: no gasoline on the stations. United States, April 1974.

hydrocarbons. But it also prevented the Soviets from modernising their economy, which North America and Western Europe did without delay. The shift from extensive production to intensive, from resource-intensive branches to the hightech industry, and the replacement of wasteful technologies with more sustainable ones began in the Western world precisely during these years. Meanwhile, the Soviet Union and Eastern Europe stuck with the old mechanisms that were becoming outdated at a growing pace. The introduction of the ‘oil weapon’ changed the global political surface. Suddenly, everyone was interested in wooing Arab states and the Muslim communities in their respective countries. Just to mention some distant examples, it was the time when Egypt, Israel, and the U.S. could broker the Camp David Accord, when Romania started to cosy up to Iran, and Yugoslavia started to recognise the Muslim community in BosniaHerzegovina. The sudden emergence of the ‘energy question’ affected not only North– South relations, but also the East–West rivalry. In fact, the failure to modernise the Soviet economy and the country’s dependence on Western technology and capital to extract more oil and gas contributed greatly to the eventual fall of the Soviet Union as an empire. As we have seen, in its early stages, the Cold War could be described as a nuclear stalemate, and, from 1962 on, as a détente due to a variety of security and prosperity reasons, of which one was the Western capital used in Soviet enterprises. At the end of the Cold War, energy, the use thereof, and the lack of

New Energy—New Society? Energy has impacted our lives in many ways— from great power politics through business to sleep deprivation. What can we expect now that a major energy shift is around the corner? One has to be very cautious in foretelling how an energy change could alter our lives. “It’s hard to make predictions, especially about the future”, said the Danish physicist Niels Bohr, and he was right. For one thing, how our society will be shaped by energy largely depends on what road we choose. Shifting to clean energy could be set out in the framework of ‘sustainable development’ or the more radical notion of ‘de-growth.’ While de-growth stresses the importance of stopping the ever-increasing nature of economy and consumption, sustainable development suggests that growth, consumption, and conservation do not exclude each other. Simply put, ‘de-growth’ is a radical Left scenario, while sustainable development is more liberal and pro-business. In a ‘de-growth’ utopia, energy is produced and used on an individual basis: solar cells bring light to individual houses basically for free, while windmills and major storages could fulfil the needs of the community. On the other hand, in a sustainable development framework, companies, facilities, and states provide energy that is clean, and individuals use it in a way that is good for business and the environment too. One should add that no sudden and drastic changes can be expected. What is more likely is a gradual, slow and elusive shift from hydrocarbons and nuclear power to different clean energies in such a way that may not pose huge challenges to our society. Of course, the human condition would be improved by the absence of toxic waste, polluted air, and littering, but in all likelihood, it will not change the entire face of human economy—a perspective that the radical Left wishes for, while the pro-business side fears. 5. Jeremy Perović: Cold War Energy. A Transnational History 7. of Soviet Oil and Gas. Springer International Publishing AG, Cham, Switzerland, 2017.

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RESOURCES & TECHNOLOGY 22

WELCOMING WORDS

THE BIG PICTURE Mihály Kálóczy

How and why is energy demand changing? What could be the future role of nuclear energy? Is there a limit to the use of the various renewable energy sources, and if so, what is it? What factors do the leaders of different countries take into account when establishing energy mixes? What are the current and expected focal points regarding energy supply? How do international organisations (UN, EU) control and encourage countries to achieve common energy policy goals? As a result of climate change, pollutants in the air, the finite quantity of fossil fuels, the struggle for energy independence, and other factors, the international community, under the umbrella of the UN, has been making an increasingly unified effort to implement potent measures to lower carbon-dioxide emissions and create a so-called low carbon or carbon

The transformers of a coal-fired power plant 24

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neutral society, which could provide a long-term solution to the problems stemming from climate change. The issue of replacing fossil fuels (crude oil and its derivatives, natural gas, and various kinds of coal) is difficult and complex: In 2013, 81.20 % of the world’s energy supply still came from these fuels. In Hungary and elsewhere, there are constant debates about the viability of nuclear power plants and the use of renewable energy sources in energy production. And it is only appropriate that we have such debates, as—in accordance with the idea of thesis-antithesis—, these are the conversations that can produce truly optimal decisions. As for the above topic, the first debates should take place between members of the scientific community: Only when the necessary calculations and findings are available can we identify the various

aspects that, when contrasted with those of other fields (such as energy independence, geopolitics, resilience in light of climate change, etc.), provide the basis for deliberate political decisions regarding the energy supply of a society or area. With this in mind, this series of articles will look at global tendencies and the European Union as Hungary’s immediate international environment primarily.

WORLD

1960-1969

7.95 %

21.41 %

1970-1979

5.04 %

20.40 %

1980-1989

2.94 %

19.08 %

1990-1999

2.07 %

15.76 %

2000-2009

3.39 %

13.22 %

2010-2015

1.04 %

6.11 %

A look at 10-year cycles shows a clear slowdown in population growth compared to the end of each previous decade.

Energy Demand One major factor in determining energy consumption is population. Global population growth has been slowing down in the past decades, as shown in the chart below. If we project the data available until the end of 2015 to the rest of the decade, the tendency appears to continue. (The geographical unevenness of population growth is deliberately ignored in this case.) Changes in population, which reflects the ratio of live births and deaths, is another important factor when calculating energy demand. Life expectancy at birth is the factor that helps predict changes in the number of deaths, and thus in future energy consumption as well. If, for example, there are fewer births this year, but previous generations end up living longer, there can be a temporary increase in energy consumption despite the minor decline in live births. Between 2000 and 2014 alone, average life expectancy increased by 4 years globally, and by 3,4 years on an EU level. Still, the increase of this figure is not reflected significantly when looking at energy consumption data, despite the fact that this increase has been continuous since World War II.

Global population growth (1972, 2000 and 2015 highlighted) RESOURCES & TECHNOLOGY

kg of oil / person

Energy consumption globally and within the EU, in kilograms of oil / person (data from 2000 and 2013 highlighted)

Interestingly, in the EU, energy consumption per person has been declining at a surprisingly rapid rate (in the upper right corner), and even globally it has shown only a slow increase. There are two possible explanations for the situation in the EU: a decreasing demand for energy, which could be due to more efficient energy use, and a drop in the quality of energy supply, which means that the supply side cannot keep up with the energy demand of a growing populace. It should be noted that the EU has several mechanisms in place for supporting improvements in the field of energy efficiency (such as Horizon 2020), and this process is expected to continue until at least 2020. Globally, the UN remains the main organization involved in this work (UNECE, UNEP, the SE4All initiative, etc.) According to International Energy Agency data, gross energy production in the EU has been dropping since the second half of the ‘90s, which, in light of the growth in population and GDP— although the latter has seen decreases in recent years—is a remarkable feat of energy economics. Consequently, the EU’s steps toward improving energy efficiency and a declining economic performance together result in a decline in energy production. 26

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In comparison, global energy production nearly doubled in the years between 2000 and 2015 (in the bottom right corner). Compared with global population growth over the same period, it becomes apparent that, although increasingly more energy is being produced per capita, social differences prevent us from drawing conclusions pertaining to a general growth in living standards. We can, however, conclude that energy efficiency—which is supposed to lower per capita energy demand—is not fulfilling its purpose as an instrument of sustainability. However, the rapid increase in global energy production is by no means a positive development, if we take into account the energy mix and its environmental effects.

RESOURCES & TECHNOLOGY

THE FUTURE ROLE OF NUCLEAR ENERGY Mihály Kálóczy

Nuclear and renewable energy still remain the least environmentally damaging energy sources. However, the future role of renewables cannot be objectively forecast without analyzing nuclear energy. (Although the use of nuclear energy correlates to the use of nuclear weapons, the present article will refrain from discussing them.) Atomic or nuclear energy is the power stored in the bonds between elements of atoms, which can be harvested as an atom disintegrates. It can appear in three ways: during the fusion of atomic nuclei (the process can be both endoand exothermic), as some kind of radiation, or the splitting of nuclei—this is the so-called fission. Traditional nuclear power plants convert the latter—the thermal energy released during the fission of atomic nuclei—into electrical power. Since the 1950s, it has been used not for military purposes, but as a means of supplying energy,

as it did away with a number of disadvantages in fossil fuel power plants. Advantages and Disadvantages One important advantage of nuclear power production is that it is easily adaptable to changes in energy demand, since production always has to follow demand in the supply process. In addition to the satisfying couple hours of daily peak demand, a nuclear power plant is able to provide baseload power, as its variability allows it to produce energy in a reliable and flexible manner. It continues to play an important role in policies aimed at reducing greenhouse gas emission and improving air quality, while also being capable of increased performance compared to fossil fuel power plants. In light of all this, it is safe to say that nuclear plants ushered in a new era of energy supply.

The reactor chamber of the Zwentendorf Nuclear Power Plant 28

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At the same time, the use of nuclear power has been plagued by catastrophes since its early days, which led to the introduction of increasingly strict regulations. However, its opponents insist that there is no such thing as safe nuclear energy. Its disadvantages include the remarkably high costs of investment, the fact that the mining and enrichment of uranium pollute the environment, and that nuclear waste is exceedingly dangerous. Because it continues to radiate long after it is “retired”, its storage is difficult, expensive, and raises a series of safety, legal, and ethical concerns. (The international consensus is that underground geological storage is the safest option.) Meanwhile, its proponents consider nuclear to be the only kind of energy where all additional costs are included in the price. Reasons for the Decreasing Popularity of Nuclear Energy Global nuclear energy use has followed the below trajectory: The below graph shows a roughly 20-year decline in nuclear energy production. Most EU countries are making an effort to maintain

or decrease their nuclear energy production capabilities. However, on a global scale, countries do not follow a common energy policy: Some of them (China, Russia, India, etc.) are building new nuclear plants, while others have made it their goal to decrease capacity or eliminate it altogether. Italy closed all of its nuclear plants in 2016, while Belgium, Germany, Spain, and Switzerland are gradually abandoning them, and the Netherlands, Sweden, and Taiwan have all expressed a similar desire (to be discussed in a separate article). What explains this downward tendency in light of the manifold advantages of nuclear energy? With current technologies and consumption levels, known uranium supplies are expected to last at least another 90 years, and technological advances may even make it possible to access further deposits (e.g. in oceans). Nuclear power plants have an average life expectancy of 30-50 years, and this data shows that, when investigating the future of renewables, the finite nature of supplies need not be considered when seeking the answers to questions regarding energy supply in the coming 50 years.

35% 30% 25% 20% 15% 10%

1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

European Union

World

Share of nuclear energy production RESOURCES & TECHNOLOGY

Expiration dates of power plants in the EU

Yet, measures aimed at decreasing nuclear energy use are not without precedent. Many of them were born after the Fukishima Daiichi catastrophe, but the share of nuclear energy in gross global and EU-level energy production already peaked in 1996 and has been in decline ever since. This is partially due to earlier accidents, but perhaps also to the fact that, since then, countries around the world have been working toward the discovery a new, more efficient energy source or technology. And this anticipation is not unfounded. This is because most governments are reluctant to take on such an expensive investment, considering the risks of return—and the return on an investment in a nuclear plant greatly depends on the price of oil and other fuels on the world market, which has seen considerable changes recently. Add to this the fact that the catastrophes that have historically accompanied the use of nuclear power have shown that no matter how much the risk of a natural or anthropogenic error and the resulting accident is reduced, such incidents can result in massive losses in lives and infrastructure. In most societies, this risk produces an aversion to nuclear power, making it less popular, which is always an important factor in political decisions. Another similarly political aspect is the need to take into account the issue of independence from other countries, which raises two main issues. The first is there are relatively few places that allow for the mining of uranium: 70 % percent of total production takes place in just three countries, Kazakhstan, Canada, and Australia. This means that, after constructing a nuclear power plant, a country becomes dependent on raw materials from a producing country. 30

RESOURCES & TECHNOLOGY

The second issue, which may result in similar difficulties, is storing nuclear waste (despite the relatively small amounts), which several countries are only able to do abroad. Both of these concerns should be kept in mind when debating energy independence. It is also worth mentioning that, if we take 40 years as the average life span for a nuclear power plant, most of these facilities in the EU will shut down between 2020 and 2030, resulting in a great drop in capacity (see the graph above). While satisfying the global demand for energy in consideration of minimizing carbon-dioxide emissions and finding efficient and environmentfriendly solutions to energy storage became the primary objectives of research, we gradually became participants, or at least observers, of a new energy revolution. Renewables are becoming increasingly prominent in the energy production of developed and several developing countries.

RENEWABLE ENERGY SOURCES—IS THIS THE LONG-EXPECTED BREAKTHROUGH? Mihály Kálóczy

• In 2016 in Europe, 90 % of the newly added energy sources were renewables. • In 2015, increased wind power production accounted for half of all worldwide energy production, and global CO 2 emissions had stagnated for the second year, despite the growth of the world economy. • In 2014, hydropower constituted 71 % of renewables, and 16.4 % of gross global energy production. • 111 large corporations joined the initiative to have 100 % of their power come from renewables by 2020. Participating companies include Facebook, H&M, Adobe, Hewlett

Packard, Diageo, and ING. Meanwhile, Google Inc., which employs 44 thousand peoples, estimates that it will have reached this goal by the end of 2017. These data raise a number of questions: What advancements do these results represent compared to the past? What aspects did decision-makers and investors (large corporations, governments) take into account when they decided that these goals were worthwhile? Is the use of renewables the privilege of richer countries, regions, companies, and those living in areas with fortunate environmental conditions?

Photovoltaic panels on a mountain in the centre of Crete

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The term “renewable” denotes all resources that are naturally replenished on a human timescale. These include sunlight, wind, rain, waves, tides, geothermal heat, and biomass. It is important to note that the various energy sources have different demands, limitations, investment and operational costs, and performance—so why do we treat them as a single group? Beyond replenishing automatically and allowing for long-term sustainable utilizations, they share the following characteristics: • Low waste technologies are built upon them: Their operation produces practically no waste, and they are completely recyclable at the end of their lifespan. • Safe operation: From a social perspective, it is important that they cannot lead to notable environmental, financial, or health-related issues. • Most of them are able to produce power intermittently, and for this reason, their demands regarding electric networks are very similar. • They require power storage capabilities. • Due to their intermittent nature, their economic effect is also the same. When comparing energy sources, three essential things need to be taken into account: supply security, sustainability and economics. In all three aspects, renewables have shown promise, but their utilization also generates further responsibilities. In terms of supply security, challenges regarding storage need to be overcome before they can be utilized— this is one of the foci of worldwide research & development projects. On the other hand, there is no debate about their sustainability: They can be operated for extended periods and replaced without risk. However, when it comes to how economical they are, some further aspects need to be kept in mind: Although there have been incredible advances in performance and capacity (wind turbines and solar panels), but surplus production also bring additional costs, as traditional electrical grids are unable to properly manage excess voltage. There are three solutions to this: exporting surplus electricity (generates income), storing it (generates additional costs), or using it in a “smart” manner. Smart use requires an intelligent, flexible grid, and constructing such 32

RESOURCES & TECHNOLOGY

a grid (or converting a traditional one) requires considerable investment, but also a major step towards so-called “smart” cities. It is no exaggeration that the greatest breakthrough in humanity’s energy supply since the turn of the millennium has been in the field of renewable energy: Technological advancement has made efficient energy production possible even in isolated areas and is capable of meeting country-sized capacity demand. While fusion experiments are being conducted and the exploitation and increasingly efficient utilization of countless other or new energy sources are being researched, it appears that renewables will represent a reliable long-term power production source. This, of course, raises much-debated questions (here in Hungary as well): • Can renewables replace fossil fuels and nuclear power production? • In energy supply, are they capable of complementing the baseload, or can they serve as the basis for the entirety of energy production? Or perhaps they are better-suited to another role? • Can electrical grids adapt to this new kind of production? • Is there a solution that allows for the utilization, distribution, and storage of renewable energy, the replenishment of which can be somewhat hectic? When looking for the answers to these questions, it is worthwhile to look at international tendencies and countries where previous investments have already produced significant experience in the field. The Economics of Renewables In an interesting development, investments into renewables in developing countries has exceeded those in developed countries, which— instead of traditional economic development models that omit externalities—offers an opportunity to craft a sustainable economic development model. However, this would also require a particular country to be capable of refraining from, or at least minimizing, the use of fossil fuels. Such a development model is without precedent, is its viability is thus doubtful. This is a kind of frogleap. Traditional models are based on GDP as the measure of economic performance. But the GDP

omits environmental and social externalities that have the potential to limit economic performance (see for example pollution in China and the US)— which is precisely what a stricter representation of sustainability illustrates. Some externalities manifest beyond borders, in the form of waste deposited or burned elsewhere, or as pollution of the ground, water, or air. Thus, GDP measures economic performance by ignoring additional costs resulting from social or environmental effects. Since it takes into account only one pillar of sustainability, it is unsuited to serve as the basis for long-term, sustainable energy mix. Global Energy Production Installed renewable power capacity has more than doubled since 2000 (see graph below). As the graph on global energy production shows that, over the same period, global energy production has grown by about 150%, which

shows that renewables are becoming increasingly widespread and most countries around the world are putting their trust in them. BP’s Energy Outlook 2017, the temporal scope of which extends until 2035, predicts the continuation of the same tendencies, adding that the rapid increase in energy consumption also leads to a rise in the demand for fossil fuels, and thus their future role will only decline in relation to gross energy demand. [Primary fuels are natural energy carriers, and include non-renewables (fossil fuels: coal, crude oil, natural gas), non-fossil fuels (uranium), and renewables. Secondary fuels (such as electricity, gasoline, petrol) come from converting primary ones.] Since renewables comprise not one, but several energy resources and technologies, they are flexible enough that at least one of them can be utilized in most habitable environments. China,

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Gross inland consumpDon

2015

2014

2013

2012

2011

2010

2009

2008

2007

2000 000 1800 000 1600 000 1400 000 1200 000 1000 000 800 000 600 000 400 000 200 000 0

2006

Thousand tonnes of oil equivalent (TOE)

Gradual shift in the global energy mix.

Primary producDon

In 2014, primary energy production in the EU-28 states combined for aÂ total of 771 million tonnes of oil equivalent.

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Graph 1: EU Decarbonisation scenarios - 2030 and 2050 range of fuel shares in primary energy consumption compared with 2005 outcome (in %)

2030

75%

2050

75%

50%

25%

0% RES

Gas

Nuclear

Oil

RES

Solid fuels

Gas

Nuclear

Oil

Solid fuels

2005 EU roadmaps for eliminating CO2 emissions

India, the United States, and the European Union play a key role in this effort, which is warranted not just by their economic performance, but their aims regarding a low-CO2 economy. Meanwhile, in the European Union In the energy production of the EU, the share of renewables was 25.46 % in 2014, and 26.65 % in 2015. Unfortunately, there is a wide gap between energy production and consumption in the EU (see in the bottom left), and in 2014 53.5 % of the gross domestic energy consumption of the EU-28 came from imports. The main reason for this is the decline of energy carrier resources, as well as loss-making production, which has resulted in a gradual drop in production over a longer period (see above). That was followed by a drop in consumption, which, in light of high European living standards and the rapidly increasing global energy consumption, is a surprising tendency. Of course, the proliferation and wide acceptance of renewables are no

accident: The European Union set out to ensure that, by 2050, the share of renewables within gross energy consumption would be a remarkably high 75 %, and 97 % within electric power consumption (the graph above shows its relation to primary energy consumption). Thus, renewable energy is the most effective means of reducing dependence on imports, nuclear power, and fossil fuels (see climate targets).

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ENERGY CARRIERS I—THE LIMITS TO CONVENTIONAL RESOURCES Mihály Kálóczy

To understand the energy policy of a particular region, one must first look at energy supply possibilities, which means investigating the various sources and potentials. It is only after this first step that it can be weighed if a certain energy source is worth utilizing (extracting the raw materials and building the necessary facilities), since all returns on the investment will depend on the market and various political factors. For example, even if someone has access to massive amounts of coal, they will not extract it if they are able to purchase cheap natural gas from a reliable partner. It is also possible that this source of gas “runs dry” due to a deterioration of political relations, and it suddenly becomes worthwhile to extract the coal (or find a third solution). Climate protection considerations also created a new decision-making environment, as the social acceptability of measures resulting in greenhouse gas emissions can no longer be ignored. With a number of similar circumstances to take into account, it is important to look at what energy sources the world’s different countries have access to. The energy that can satisfy humanity’s demands comes in a wide variety of forms. This is articulated in the ISO 13600 standard, according to which an energy carrier is either a substance or a phenomenon that can be used to produce mechanical work or heat or to operate chemical or physical processes. Their availability is closely related to the circumstances of their formation. Thus, depending on the source or the means of creation, they can be assigned into one of three groups: • Fossil fuels: Energy carriers formed during the airless decomposition of plant or animal remains, which came into being over millions of years. They can be solid, liquid, or gaseous, have great energy density, and consist mainly of carbon and hydrogen atoms. 36

RESOURCES & TECHNOLOGY

• Nuclear energy carriers: The amount for free energy stored in nuclear fuels (uranium, thorium, plutonium) is a million times more than in a similar unit of chemical fuels such as petrol. Since, according to our knowledge, most nuclear fuels— meaning elemental uranium—is (more accurately: was) created only during a supernova explosion, it is also a finite resource. • Renewable or alternative energy sources18: On a human scale, these are constantly replenished, and thus, according to our current knowledge, the amount of resources cannot be measured in a traditional sense. Fossil fuels include various kinds of coal (anthracite, hard coal, brown coal, lignite, peat), crude oil, and natural gas, as well as their processed products (e.g. petroleum (gasoline), light petroleum, bitumen). When making estimates for the amount of available resources, we only take into account those that are worth extracting, which is determined by a variety of factors, ultimately the market price, and thus the methods and results of calculating may vary. Returns of investment are dependent on three main factors: price of extraction, which is essentially a technological challenge; market price, which is shaped by demand; and the quality (heat value) of the energy carrier. For example, the uranium supply grew by 25 % in the past 10 years as new deposits were opened. In the following discussions, we will disregard subcategories of energy carriers, as differences in their heatvalues would warrant more detailed subdivisions. We will thus omit these, since their use and returns on their extraction requires 1. 8. Ellabban, Omar; Abu-Rub, Haitham; Blaabjerg, Frede (2014). „Renewable energy resources: Current status, future prospects and their enabling technology”. Renewable and Sustainable Energy Reviews. 39: 748–764 [749].

Coal 12 % 21 %

27 %

28 %

7,4 % 7,2 %

6,8 %

48 %

17 % 8,6 %

USA Australia

13 %

Russia

China

India

10 %

26 %

Others

Distribution of global coal reserves (2015)

individual consideration. The US possesses over 25 % of the world’s coal reserves, and 75 % of the total available amount is in the hands of just few countries. Further large reserves are held by Germany (4.5 %), Kazakhstan (3.8 %), Ukraine (3.8 %), South Africa (3.4%), and Indonesia (3.1 %). Of course, the economic significance of these shares also depends on a particular country’s population, level of development, and territory. Beyond the amount of reserves, the two other important aspects are extraction (mining) and consumption, changes in which—on a regional level—have been interdependent in the past 25 years. Comparing the three diagrams reveals a number of interesting details. Comparing the hard data confirms that China is responsible for about half of the global coal use, while possessing on 12.8 % of global reserves, which—considering the constant increase in global coal extraction—suggests that intense extraction can only supply power plants with coal for a relatively short time—according to BP’s calculations, for a mere 31 years. Based on

11 % 50 %

USA Australia

Russia

China

India

Others

Distribution of global coal mining (top) and use (bottom) (2015)

RPR values (reserves-to-production ratio), when we compare various regions, North America and Europe (taken together with Eurasia) are in the lead, with over 270 years’ worth of reserves, thanks to their relatively slow use of this resource. Mining in Australia has grown over the past 10 years despite a drop in consumption, and there is even a noticeable different between the two.

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are followed by Middle Eastern countries. With its current extraction levels, Russia’s natural gas

Natural Gas

24 %

30 %

22 % 40 % 5,44 %

17 %

5,13 % 13 %

5,3 %

16 % Russia Saudi Arabia

Iran

Qatar Turkmenistan

USA Others

United Arab Emirates

USA

Iran

China

Norway

Qatar

Canada

Russia

Others

Distribution of global natural gas reserves (2014)

That amount can be stored or exported. Russia possesses nearly a quarter of natural gas reserves, and when combined with the reserves of the runners-up Iran and Qatar, the amount is 54 %. This is the main reason why Russia is able to sell natural gas at a very low price on the international market. The interesting thing about international natural gas trade is that, regardless of the availability of resources, there are only a few countries who export. In 2015, the United States hardly consumed less (in real terms) than what it had produced. Japan and China are both important consumers, which is only possible thanks to the international market. By contrast, Norway does not use its considerable resources for energy production, and Russia only used 68.3 % of what it had produced in 2015, as most of the rest was sold to foreign countries. According to BP, global natural gas reserves should last over another 52 years, which standout countries including Turkmenistan (241 years), Iran (177 years), Qatar (135 years), and Venezuela (173 years), which 38

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22 %

46 %

5,7 % 5,5 %

11 % USA

China

Saudi Arabia

Iran Canada

Japan Russia

Others Distribution of global natural gas extraction (top) and consumption (bottom) (2015)

Oil reserves will last another 56.3 years. The most easily accessible crude oil deposits

12 % 25 %

8,1 %

are found in the Middle East and South America. On a global level, the rate of extraction is slowly but gradually growing. When there is a drop in the extraction of easily accessible oil, its price goes up, which makes it worthwhile to extract deposits that are more difficult to access. Oil reserves—in RPR, according to BP’s estimates—should last over 50 years.

13 %

8,4 %

22 %

12 %

42 % 14 %

13 %

Venezuela Iraq

Saudi Arabia Kuwait

Iran

12 %

United Arab Emirates

Others

China

Russia

United Arab Emirates

Saudi Arabia Iran

18 % 27 % 21 %

10 % 8,4 %

52 % 16 %

6% 8%

Venezuela Iran

9% Canada

Iraq

United Arab Emirates

12 %

Saudi Arabia

Kuwait Others

Distribution of global natural oil reserves according to OPEC (top) and BP (bottom) (2015). BP’s numbers account for secondary supplies in Canada, while OPEC’s only take into account traditional reserves.

USA Brasil

India China

Japan

Russia

Others

Distribution of global oil extraction (top) and demand (bottom) (2015) RESOURCES & TECHNOLOGY

Nuclear Energy Resourcesâ&#x20AC;&#x201D;Uranium Uranium is the primary nuclear fuel. Not taking into account the various isotopes, the global distribution of reasonably exploitable reserves are as follows:

29 %

5,1 % 5,6 %

Australia Russia

13 % 9%

Kazakhstan South Africa

10 % 8%

14 %

Canada Niger

Global distribution of reasonably exploitable uranium reserves (2015)

The above diagram does not show so-called secondary nuclear supplies: recycled uranium and plutonium (from used fuels), re-enriched depleted uranium tailings, ex-military weaponsgrade uranium and plutonium, civil stockpiles. Their utilization is only possible in appropriate power plants. The above diagram clearly shows one of the catalysts of the changes seen in French energy supply: For decades, the country relied on nuclear energy sourced from imports. The country is among the worldâ&#x20AC;&#x2122;s largest consumers of uranium. Uranium mining is essential to supplying power plants, but 70 % of all production takes place in just three countries: Kazakhstan (39 %), Canada (22 %), and Australia (9 %), followed by RESOURCES & TECHNOLOGY

29 %

7,9 %

Others

27 %

USA France

Russia

China

South Korea

Ukraine

Others Global distribution of uranium demand (2016)

Nigeria, Russia, and Namibia. Known reserves are expected to last about 90 years, although this estimate is based on the properties of traditional reactors.

ENERGY CARRIERS II—RENEWABLES AS THE TOOLS OF ENERGY INDEPENDENCY Mihály Kálóczy

“Our studies continue to demonstrate that there are no one-size-fits-all solutions in energy generation or storage,” says George Bilicic, Vice Chairman and Global Head of Lazard’s Power, Energy & Infrastructure Group. On a global scale, in addition to fossil and nuclear fuels, renewable energy resources have taken on a bigger role, since, as a group of different technologies, they can provide a decentralised and sustainable long-term solution to the question of energy supply, while also representing the push towards more environmental conscious solutions. As the Renewables 2016 Global Status Report reveals, the share of all renewables in global final energy consumption was 19.2 % in 2014, although about half of this is covered by traditional biomass (mainly wood), which we do not deal with here, since it has shown that it cannot represent any political power. The share in global electricity production was 23.7% at the end of 2015. Renewable power generating capacity has never ever seen an increase like the one in 2015, with an estimated 147 GW of renewable capacity added. Although wind turbine and solar PV both saw records for the second consecutive year, together making up about 77 % of all renewable power capacity added in 2015, hydropower plays the main role in the electricity production amongst renewables with a share of 16.6 %. Hydropower Since hydroelectricity is currently the most flexible and consistent renewable energy resource, it has multiple functions in energy mixes: It can serve as baseload or flexible backup, particularly when complemented by pumped storage (PSH). As the past year’s events in Brazil have shown, it is not safe to use it on its own. As for the environment, this resource generally has only minor effect

compared to others, although this is also the subject of debate. Globally, hydropower represented 1,064 GW of installed capacity in 2016, with Europe possessing 24.4 % of it. Surprisingly, although electricity production from hydroelectric sources was changing frequently between 1971 (it was more than 20 %) and 2007 (15.4 %), it seems to be steadily increasing now. Nowadays, hydropower is not in the focus of energy- and geopolitics. Solar power While hydropower is dependent on the location of rivers, almost any country stands the capability to produce solar power, as the map below shows. Most African countries do not have enough water or any hydropower capacity, but the technology to produce drinking water from the air by means of solar PVs already exists, and thus, technically, climate-related migration could likely be solved in situ. Solar PV is responsible for the 1.2 % of global electricity production and this number has been growing exponentially. Global photovoltaics’ cumulative capacity was around 5.1 GW in 2005, 40 GW in 2010 and 227 GW in 2015. According to a report from IEA PVPS, the world’s cumulative PV capacity had surpassed 303 GW by the end of 2016. Germany has the largest PV capacity with 22 %, followed by China (16 %), Japan (13 %), Italy (11 %) and the USA (10 %). As the leader, Germany’s solar power share in gross power production was 5.95 % in 2016 (and a further 11.9 % of on- and offshore wind energy). Beyond its environmental and economic benefits, solar panels play a key role in decentralised energy independence. Depending on the future of technical solutions (storage and energy demand RESOURCES & TECHNOLOGY

In production, China has reached higher levels than Brazil, Canada, and the USA combined. Due to the difference in the amount of energy produced per country, it has aÂ different share and significance in energy mixes. (In terms of capacity, the USA leads Canada.)

World Map of Global Horizontal Irradiation (2012) 42

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management), it may be the primary energy solution for most countries around the world. Wind Power Alongside the solar panel, the wind turbine is also experiencing a revolution of sorts. Tipically, in developed countries, solar and wind are the cheapest forms of unsubsidized energy, eg. USA according to Lazard. Due to this fact, installed global capacity at the end of 2016 was 486.8 MW. China leads the way with 34.7 %, followed by the USA (16.9 %), Germany (10.3 %), India (5.9 %) and Spain (4.7 %). Some countries rely on wind power in their electricity generation more than others, e.g. as of 2013, Denmark had 33.8 %, Portugal 24.6 % or Spain 20.9 %. If one would like to understand why offshore wind farms are being built, they simply have to compare wind speeds to above water and on land, where the landscape and man-made objects do not get in the wind’s way. Others In electricity generation, so called bio-power represented only 2.0 % of the total in 2016. Furthermore, geothermal (83.4 GW installed capacity) and ocean energy resources made up less than 0.4 % altogether, similarly to biofuels and waste energy. While a few countries are able to benefit from them (geothermal energy is responsible for 25 % of Iceland’s electricity production and 66 % of its primary energy use), in the global processes, they are not significant.

Summary The second tier constitutes of exporting countries such as Nigeria, Angola, and Algeria, representing the fortunate exceptions in Africa by virtue of their oil (and gas) reserves, and there are further countries more or less capable of supplying themselves, but their role in international relations is less significant. Regarding reserves, extraction, and consumption, we might assume that the main foci of the global energy landscape are North America, Russia, China, the Middle East, an—chiefly for its colourful and changing energy policy—Europe. Possessing a quarter of global coal reserves, the main rival to U.S. coal is cheap natural gas. Coal is constantly losing share in electricity production; in spite of President Trump’s election promise, its relevance is projected to continue to drop in the U.S. energy mix, as market forces seem to move investments in completely different directions, like unconventional fossil fuels and renewables. (The latter are constantly getting cheaper and offer the chance of emission-free power). US coal— among many other factors—is also challenged by temporary decrease in demand from China: The giant country banned the construction of new coal plants, including a dozens of projects, aiming to limit its total coal-fired power generation capacity. Meanwhile, coal companies are shrinking and slowly going bankrupt in the U.S., shale resources are changing the country’s energy outlook, as increasingly larger quantities of gas are getting economically recoverable. Unconventional gas and oil in North America is changing the global energy flow, having serious impact on the globe’s energy

The expansion of global wind capacity until 2015.

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landscape: the continent is importing less energy and is aiming to increase its exports in form of LNG, what might be eased by upcoming free trade agreements. Additionally, shale resources outside of the U.S. also might have serious impacts on the global energy trade, once—instead of its negative environmental impacts—its economical potential gets more emphasis. Due to the „tight oil” revolution in the U.S., more African and Latin American producers are competing with Middle Eastern suppliers for market share in the Far East. In spite of the optimism of many investors, the United States still depends on the global market; and the main question is how efficiently and how long it is possible to base the growth of American energy security on shale gas and oil. Russia, holding high reserves of coal and natural gas and being among the top countries for oil and uranium reserves as well, has a huge influence on the global energy landscape. With its reserves in East Siberia and the east of the country, the world’s fastest growing markets—China and India—are once again found into the focus of Russian energy export by implementing new investments such as the East Siberia Pacific Ocean pipeline, along with a branch from Skovorodino to Daqing, China; and by the construction of a joint venture refinery and petrochemical complex in Russia near the Chinese border by the end of 2018. Although one might think that Russia’s fossil fuel wealth does not urge the country to turn to renewables, but there is a large number of isolated dachas with no access to centralized electric power supply, which should provide an impetus to the growth of renewable energy customers, especially on remote sites. China’s coal reserves and production capacity are high, but the same is true for the environmental impact of its coal use. This situation might change in the future, as China has spent billions on renewable energy technologies and fortunately relies more and more on green energy, aiming to reach an increased share for energy from renewable sources by 2020, while the proportion of coal in the energy mix is projected to fall as well. China’s involvement in the Middle East— due to increasing oil imports—indicate deeper 44

RESOURCES & TECHNOLOGY

commercial engagement. Although it has its own reserves, China is the world’s second largest importer of crude oil, with Saudi Arabia, Iran, and Russia as the top oil exporters in the world. Despite the growing importance of shale gas and oil in North America and China, at current production and consumption levels, oil reserves in the Middle East (including Gulf Cooperation Council countries) will remain one of the cornerstones of the global energy supply in the near future. Although the rise of shale oil threatens OPEC’s interests, the region is expected to maintain its importance in the global economy due to the ongoing growing demand for petroleum products. Striving for a more diverse energy mix, Middle East countries have good opportunities for alternative energy investments, especially considering the ideal climate for harvesting solar energy, and wind energy can be also a viable option in vast open spaces. Meanwhile, Europe’s energy consumption is decreasing and becoming more efficient, but the continent is still import-dependent. A common energy policy is intended to be adopted by the member states, while Germany’s green energy revolution is helping renewables become one of the flagship industries in the Old Continent’s most influential country. The European dependence on fossil fuels makes international relations even more complex, and Europe’s long-term strategy has to include the diversification of its resources— regardless of whether it is an economic solution, the continent continues investing in LNG terminals on its territory, extending import possibilities to and from the Western Hemisphere as well. We are experiencing a peculiar rebalancing, whereby new demands and supplies are dictating the path. Taking into consideration Asia’s potential for growth, the fact that additional unconventional fossil resources will likely capture a greater market share, oil and gas will keep playing an important role in energy supply. The proliferation of renewables is rapid, but still technically and economically limited, and thus this process will be slower than it currently appears globally, until one or more inventions—due to the tremendous investments in R&D projects—eventually allow us to overcome these obstacles.

ENERGY MIX—BASELOAD AND PEAKS, OR RENEWABLES AND FLEXIBLE BACKUP? Cecília Varsányi & Mihály Kálóczy

An energy mix is defined as the combination of different energy sources for supply. The demand originates from the consumers, the supply from the available sources in the given area. The energy supply chain can be quite varied, both horizontally and vertically. The five main steps of a supply chain are production, transmission, distribution, retail, and consumption. Most consumers are not interested in raw materials (primary energy) but solely the electricity produced from them. This fact is remarkable, because electric power is transmissible and distributable very easily and cheaply via an electrical grid compared to material resources (for example coal and oil). Naturally, there are exceptions when the geological environment cannot make the establishment of a grid feasible.

It is not transmitting the energy via a grid that is the challenge of this process, but balancing supply and demand across the entire grid in real time. This is the responsibility of the system operator. The transmission system can be owned by a national or international service company. As the system operator watches the balance, it has to increase or decrease the generation of each power plant, sometimes turning it on or off, or importing and exporting electricity through the international electrical grid. Using traditional (fossil or nuclear fuels) power resources and power plants, it is obvious that supply strictly follows demand, thanks to an adjustment procedure. In a system like this, it needs to be stated, that there is a lower limit for the total electricity (demand and) production

The share of fuels in electric power production including the provisions of EIA. RESOURCES & TECHNOLOGY

(minimum) of a country or area. The upper limit defines the full capacity of the area. Regarding this aspect, power plants can be split into two types: 1. Base load power plants, meeting the minimum energy demand, and 2. Peaking or load following power plants, which generally run only when there is a high demand, known as peak demand, for electricity. They quickly respond to peak demand. The first group contains power plants running on nuclear fuel, geothermal, waste, coal and biomass energy. The second one is a smaller group, though their importance of seems to increase rapidly as renewables spread on the markets. These are the gas turbines that burn natural gas, sometimes biogas or petroleumderived liquids, such as diesel oil and jet fuel, and pumped storage hydropower. The role of natural gas is getting more and more significant as a consequence of this attribution. Hydroelectric dams or power plants are the ultimate weapon in the toolset of power plants. Depending on the water mass flow, they can function as a peaking plant or a baseload plant. On the level of generators we distinguish base load, middle (or intermediate) load and peak load generators by their ability to change power output. If we take a look at the graph below, it is obvious that nuclear power plants are responsible for the 46

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majority of the energy production. Meanwhile, renewables, gas, and coal and oil cover the peaks. This kind of energy supply approach was sufficient up until the quick proliferation of renewables after the 2000s, because the use of small amounts of intermittent power has little effect on grid operations. Using larger amounts may require upgrades or even a redesign of the grid infrastructure. Three promising solutions seem to be flexible backup, energy storage, and demandside management 9 (DSM)1, as parts of and complements to a smart grid. One of the main arguments against renewables in energy supply, according to its opponents, is that clean energy is unable to meet baseload needs. What is given everywhere is that an electricity grid cannot function without substantial minimum energy on the system in order to avoid system failures or blackouts. Thus, intermittent sources alone are not able to provide stable energy; for example, the rapidly built up renewable energy infrastructure of Germany has to face this problem as well, as there is a constant effort to keep German electricity grid balanced.

1. “Electricity system flexibility”. Ofgem. Government of United 9. Kingdom. Retrieved 7 September 2016.

“The Sun doesn’t shine at night. The wind doesn’t blow all the time.” These arguments are overly

simplified, taking into consideration today’s

technological achievements, thanks to which there

are number of renewable energy forms which are

able to provide baseload power in case of a diverse portfolio of resources. Because humanity currently

cannot control wind and solar power production and sustainable energy resources in general, the question is not what we should do, but how and when do we develop storage and DSM to reach

sustainability. Speaking of production, the question is which mix of technologies allows for the best system reliability in a given case in a given region.

hydro storage) and concentrated solar power (CSP—a system generating solar power by mirrors or lenses focusing sunlight onto a small area), which are able to control their output just like a conventional fossil power plant and able to meet baseload needs if necessary. However, when installing variable resources, there are specific factors which cannot be left out of consideration: lower predictability, temporal variability, and the geographical availability of the resources. Although variable renewable energy cannot constantly cover baseload power demand yet, its well-thought-out combination with a dispatchable renewable or another energy source could satisfy total power demand.

As mentioned, baseload power plants are generally the ones which meet minimum energy demand, operating with low variable costs. (However, initial capital costs are generally very high, e.g. in case of a nuclear power plant, the operation of which is less costly than that of, for example, a natural-gas power-plant.) An alternative solution can be provided by dispatchable renewable energy generators (biomass power plants, geothermal power plants, reservoir hydropower plants (i.e. pumped

France’s average daily generation by source, November 21, 2014 through July 20, 2016. The data shown are daily averages, so daily variations in generation will not be visible. RESOURCES & TECHNOLOGY

SMART GRID—THE DREAM OF PROSUMERS Mihály Kálóczy

According to the Results and Recommendations of the World Smart Grid Forum 2013, held in Berlin, “Smart Grid is a smart power system in its entirety, including every element from the beginning of the chain to the end (where “chain” is value chain, power chain and energy chain).” Still, there is no common definition for the concept of smart grid, but the point above remains the same. The International Electrotechnical Commission provides the standards that any service company can follow, and the International Energy Agency published the Roadmap about smart grids, but it is, of course, not a legally binding paper. Evolution of Grids Since the War of Currents between the representatives of the two competing electric power transmission systems in the late 1880s

Renewable energy on the grid 48

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and early 1890s, the alternating current standard has been in use and advocated by several US and European companies. This has determined the types and properties of all the electrical grids that have been installed since then. Consequently, metering of electricity consumption became necessary in order to allow per-user billing, but, since the 1960s, only fixed- and dualtariff arrangements had been introduced due to technological barriers. Then metering capability The so-called war was a commercial competition, a debate over electrical safety, and a media/ propaganda campaign about the advantages and disadvantages of direct current (DC) represented by the Edison Electric Light Company and the alternating current (AC) represented by the Westinghouse Electric Company.

Electrical grid evolution

became the technological limitation, because the networks were not capable of forwarding so many price signals. In the next two decades, peak times led to the proliferation of power plants, as poor-quality power had to be phased out: Brownouts, blackouts and power cuts took place during those times. Firstly, automatic meter reading worked only for large costumers, but by the end of the 1980s, an advanced metering infrastructure could already track changes in electricity use. The traditional usage pattern of electricity (industry, heating, communication, lighting, entertainment, other household purposes) was changed at the end of the 20 th century due to the daily peaks caused by air conditioners and heating, which required the increased use of more or less flexible energy producing plants (peaking generators, e.g. gas turbines). As a solution, in the early 1990s, USA complemented its smart grid research with prototype sensors that were capable of quickly analysing anomalies in electricity quality over very large geographic areas. That is how the first operational Wide Area Measurement System (WAMS) was installed in 2000. Since then, other countries have adopted this technology—China, for example, has been building a comprehensive national WAMS system since 2012. Meanwhile, in the 2000s, the world of energy security fundamentally changed. Extreme events led to a growing concern over terrorist attacks in some countries, which has led to calls for more robust energy grids being less

dependent on centralised power stations, which were perceived to be potential targets of attacks. Meanwhile, thanks to rapidly falling costs, the proliferation of renewable technologies induced further technological solutions to ensure system stability and reliability. One of these is the smart grid, made possible by the invention of smart meters, which can enable continuous communication so that monitoring can be done in real time. For example, the Telegestore Project (Italy, 2005) networked 27 million homes using smart meters connected via low bandwidth power line communication. Technological Challenge of Renewables In the beginning, the appearance of renewable technologies was accompanied by a growing demand for inverters—a machine converting DC (produced via a renewable technology, e.g. solar panels) into AC—as an AC network is unable to transmit DC electricity. (This had significantly increased the price of the application of renewables.) Afterwards, they called into question the storage, the timely distribution, and so the metering. The renewables revolution still sorely requires a solution to the currently unreliable supply in order to satisfy social demand regardless of the type of energy resource. That was the point where environmental conditions began to meet the economic aspects, creating an intelligent—i.e. smart—grid, which can handle the energy supply chain under the principle of subsidiarity, which means that each energy consumer can become a producer as RESOURCES & TECHNOLOGY

well (prosumer). This means that, unlike the previous one-way supplier role, a smart grid introduces a two-way dialogue, where electricity and information can be exchanged between utility and consumer. Although technical challenges worldwide are all roughly of the same type, all regions, countries, and local systems have their own challenges as well. In China, the rapidly increasing demand for power necessitates more transfer capability due to the long distances between producers and consumers. Their grids are linked but not unified. Europe has a single grid, but reinforcing it is difficult (but necessary). A meshed DC system should be superimposed on the AC grid as an overlay and new transmission links with North Africa should be installed. The USA is working to synchronise its various solutions across state borders. In general, the protection and control of the entire system and all the equipment is also a challenge. As it was concluded at the World Smart Grid Forum, technical solutions to most of the problems presented by the smart grid already exist, and now the conditions must be created to allow them to be acquired and installed in a cost-effective manner. Impact of the New Electric Network The overall effect of this technological change is much bigger than expected. It can transform society, the industry, and the state of the environment. It creates more energy efficient societies. The role of energy service companies will change in the city of the future due to the role of prosumers, the manufacturing plants will be programmed and ready to operate during energy abundance, and the anthropogenic environmental impact will be much lower. As for households, energy supply will be decentralised, as nowadays the roofs of buildings are often covered by solar panels, and villages are supplied by wind turbines in situ. The advancement of sensors, the application of 3D printing, the transition towards individual production via demand flow technology (improved production planning and control) as a tool of the 4th Industrial Revolution are all a way of smart grid implementation. Furthermore, smart grid is a tool of climate change mitigation due to its efficacy-increasing impact. 50

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The Internet of Things or IoT is an umbrella term

for inter-networked physical devices, vehicles (“smart devices”), buildings or any other items embedded with electronics, software, sensors,

control functions, and network connectivity, which enable all of these to collect and exchange even large amounts of data (“big data”).

The spread of the Internet of Things in manufacturing

and the consequent technology-driven changes triggered a new, 4th Industrial Revolution, also called Industry 4.0. Two main advantages are

smart machines that can predict failures and trigger maintenance processes autonomously and

self-organized logistics that react to unexpected changes in production.

Unfortunately, in developing countries, technological processes are surrounded by the expectation of a miracle. More than half a century ago, nuclear power seemed to be the ultimate solution, while today fusion power is expected to solve all problems. However, current energy developments are much more like a learn and adapt scheme aimed at a sustainable energy system, which means that researchers, engineers (with the support of companies and governments) are continuously working to achieve a resilient, sustainable level of our existence on Earth. Environmental Impact As for electricity consumption, an interesting fact is that it only represents 17 % of final energy use

Resilient energy mix: According to projections in

the IPCC Fifth Assessment Report (AR5), changes in weather and climate extremes will occur globally,

albeit unevenly. In this sense, resilience means the ability to quickly respond to these factors, which is feasible via a system diverse enough to adapt to

energy demand, which can ensure energy supply

independent of environmental conditions and has an adaptive infrastructure coping with extreme heat, freeze, storms, heavy rain etc.

A smart grid will consist of sensors, controls, computers, automation, and equipment, interconnected by the electrical grid and working together to respond digitally to our quickly changing electricity demand.

today, but is responsible for 40 % of global CO2 emissions, since almost 70 % of electricity is produced from fossil fuels (IEA, 2010). Furthermore, according to the IEA, the role of a smart grid will gradually increase in the future, mainly due to the ability to save energy via peak load management. In the ETP BLUE Map Scenario, as a result of decarbonisation, electricity generation constitutes only 21 % of global CO2 emissions, representing an annual reduction of over 20 Gt of CO2 by 2050. The Map Scenario estimates that smart grids offer the potential to achieve net annual emissions reductions of 0.7 Gt to 2.1 Gt of CO2 by 2050. Not surprisingly, North America shows the

highest potential for CO2 emissions reduction in the OECD, while China has the highest potential amongst non-OECD member countries. Apparently, countries facing the burden of having to phase out both nuclear and fossil fuels are dependent on a solution like smart grid.

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SUBVENTIONS ON THE ENERGY MARKET Cecília Varsányi

“There is a myth around subsidies, but there is no such thing as an unsubsidised unit of energy”said David Hochschild member of the California Energy Commission in 2016 at the Energy Productivity Summer Study in Sydney. Energy subsidization—artificially benefiting certain technologies over others—always has been topic of intense debate. There are many different definitions for subsidization; the main question is which definition of subsidies we want to use, as they are made up of both consumer and producer subsidies. (Which can also be divided into different types.) We speak of pre-tax consumer subsidies when consumers pay less for a given type of energy than the costs of supplying them with this energy are, it is mostly a price-gap approach (gasoline might be a good example). Tax subsidies mean that taxes for energy are below their efficient level, meaning that they are not taxed as any other product and also that their negative effects are not taken into consideration. Post-tax consumer subsidies are actually the sum of pre-tax subsidies and tax subsidies, they include the negative externalities associated with the use of fossil fuels (that are not internalised through corrective environmental taxes by the government). Producer subsidies encourage suppliers to increase their outputs, even if selling prices are low. It often arises when—usually state-owned— enterprises offer artificially low prices while their

production costs remain high. This support can occur in different forms, for example with the help of direct financial transfers or preferential tax treatments, just to mention the most common ones; however there is a large number of different tools and methods that enable the support of diverse types of energy sources (for example trade restrictions, direct investments in energy infrastructures, price controls, etc.) When evaluating subsidies, we have to take into consideration if they actually help to correct a market failure, how much do they cost and who are the ones who benefit from them. There have been various efforts by international organizations to measure and track government subsidies provided to the fossil fuel production industry. Though, methods differ in many aspects, the fossil fuel support estimates provided by IEA and IMF show shocking figures. As reported by IEA, the value of fossil-fuel consumption subsidies dropped in 2015 to $325 billion. Even so while fossil fuel subsidies fell in the last years, the industry is still over-subsidized compared to the clean energy industry: renewable subsidies were around 150 billion $ in 2015. According to the International Monetary Fund’s even more shocking estimate (which takes into account non-internalized negative externalities in form of post-tax subsidies), fossil fuels in 2015 have been subsidized by an amount of $7.38 trillion globally. This amount—according to

By definition, externality is a „consequence of an economic activity that is experienced by unrelated third parties”, which can be either positive or negative. In our example, it reflects the environmental damage associated with energy consumption. Consumption of different goods—especially of fossil fuels—generate external costs for the society, therefore the prices should reflect the damages caused (which in general are difficult to monetarize) as far as possible in an efficient pricing system. Consequently, tax on pollution is a popular example of Pigouvian-style tax, as pollution creates negative externality which has to be endured by a third party.

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WHO’s estimates—exceeds the level of money spent globally by governments on healthcare in 2013. The next chart shows the list of countries which globally spend the most (in absolute amount/value) on subsidies. Enhanced transparency would allow more correct figures, but accordingly to the closest estimates, China with its coal-fired power stations and huge population, spends the most on annual producer subsidies. The EU collectively

pumps 326 billion dollars per year in subsidizing environmental damages: it’s really hard to find justification for this excessive support for fossil fuels, considering how they distort markets plus damage economies and our environment. Energy prices drastically remain below levels that reflect their true costs, while externalities clearly remain unpriced. As a result, the production volumes of fossil fuels remain higher than the „social optimum”; and due to the disproportionate

Biggest fossil fuel subsidies of the world (bn $) China

2264

USA

689

Russia

329

326

India

273

Japan

155 0

500

1000

1500

2000

2500

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subsidy amounts renewable energies’ production might fall shorter than it would be necessary. In this way, subsidy causes an expensive extra burden with increased government spending, dismissing externalities and setting back cleaner energy resources. Could the money used up this way be better spent elsewhere…? Do Renewables Actually Need Subsidies? According to the Solar Energy Industries Association’s analysis, the costs to install solar power capacity in the U.S. has dropped by more than 60 % over the last 10 years, leading the industry to expand installation capacities over 14,000 MW per year. Apparently, renewables need less and less financial support in order to be able to compete with over subsidized fossil fuels. Solar energy prices have shown a significantly decreasing trend over recent years; and, albeit at a slower pace, wind prices have also fallen. Just to mention some examples, the UK planned to cancel subsidies on onshore wind power installations, as it’s getting cheaper than any other low-carbon technology, while the Netherlands plans to gradually phase out subsidies for renewable energy as well. These cuts to solar and onshore wind support schemes also show how significantly renewable

Solar power capacity cost drop in the U.S. 54

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energy technologies are improving, offering a cheaper and cleaner alternative of energy consumption. Even though prices are falling and this hurray optimism might overwhelm people the question remains if it is it the right moment to cut financial support of clean energy? Aren’t these decisions holding back the final dose of support needed to guarantee the sustainment of renewables on the market without subsidies? Subsidies Phased Out—Will We Ever Stop Using Fossil fuels? Obviously not. Financial support of fossil fuels is a combination of many interests and factors; apart from political decisions its technical features, such as storability, transportability and energy density contribute to its longer life span on the energy market. At the same time, infrastructure lock-in is currently also a determinative factor. For now, probably one of the most effective ways to fight pollution is to tax fossil fuels at the source in order to make external factors expressible throughout the economy. The question remains, how leading countries will be able to deal with the question of subsidies, especially carbon taxes in the future. If, for example the United States decides to drop the Paris Agreement, U.S. trading partners will need to try to find a solution to level the playing field, most probably in form of carbon

taxes. Policy arrangements like adding carbon taxes to fossil fuels would support a soft-landing gradual shift to the use of renewable energy, giving time for investment in alternative energy. Even if it causes short-term price increase, on a medium- or long-term prices would consolidate as renewable energy becomes more efficient. If financial subsidies for both fossil fuels and renewable energies would be removed, renewables would gain a competitive advantage. Nevertheless, fossil fuels would still be „more subsidized” if externalities remain unpriced. Therefore, economic, environmental and health impacts could be generated through—besides the removal of producer subsidies—the raising of fossil fuel consumer prices to efficient levels. The green transition is not the unrealistic illusion of green supporters; it’s an inevitable process we have to go through in order to try to find an acceptable equilibrium for the use of the Earth’s energy resources. However, we are talking about a process lasting decades, which will inevitably reorganizes the global economic landscape, giving power to those countries of the globe which are both technologically and financially prepared to manage an adequate transition and distribution process.

TOP subsidizers per year

In terms of dollars: China, 2.264 billion $ In percent of the GDP: Ukraine, 61 % Per capita: Qatar, 6,000 $

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GEOPOLITICS 56

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INTERVIEW WITH PÁL SÁGVÁRI, AMBASSADOR-AT-LARGE FOR ENERGY SECURITY AT MINISTRY OF FOREIGN AFFAIRS AND TRADE OF HUNGARY Ukrainian gas crises of 2005, 2006, and 2009 unequivocally caused a shock in East-CentralEurope. If gas supplies fall short in the Western countries, prices rise somewhat, while on this side of the continent energy consumers need to be restrained in some cases. Although Europe has improved a lot in this regard over the last ten years, the different perceptions of the approach remain. This characteristic can also be perceived by outsiders as a “multi-speed” energy policy.

“Europe is without a doubt the champion of global climate acts, but the following question is still a difficult one: Can the EU stand against cheap energy from the US and China and against other competitiveness factors?” From the perspective of energy markets, how many speeds can you see Europe having? When we talk about determining energy policies of the European Union or another country, we usually visualize it as a triangle. Within it, we were supposed to enforce three hardly compatible objective frameworks simultaneously: supply security, affordability, and sustainability. Due to their nature, this is hardly possible, forcing one to put their thumb somewhere on the three-armed scale. More developed Western countries, mainly Germany, Denmark (and now the French president is pulling his country in this direction as well), definitely prefer sustainability, while countries East of the Leitha prefer supply security. A result of this difference in approaches is that western countries don’t even really understand the expression “supply security.” The Russian-

Is there a common Central-European energy policy? The V4 countries—this more or less entails the area from Tallinn to Athens—have a common historical legacy, which is partially a result of the Soviet era. The basic infrastructure connecting the East to the West still constrains the development of the relations between the countries of Central Europe. This doesn’t only concern the energy infrastructure, but also the issue of transportation. For fifteen years, the North-South corridor as a political concept has been one of the most important aspirations of the East-Central-European countries, and has— slowly but surely—been progressing. However, if we analyse the member states individually and on a deeper level, the picture appears more colourful. The Polish economy is still coal-based, which makes it unique not only in the region, but in the entirety of Europe. Obviously, it will take decades until they can switch to gas as their primary source of energy. Poland wishes to use sources from the US and the North Sea during this conversion, for the sake of balance and will be relying less on Russian gas molecules in the future. Slovak energy situation is similar to the Hungarian one in many ways: The country’s dependence on gas is high, its inner gas production is negligible. As it is essentially a transit country the new, massive pipelines can RESOURCES & TECHNOLOGY

stagger its heretofore stable position, and this is the most important direction of the Slovaks’ energy policy aspirations. In the case of the Czech Republic, we are talking about a satellite system that connects to the German one via a thousand strings, and thus the burden of supply security is small. In Hungary, gas dependency is a delicate question due to the high gas demand of the population. In a physical sense, we can still only get gas from Russia. A characteristic of the V4 programming efforts is that in a web of interests we look for the lowest common denominator. That’s why we chose the North-South corridor as the energy policy priority of the V4 presidency, starting 1 July 2017. Hungary could assume a strategic role in the opening of the Southern and Poland in the Northern part of the corridor. Our aim is to contribute to the opening of at least two alternative routes. Firstly, we can connect across Romania, Bulgaria and Greece, and on the other hand, we strive for the integration of Western Balkans, especially Croatia, into the European network. To which source countries could the Southern opening connect the V4 region? Firstly, Europe’s flagship project is to connect the Central-Asian sources with the European markets. This could be done through Turkey and Greece via the Southern Corridor, which aims at connecting the Shah Deniz gas field in Azerbaijan to Europe after 2020. Since this project is already nearing completion and these sources are mostly not directed at CentralEurope, the most important question is what other Central-Asian sources can be included in addition to the ones in Azerbaijan. In this regard, there are many questions: When can natural gas be exported from Iran after the nuclear agreement, how stabile will Iraq be after the expulsion of ISIS, and, on the other side of the Caspian Sea, how committed will Turkmenistan be towards selling to Europe. Secondly, the value of the Eastern Mediterranean area has grown due to its proximity. In the last five years, new and important fields were found in Cyprus, Israel, Egypt, and Lebanon, roughly identical in quantity to the reserves in Norway, 58

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and new exploration sites are constantly being opened. In an ideal political scenario, the Eastern Mediterranean territory could truly solve Europe’s dependency problem. Despite many potential risks, two realistic options seem to be taking shape concerning the setting-up of fields and the transportation of resources to Europe by the beginning of 2020s. The first one is an Egyptian LNG terminal, now used for import purposes, the enlargement and “bi-directionalization” of which is a viable alternative. The other possibility could be the construction of a bigger pipeline, the EastMed pipeline system (Eastern Mediterranean Natural Gasline), which goes through the Region of Levant, Cyprus, and Crete to the EU. Thirdly, the United States of America could become a supply country. Donal Trump’s visit in Warsaw brought a change in U.S. doctrine. During the Obama administration, the American objective was to become self-supplying and to decrease their dependency on oil monarchs. But Trump announced his intention to create an American energy dominance. He did this in Warsaw in the context of Central Europe, thus some of the large amount of shale gas intended for the global market could end up in Central Europe. The short-term competitiveness of LNG in Europe is, of course, limited by the costliness of transatlantic transportation. In the long run, it must be taken into consideration that the cheaply exploitable Russian sources are depleting. In the middle of the 2020s, when difficult-toaccess Russian fields will also come into play, larger amounts of LNG will be made available, and its competitiveness and certain bargaining positions will likely change. In comparison, how will the EU’s energy and gas consumption change in the near future? Let me illustrate the complexity of the answer: I was recently in Doha, where experts of the Gas Exporting Countries Forum told me that one of the biggest challenges they were facing is still the estimation of European gas demand in the future. In simple terms, this means that European gas demand can be divided into three segments: population, industry, and gas

power plant demand. The course of population demand is stagnant, but thanks to energy efficiency policies, it is expected to show a slightly decreasing tendency in the future. Industrial use depends on the general welfare of the economy, so with the right economic tools this can also be predicted more or less accurately. However, the use of power plants, which will make up approximately a quarter of European consumption in the future, remains a major question mark. Concerning electricity production, two more serious contenders beside gas are gaining traction: renewables and, paradoxically, coal, which has been driven out of the American market and is becoming cheaper, but is not compatible with the EU’s climate aims. The EU’s newest clean energy package aims to provide an answer to this complex question and the cleaning of gas power plants in the future. All in all, with a significant uncertainty factor, consumption will stagnate in the next period, and the same can be said of Hungarian and European consumption as well. How deeply are energy service companies interested in investments related to energy efficiency? There is, of course, a lot they can do directly, but energy efficiency programmes are topdown processes for a reason. Basically, service companies are interested in selling higher volumes, because that is the source of their income. Therefore, the role of state regulator is paramount in the field of energy efficiency. In this regard—as I see it—, Europe is currently milling around. The aim, the vision, is to save 20 % by 2020 compared to an alternative future scenario, and 30 % by 2030. The member states set compulsory goals for 2020, but there are no such goals for 2030, except for carbon-dioxide reduction. Therefore, national governments have plenty of room to create energy efficiency operational programmes. As for energy security, there are many opportunities to act in the field of energy efficiency. We can consider it as a hidden fuel reserve that we could utilize even better. Let’s look at buildings. In Hungary, if the so-called „Kádár cubes” (a 100 m2 residential

house type constructed in great numbers during those times—ed.) built in the 60s and 70s were covered by 20 cm of insulation, it would result in a 1-billion-cubic-metre natural gas savings on a national scale, which is around 10 % of the annual consumption. The other opportunity is to increase the energy efficiency of products, e.g. the extension of A+, A++ labels, which also helps raise awareness, making sure the customer always knows how environmentally friendly a certain product is. The overall effect of these measures— although they aren’t exactly spectacular from the aspects of geopolitics and policy—is huge. In my opinion, both the EU and national governments have a lot of untapped potential. How much does the Energy Union support the comprehensive policy of its member states, and what is the exact role of the Energy Union in this process? The Treaty of Lisbon introduced energy policy into the classic range EU policies—previously it was a national-level issue. The concept of an Energy Union was originally a Polish idea, which made its way into the mainstream European targets thanks to the Polish government. This is a complex political and legislative process, the final goal of which is to depoliticize energy as a product. This way, customers would have access to energy as a competitive product on the regular European market. Today, we may be somewhere around the halfway point of this decade-long process. The watershed moment, I assume, will be at the point of determining who will be responsible for energy security. Currently, national governments are (and, until the situation changes will remain) the ones to make major decisions—for example, in cases such as improving a power plant or national subsidization policies or long-term investments. In the last decade, the EU member states made efforts to standardize European wholesale markets. However, we will only be able to talk about an actual European Single Market if this becomes apparent on the retail markets as well. Nowadays, consumers don’t feel affected by the single market, but it will be RESOURCES & TECHNOLOGY

what determines the goals of the next decade. On the way toward this goal, we cannot and must not avoid debate. The stance of the Hungarian Government and ten further countries is that the task of determining energy prices has to be left up to individual nations. It isn’t obvious whether the complete liberalisation of energy prices in the residential sector is a good idea. The Czech Republic is the only country among the V4 which has already done it, and if you talk to Czech experts, they will tell you that they aren’t sure that it was smart to let prices rise so early. The deregulation, however, led to an increase in prices, and the residential sector doesn’t have as much bargaining power as big companies, which have the ability to push down energy prices in the free market. It’s necessary to establish the appropriate guarantees for the residential sector beforehand, giving it the opportunity to become a liberalised market along the entire value chain. This is the step where we can begin to talk about an Energy Union. How can low energy prices be reconciled with the climate targets? That is a very good question. Basically, tendencies have to be examined. The Western European, German, Danish and French aims assume that the specific costs of renewables decrease gradually and consistently. If we trust this assumption, then we should expect prices to be competitive with other energy resources, and thus affordability and sustainability in the previously mentioned triangle can be immediately reconciled. But we don’t know the exact date of the eventual turning point when the balance will change and progressive technologies will become affordable. Obviously, renewable energy has much to improve regarding efficiency, not just in production but along the whole value chain, including, for example, system control and the appearance of connected devices in the residential sector. This will result in further cost reduction. Today, we can still claim with certainty that, even compared to nuclear energy, renewables are more expensive. So what should a future environment-friendly and affordable energy mix look like? 60

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The governments of Central and Eastern Europe typically plan in a conservative manner, and Hungary also aims for a balanced energy mix: A baseload power plant is necessary in the long run, ensuring 40 % of the total supply, which is in line with Western European trends, but not in the first, but the second wave. Using readily available and cheaper renewables, a low carbon production of 60-70 % may be attainable (including the nuclear sources— ed.), with the remaining amount coming from balancing resources. Europe is without a doubt the champion of global climate acts, but the following question is still a difficult one: Can the EU stand against cheap energy from the US and China and against other competitiveness factors? The trend of energyintensive industrial sectors has been relocated from Europe, sometimes as far as the United States, is unfortunately continuous. This “champion of renewables” strategy will be affordable if the price of these technologies can be lowered, making them competitive with American and other fossil energy resources. The great European forces are moving things in this direction. The only question is when and how the Central European countries should get on this bandwagon. We are constantly looking for answers. There are countries subsidizing not renewables but the exploitation of fossil energy carriers. What can they expect in the future? A lot of fossil fuel exploiting countries operate as a mono economy. In the short term, they have no other choice but to make the most of this situation. The process of energy transition has already begun. Despite President Trump’s decision to quit the Paris Climate Agreement, a lot of companies and cities have already chosen an individual energy strategy aimed at supporting renewables and exploiting all the hidden business opportunities. Some experts say that “The genie is already out of the bottle,” and the energy transition can’t be reversed. In times of transition, there emerges the question of who will be the winners and losers? Primarily mono economies involved in exploiting

resources, such as Venezuela, Saudi Arabia, and Russia surely will be losers in such a situation unless they lay out a strategy for adapting rapidly. Making their situation more difficult is the fact that the fear of scarcity no longer leads to skyrocketing prices, furthermore the cheaper renewables spread at their expense. Has the appearance of electric cars influenced the energy transition? If so, which sectors of the industry will be affected? In transpor tation, we’re experiencing a revolutionary change. Within the strategic term it’s certain that the time of petrol- and oil-based transportation is coming to an end. But what will replace them and in what form isn’t clear yet. An era of green transportation is about to come, in which both electric and natural gas-based transportation — even the fuel cell transportation—may coexist. Regarding electric cars, there are technological questions, e.g. regarding energy storage, that are yet to be answered. If we compare the combustion engine to the electric, it’s obvious that the latter is at an early phase of its technological development, whereas the efficiency of the former is quite difficult to improve. The structure of an electric engine is much simpler and there are a lot of improvements ahead of us. The electric car isn’t as ready for the market as the naturel gas-based one. It seems that the latter will eventually enter the market, although we haven’t been hearing much about it, because it mainly affects the cartage industry rather than private transportation. Companies have also begun to adapt. If we take a look at MOL’s strategy in 2016, it shows that they are preparing for a new world where the oil-based transportation is squeezed out of the market. It’s no coincidence that they are investing in the chemical industry. This is because, while they don’t know what fuel the cars of the future will run on, they take it for granted that there will be rubber tires on them. Thus this is a way for them to reduce risk. When creating national strategies, it has to be considered that, in Central Europe, the automobile industry represents a significant share of GDP,

especially in Hungary. We have to keep this in mind, and the government is also taking steps in this direction to attract investors who will shape the future of the car industry—just think of selfdriving cars, for example. What significance does this have on a European level from the aspect of climate protection? The biggest carbon-dioxide emitter is without a doubt the energy sector, since it is responsible for more than the half of the total emission. Transportation is a close second, and more than two thirds of all emission is related to these two sectors. Industrial, stationary emission can be managed much more easily via regulations, but transportation has to be controlled from the technological side. The Danube Region Strategy has set targets for energy-related questions as well. What are the energy issues that transcend national boundaries and connect the countries of the Danube region? The Danube Region Strategy is an EU-wide macro-regional cooperation framework involving 14 countries and incorporating nine EU and five non-EU countries (Austria, Bulgaria, Czech Republic, Croatia, Hungary, Germany, Romania, Slovakia, Slovenia and Bosnia- Herzegovina, Montenegro, Moldova, Serbia, Ukraine—ed.). In 2017 Hungary will host the Presidency of the Danube Region Strategy, and for the 18th and 19 th of October we are organizing a high-level annual forum. Similarly to the V4 program, the Hungarian presidency of the Danube Region Strategy aims to strengthen the interconnectivity of the region, which in this case means intensifying energy and transport connections in a region which is crucial for Hungarian foreign policy. The EU has set up a new financing framework in order to help the development of the strategic corridors by 2020. During the 6th Annual Forum of the Danube Region Strategy, we are focusing on what should be the next step if this goal succeeds. A possible approach might be the continuation of the infrastructural development in the RESOURCES & TECHNOLOGY

neighbouring non-EU countries: this may affect some countries in the Western Balkans and some of the countries of the Eastern Partnership. There is certainly a serious political debate about this option, as, due to Brexit, the post-2020 EU budget is expected to diminish. In any case, Hungary’s standpoint is that the infrastructural development of these countries and the related financial support is inevitable and that these developments are serving the long term benefit of both the Danube Region and the EU. The other approach might be setting more ambitious sustainability targets and using energy, transport, and water networks built before 2020 in a more “sustainable” and “green” way. It is also necessary to clarify how these countries might contribute to decarbonisation, and identify the crucial points which need to be taken into consideration in the post-2020 period with regard to job creation and economic growth. For this reason, the motto of the October Annual Forum of the Danube Region Strategy is ”Secure, connected and prospering Danube Region”. Energy systems are becoming increasingly decentralized, but an interconnected network can make supply vulnerable. How can a country be protected in terms of cyber security? This issue goes beyond the security of critical infrastructures and starts to become a general security concerns. Over the last couple of months, two or three major cyber incidents have put cyber security in the focus of geopolitical discourse, with both NATO and the EU trying to provide an adequate response to such challenges. In July 2017 in Warsaw, the Foreign Affairs Council also adopted a resolution, according to which the Foreign Penalty Toolbox may also be utilized in case of proven external cyberattacks. At the NATO summit a political resolution was reached, cyber defence was marked as a strategic priority and has been made a part of Article 5, theoretically meaning that NATO’s famous Article 5 can be activated in case of a cyber attack.

RESOURCES & TECHNOLOGY

From an energy perspective, what is the most pressing issue our region is facing? Infrastructural development in the region is really slow but it’s on track. I think that by 2020 the CEE region will be in a much better position regarding energy vulnerability, as it will be able to receive more gas sources from different locations. Existing and new infrastructures will be able to operate efficiently and comply with market rules. The next challenge is the question of the competitiveness of cross-border tariffs. Transit tariffs from one country to another are quite high and make cross-border trade uncompetitive, especially for LNGs. While average crossing tariffs in the region generally cost 1-1.5 EUR/MWh, the tariff of transmissing gas from Croatia to Hungary, for example, costs 6 EUR/MWh. Taking into consideration that the price of gas is around 15 EUR/MWh, we can see that shipping from Croatia to Hungary is almost half of the price of the commodity itself: the crossborder tariff is higher than the entire transatlantic shipping cost. There is plenty of room for cuts, but as long as each country is thinking within its own box and not on a regional level, there is no chance for progress. On an EU and regional level, this is the next problem that needs to be solved quickly. This is also very important because of the approaching expiration date of Hungary’s long-term gas contract in 2020, as well as due to the utilisation of alternative options.

SMOKE-TINTED GREEN—ENERGIEWENDE IN GERMANY Roland Menyes Germany is going green at full steam. After the imminent decommissioning of nuclear and coal power plants, photovoltaics and wind are to become the main energy sources of the country. Efficient technologies make economic growth possible with overall energy consumption falling and electric cars filling the roads en masse. As a result of all these progressive changes CO2 emissions are in constant decline, making Germany a pioneer also in the fulfilment of the ambitious objectives of the Paris Agreement. Optimistic expectations indeed. In spite of the remarkable development in the energy sector, however, the government’s plan to push the energy transition forward at the current pace is nothing short of audacious. Experts warn that in the absence of technological miracles and a thorough systemic overhaul, the lofty goals will inevitably flounder on the stubborn laws of economics and science. History of the Energiewende The roots of the Energiewende lie in the early 1970s. The oil crisis highlighted the vulnerability and inefficacy of the then current energy regime. With fuel prices skyrocketing and supply security waning, interest in alternative solutions grew significantly. Around the same time, environmentalist groups began their fight against nuclear power plants and polluting industrial practices, raising public awareness of ecological concerns. Changing social attitudes had two consequences. On the one hand, the 80s saw the beginning of genuine scientific work regarding the feasibility of a complete abandonment of fossil fuels. On the other hand, the Green Party grew into a political power to reckon with, gaining representation in the Bundestag in 1983 for the first time. Even though their enthusiastic—as well as somewhat unrealistic—early demands were not yet translated into legal measures, the shift in the political landscape was not to be reversed.

Public reactions to the Chernobyl disaster only highlighted this and led even the major parties to realize that a full nuclear phase-out was no longer merely a green phantasy but a very topical issue. With climatic concerns also growing, the prerequisites for an energy transition were put into place. Although the federal government had funded pertinent research for at least a decade, and programs for supporting the installation of wind turbines also started earlier, it was not until 1991 that incentives made the wider populace interested in actively participating in the unfolding green revolution. From this year on, electricity suppliers were obligated to absorb the electricity generated from renewable sources into their system and pay for it. Although the construction was very simple, the so-called feed-in act went on to gain enormous significance for creating the basis for further decentralization and liberalisation of the electricity market. As the red-green alliance formed government in 1998, renewables gained impetus again. The adoption of the first renewable energy act (EEG) in 2000 bore witness to a fundamental shift in energy policy. Instead of playing merely an ancillary role, renewables came to be regarded as the new main energy sources set to replace the conventional ones in the foreseeable future. To promote this transition, a coherent mix of measures was bundled together, including the introduction of the EEG surcharge, which consumers are mandated to pay in order to support green producers and the “100,000 roofs” program, which fostered the installation of photovoltaic panels by both households and LMEs. Goals and Achievements The basic document of the current energy regime, the Federal Government’s Energy Concept, was adopted in 2010. The targets are ambitious indeed: GEOPOLITICS

40-45 % of the electricity consumed in Germany to be covered by renewables by 2025 20 % less primary energy consumption by 2020 (from 2008) 40 % less greenhouse gas emissions by 2020 (from 1990) 10 % less final energy consumption in transport by 2020 (from 2005) The interim achievements, however, show that making the envisioned progress within the remaining time of less than three years is very unlikely. While renewables have been expanding more or less at the necessary rate, reaching a 31.1 % share by 2016, efficiency gains have been not high enough to mitigate consumption according to plans—the relevant figure in 2014 was just 8.3 %. The third and the fourth goals have also proved too idealistic. The transportation sector in particular lags behind, with CO2 emissions practically having remained the same over the last decade and energy consumption having actually risen in the period from 2005 to 2014. Gradual nuclear phase-out, enacted shortly after the Fukushima disaster in 2011, has not helped either, since it left only conventional coal and gas power plants to operate as a complement and counterbalance to green generation. As things stand, these will remain essential elements of the system for decades as the government, faced with the difficulties their decommissioning would pose, has shown little determination to set an exact date for a final farewell. It is obvious that without more effective measures, following the official itinerary of the transition is no longer possible. The question, however, is just how technically feasible, economically viable, and socially acceptable the adoption of an expediently tailored new regime is. As we well see, the current strain on the energy system is already enormous and technically hard to sustain in the long run. Challenges of the Energiewende As the harnessing of renewables gains momentum, the environmental assets of a country come to be appreciated in a new context. Existing possibilities and constrains greatly influence the way the energy sector can be restructured and the pace at which progress can be made. 64

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Germany is a densely populated country with a central European climate where the real potential for geothermic energy and hydroelectric generation are rather small. Since the outlook for biomass is not much better either, there remain only wind and solar power as the main sources for the Energiewende to draw on. This is the environmental background that must be taken into consideration when it comes to pursuing the aforementioned goals. With the social and economic contexts also defining certain requirements, the government faces various responsibilities. Firstly, it must create an incentive system ensuring a predictable rate for the extension of new renewable capacities, as well as the proliferation of more energyeffective solutions, while keeping subsidies low to help new technologies become economical. Secondly, it has to support the establishment of the necessary physical and digital infrastructure to maintain system coherence. And thirdly, it has to distribute the associated costs in such a way as not to lose public support and—at the same time—endanger the country’s economy. Not surprisingly, targets, measures, interest, and practical possibilities often collide. Progress in the Field of Investment Regarding investment, the news is mainly good. Today, there are over 27,000 wind turbines and around 1.5 million photovoltaic systems commissioned across the country. The sheer size of the installed capacity along with favourable weather conditions recently made it possible for renewables to set a new milestone by covering nearly the entire domestic demand for at least a short period. But as the sector changes due to innovations and a new market environment unfolds, legislation too must evolve expediently. Previously, investors were guaranteed a fixed takeover price for the generated electricity for 20 years. From 2017 on, however, a new policy is in effect, which stipulates that after a call for offers, the winner is the participant who requires the least amount in subsidies. As a result, wind farms are getting cheaper - in fact, this year saw the first one to be realized without such ancillary financial means. Furthermore, the support for and

flexible conditions applied to civil communities led to those winning 90 % of the projects in the first federal tender in 2017, elevating the democratization of energy to a new level. Apparently, investors anticipate the establishment costs to drop and electricity prices to rise in the foreseeable future. This hope, however, has not yet been enough to incite investment into flexible backup capacities and speed up the deployment of super transmission grids—both are crucial for maintaining supply security. But unsurprisingly, rising prices are problematic from another point of view. Costs and Their Distribution The costs of the Energiewende were estimated a decade ago to be roughly equal to the price of an ice cream per month for an average household, but skyrocketed as renewables continued to conquer the energy sector. There are three basic reasons for this. Firstly, wind and solar generate electricity intermittently, putting the electricity system under strain. To uphold stability, network operators are forced to intervene when imbalance occurs. The applied measures, however, are— as a general rule—expensive. Secondly, supply and demand are dynamically separated not only in time but also in space. Due to that, carrying immense amounts of electricity over large distances is inevitable. To make this possible wide-ranging infrastructural development is needed requiring serious investment. Thirdly, high electricity prices affect the competitiveness of the country negatively. Taking all these factors into consideration, the government exempts pivotal branches and companies from having to pay the EEG surcharge leaving primarily the population to shoulder the financial burden of the whole energy transition. To shed light on the current situation through a practical example: Although the electricity producing costs practically have not increased since 2009 and account only for 25 % of the electricity bill, an average household with 4 persons pays 57 % more than a decade ago (760 Euro in 2006 versus 1200 Euro in 2016). The main reason for this inflation is the continuous increase in the EEG surcharge, but the network fee has also grown to become almost as relevant—

combined, they are responsible for around 50 % of the electricity price. Furthermore, the network fee creates massive differences between regions, as well as between cities and the countryside. As the revenue from it is set to cover the establishment of new local grid segments, inhabitants of areas with low population density are disproportionally burdened. Infrastructural Development and Unanswered Questions As already mentioned, on account of their intermittency, the expansion of wind and solar in the electricity sector affects both supply security and network stability negatively—in terms of raw figures, at any time only the seventh of their average performance is secured and can be prudently calculated with. Four basic solutions exist to offset the resulting imbalances, namely the activation of conventional power plants, the import and export of lacking and redundant electricity respectively, the tapping of stored reserves, and the dynamic synchronization of supply and demand via smart grids. As to the first possibility, it is seriously constrained by the imminent abandonment of nuclear energy, leaving only coal and gas plants to act as buffers. Yet, falling back on these to a huge extent jeopardizes the planned progress on CO2 emissions targets. To add to the problem, without the support of nuclear sources, transportation is also unlikely to go electric at an appropriate rate. Regarding the second option, the infrastructure for international electricity trade is available, but difficulties arise in its practical usage. Since neither volatility in itself nor redundant supply are desirable, neighbouring countries are prone to reject feeding into their network when demand is not attendant. On the contrary, temporary domestic electricity scarcity is tricky from a rather theoretical point of view. Nuclear power plants are scattered all around Germany, providing enough capacity to satisfy domestic demand at any time, but drawing power from them seems to be nothing short of hypocritical, because— as a consequence thereof—the associated environmental risks are merely shifted to beyond the borders. GEOPOLITICS

Concerning the third way of dealing with intermittency, storage, progress is not visible and there is a good reason for this. It is estimated that securing the average performance of the already deployed wind turbines alone would require around 10,000 (!) pumped storage power plants—from which only 35 are in operation today. The situation does not become significantly better even if solar panels, which generate power in more or less inverse proportion to wind turbines, are factored in. In this case, a “mere” ~5,000 such facilities would suffice. The associated costs are accordingly mind-blowing: they hover around one trillion Euros. Yet, water is not the only option. The production of methane via electric power to gain an easily storable and recyclable substance is also an industrially established practice. The crux of this process is, however, the notoriously low efficiency, making the used energy four times more expensive in the end than it was before. Since the mentioned drawbacks of conventional methods are not easy to circumvent, new solutions need to be developed. Two such solutions are already present in public discourse, but the hopes vested in them may prove to be exaggerated under professional scrutiny. Electric cars are regarded by many as the saviour of the future, because their batteries can be operated as buffers when attached to the electricity network. As promising and progressive as it may seem, this concept is also likely to stumble on practical obstacles. According to recent calculations, at the current share of renewables, a perfect smooth-out would require 164 million e-vehicles. To put this grotesque number into a wider context it is worth noting that there are only 42 million “conventional” cars on the roads of Germany today. The potential of smart grids, which promise dynamic energy distribution and intelligent load shifting, is called into question too, as they are suitable only for offsetting local and temporal imbalances but cannot successfully handle the seasonal volatility so characteristic of renewables. Moreover, the effectiveness of smart grids is highly contingent on customer behaviour, making the pertinent calculations on their real potential very difficult. 66

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In the absence of other viable alternatives, what remains in the medium term is the deferment of coal phase-out. In this case, however, the treatment of unwanted end products becomes pivotal if the country wants to stay committed to its climate-friendly course. One option would be the storage of these materials but, unfortunately, the laws of physics present a problem here. Namely, the amount of CO2 set free through the burning of 1 m3 of coal occupies a volume of 5m3 in liquefied state, which makes such an option both practically unfeasible and uneconomical. The Chances of Decarbonisation Apart from the above-mentioned major technical concerns, there are yet others casting doubt over the viability of the Energiewende and the attainability of the interdependent German climate goals. The most important one is that the share of renewables in total energy production is just negligible, making decarbonisation even in the middle run a titanic endeavour. Currently, green sources are responsible for one third of the entire electricity production, but the electricity sector meets only the fifth of the total energy needs. Even today, around 80 % of the total energy consumed comes from fossil fuels. And the picture does not become rosier if we take a look at the trends. Transportation, which accounts for more than one quarter of the overall CO2 emissions, have not shown any improvement over the last decade in this regard. The EEG surcharge, introduced to support the energy transition, also failed to exert any tangible influence here. As a matter of fact, it had undesired side effects: The subvention of green energy in Germany led to emission certificates being used in other EU countries. In light of this, the abolition of the EEG surcharge and the establishment of appropriate incentives on a European level seems inevitable for the Energiewende to be at least partially successful. Environmental Concerns Quite controversially, the growing role of renewables is ambivalent from a purely environmental point of view too. To highlight this, let us imagine the problems the further extension of wind power capacities would pose by running a purely

theoretical experiment. Owing to the pertaining extreme territorial needs, covering Germany’s entire electricity demand from this source only would require an area the size of Bayern to be planted with nothing else but wind turbines— even if many of them were located off-shore. The sight of the huge transmission grids, which would also be needed to channel the electricity from the place of production to the place of consumption—in this case mainly from the north to the south—would be similarly impressive. Apart from aesthetic concerns such mammoth facilities would inevitably raise, they would also mean an immense and extremely harmful intrusion into the natural surroundings. Obviously, the outlined concept is highly speculative and— as it was pointed out previously—certainly not desirable as far as system stability is concerned. In fact, diversification is more likely to be the key term in future’s energy production. At any rate, the negative environmental effects accompanying renewables must be taken into account lest they overshadow the green branding of the transition over time. Conclusion In view of these pros and cons, how can the Energiewende be evaluated? On account of its impressive results, it must be appreciated

as a success. The many difficulties it created, however, certainly raise doubts regarding the smoothness of its further unfolding. Indeed, it is likely that the chosen road is too ambitious, as the envisaged targets in various areas are proving increasingly difficult to attain, and the optimism which has surrounded the process from the beginning has gradually given way to practical considerations among the public and experts. From today’s perspective, it is far from clear whether the technical and economic innovations can keep up with the arising problems in such a way as to maintain social and political support for the project. Since the government has to focus on many aspects simultaneously and find the balance between conflicting interests, it is not at all surprising that the necessary manoeuvring has not always resulted in a straightforward path, and criticism highlighting certain awkward traits of the energy transition is ubiquitous. That said, the variety of opinions and different approaches which bear witness to a vivid and active public sphere, inevitably make it difficult to see the general picture realistically and to handle transitional problems only as such. Therefore, what we can say with certainty is that, in spite of the criticism, the Energiewende has been a remarkable and progressive project; which promises wide-range benefits both on a national and a global scale.

Energy revolution in Germany—a green path with no clear end in sight GEOPOLITICS

GERMAN AND FRENCH LESSONS ABOUT ENERGY TRANSITION Cecília Varsányi

Two of Europe’s main leading economic and political powers, France and Germany, have committed themselves to making their energy system cleaner and more efficient. Green parties in France and Germany have notably gained influence in national parliaments in the last decades, opposing nuclear power and supporting investments in renewable energies. This changing political landscape also contributed to accepting green efforts to transform the national energy mix of both countries. The German Energiewende is often criticised because of its hasty pledges and its high costs to consumers, and sometimes it is portrayed as

Germany, in contrast, started its nuclear phase back in 1998, which lead to higher reliance on coal use, keeping CO2 emissions relatively high. France gains roughly 3/4 of its electricity from nuclear energy, which, according to the Plan de programmation pluriannuelle de l’Energie” (PPE) (2016), is to be decreased by 50 % by 2025. Clearly, it might be easier to keep that promise than sutting down the whole nuclear capacity of a country by 2022 and ramp up renewables in a haste. During this process, Germany will close 17 nuclear reactors; while France will terminate, according to estimations, 22 of them. Although nuclear phasing out might be politically

Comparison of the strategic goals of the two countries

a model to avoid. In spite of this, German and French energy transition strategies have more in common than we would at first think. Although Germany set higher targets in cutting GHG emissions and reducing primary energy consumption, the two countries have similar ambitions regarding the overall renewableshare goals in final energy consumption. It also worth taking a look at the CO2 emission rates in the two countries. The difference lies in France’s heavy reliance on nuclear energy; 68

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accepted, today it is rather a problem of cost and management questions: it is clear that it is not easy to replace that much capacity ahead of time, while taking into consideration supply security in the phasing-out period. Additionally, sceptics of Germany’s Energiewende never forget to remind that Germany buys French nuclear power on less sunshiny days. Therefore, can we state that Germany is heroic regarding its renewable energy transition because if something goes extremely wrong they can

CO2 emissions (metric tons per capita) 13 12 11

Germany

10 9 8 7

France

6 5

19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13

Annual CO2 emissions (metric tons per capita), 1991-2013 and latest data from 2013

Germany

France

(2002) to 12.1 GW (2014), Germany had the highest level of net electricity generation in Europe (19.5 % of the EU-28 total, France was at second place with 17.8 %), as the share of renewables significantly increased in the electricity generation system. Additionally, Germany’s average electricity import has not grown either from France or from the Czech Republic. In contrast, in October 2016, a total of 21 reactors were offline in France largely for inspections; so during the cold winter of 2016-2017 France’s peak demand was covered by German electricity generation. France, even being Europe’s biggest electricity exporter, very probably will have to rely on excess German energy on peak demand days, especially in the period of phasing out 25 % of its nuclear capacity. At the same time, French nuclear energy can be an economically feasible option for Germany when renewables do not produce enough. The main question is how to develop a mutually beneficial strategy, where the ultimate goal for all is to get rid of fossil fuels.

always rely on French nuclear production (not forgetting Czech capacities either)? With phasing out nuclear energy, Germany is losing around 20 GW of its dispatchable capacity, while electricity consumption reaches its highest point around 80 GW in peak demand periods. However, even after electricity generated from nuclear power plants dropped from 22.4 GW GEOPOLITICS

CHINA’S ENERGY POLICY PRIORITIES Viktória Anna Papp

Economic Growth First China’s rapid transformation into the world’s second largest economy coupled with the sheer number of its population led China to be the largest energy consumer and producer in the world. However, this fast-growing development also came with serious socioeconomic and environmental costs, such as high inequality, rapid urbanization, and challenges to environmental sustainability. After its market reform in 1978, China developed at an unprecedented speed and scale—its GDP was increasing by an enormous 10 percent per annum or above, so was China’s appetite for coal, especially since the turn of the century. As China’s industrial revolution was driven mainly by coal, it became the world’s top coal producer, consumer, and importer. In 1996, coal accounted for over 76 % of primary energy

Coal mine near Hailar, Inner Mongolia 70

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supply and over 62 % of final commercial energy consumption. In the past decades, its heavy industry has prospered as economic growth first became the mantra of the Communist Party. If the leadership had to choose between the economy or the environment—the economy would win every time. Consequently, this policy resulted in unbearable pollution mainly in the densely populated cities and the threat of rising sea levels. In 2000, China has become the world’s biggest emitter of greenhouse gases and now discharges about twice as much as the US. The Worldbank’s data on CO2 emission shows that in turn, the US’s emission per capita exceeded China by more than 17 tonnes per head of population in the same year. At the time, responding to criticism from the West, China argued that it had the “right to pollute” and it was unfair for developed countries to lecture as

they had polluted the environment in the course of their industrialisation as well. It is worth to note, though, that in 2013 China’s growth in coal consumption alone was almost as high as the UK’s 1983 total output. Sustainable Growth—the New Normal Given its slowing GDP growth since 2012 and its planned transformation to a less-energy intensive consumption-, services- and innovation-driven economy, it was time for China to address its environmental issues. Furthermore, as air pollution became the most pressing problem for many Chinese citizens, Beijing clearly begin to consider air quality as one of the major drivers of energy policymaking. Continuing the 12th Five-Year Plan’s (FYP) aspirations, the 13th Five-Year Plan for Social and Economic Development for 2016-2020 (13 FYP; in Mandarin called the shisanwu, 十三五) focuses on China’s shift from a heavy industry-oriented economy towards one using cleaner energy while aiming for a higher-quality yet slower growth. The 13FYP defines a strategy and pathway for China’s development for 2016-2020 and gives

priority to reaching the GDP growth target of 6.5 % per annum. The core of 13FYP is innovation and “green development” in order to achieve the goal of becoming a “moderately prosperous society” (xiaokang shehui, 小康社会) by 2020. Published in January 2017, the 13th Five-Year Plan on Energy Development (Energy 13 FYP) further specifies the 13FYP’s goals regarding China’s energy sector development, however, many energy targets are not entirely “new” as they are in line with the previously announced Strategic Energy Action Plan (2014-2016). In terms of outlining energy policy, both FYPs emphasize the reform of the energy sector, greater diversity in its overall approach as well as developing smart power grids and investing in energy storage technologies. The Energy 13FYP decreases the total energy consumption cap to no more than 5Gtce, it gives higher priority to hydropower and CCP (carbon capture and storage), whilst lowering coal in primary energy consumption to be less than 58 %. In addition, China has committed to reach its peak CO2 emissions by 2030, continue decreasing emissions afterwards, and to generate 15 % of primary energy from non-fossil sources as well.

The highly controversial Three Gorges Dam is the world’s largest power station. GEOPOLITICS

CHINA'S PRIMARY ENERGY CONSUMPTION (MILLION TONNES OIL EQUIVALENT) 2012-2016 2013

2014

2015

2016

OIL

NATURAL GAS

COAL

NUCLEAR

HYDRO

29,4 42,3 50,8 64,4 86,1

195,2 205,8 237,8 252,2 263,1

22,0 25,3 30,0 38,6 48,2

135,8 154,7 169,6 175,3 189,3

487,1 508,1 528,0 561,8 578,7

1927,8 1969,1 1954,5 1913,6 1887,6

2012

RENEWABLE ENERGY

China’s Primary Energy Consuption (million tonnes oil equivalent) 2012-2016 Based on: BP Statistical Review of World Energy 2017

Longyangxia Dam Solar Park in Qinghai Province is the world’s biggest solar farm with its 850 MW of capacity and 4 million solar panels. 72

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In accordance with China’s domestic interest in and policy of “actively dealing with climate change,” came its decision to join the Paris Agreement in 2015, however the country’s participation was needed to bring the accord to success. To be able to deliver for the Paris Accord, China needs to follow through its FYPs and maybe even go further. The Emergence of a Green Superpower? It has only been about a year since the 13FYP was announced, yet it already seems that China is turning its economy to a cleaner direction while its energy mix continues to evolve. Based on last year’s data from BP Statistical Review, certain trends are outstanding, concerning particularly coal, oil and renewable energy, which indicate China’s shifting energy priorities. Sooner than most experts predicted, China’s coal production finally peaked in 2014 and declined last year by 7.9 %—the greatest annual fall in the past three decades. Besides cutting total coal consumption down from 23 million tonnes in 2013 to below 10 million last year, Beijing shut down 335 polluting factories and took high-polluting vehicles, those registered before 2006, off the roads. In 2016, China became the first in producing renewable energy, overtaking even the United States. Besides tackling environmental issues, investing in green energy reduces China’s energy security vulnerability as well. Hence, Beijing is committed to further boost investments—it recently announced to spend 360 billion USD on renewable energy sources by 2020 creating more than 13 million jobs in the sector. Furthermore, the country managed to decrease its CO2 emission by 0.7 % last year, which was also reflected in the world’s emissions as it has only grown by 0.1 %. China’s efforts are particularly visible in its solar capacity development, since it is now the biggest producer of solar energy having just opened the world’s largest solar park in Qinghai along with the largest floating solar park in Huinan. Although renewable energy plants—be it solar, hydro or wind—are being built extensively and there is a massive built-out capacity

already, much of the produced energy is not utilized efficiently. The plants are located rather far from the most urbanized east coast, usually in western China, such as the Longyangxia Dam solar park on the Tibetan plateau and therefore cannot connect to the country’s power grid effectively. For instance, a record high 15 % of China’s wind energy was wasted due to the lack of proper power grid in 2015. To resolve China’s overcapacity, it has been investing more in smart grid too, in order to utilize its green energy at its highest efficacy possible and to improve its infrastructure’s reliability. Oil still represents the country’s secondlargest primary energy source, which along with natural gas continued to grow last year. Being the world’s second-largest net importer of crude oil and petroleum products, China’s dependence on imported oil is rising mainly due to its shrinking domestic production. The fact that no major new resources have been found, also contributes to this trend, meaning China will have to buy two barrels of oil abroad for every barrel it produces at home. Although China recently signed a 30-year gas deal with and increased its oil imports from Russia in 2016, overtaking Saudi Arabia as its largest supplier, in total most of its crude oil import is from the volatile region of the Middle East and Africa, which poses considerable risks to China’s energy security and economy. Certainly, China will continue implementing its 13FYP prioritising green energy and further diversify its primary energy sources, yet its transition towards a lower carbon energy mix could be distracted if its GDP growth rate fell to low. From a broader perspective, however, China’s role as the new champion of renewable energy is more complex and contradictious. China is still the largest emitter of greenhouse gases and the largest investor in renewable energy at the same time, while almost two third of its energy consumption still comes from coal. Nevertheless, China has clearly stepped on the path towards a cleaner future and given its influence in world energy markets, others may follow.

GEOPOLITICS

THE LEGACY OF THE FUKUSHIMA DAIICHI ACCIDENT— STRICTER REGULATIONS VERSUS THE BLACK SWAN THEORY Mihály Kálóczy

“A major factor that contributed to the accident was the widespread assumption in Japan that its nuclear power plants were so safe that an accident of this magnitude was simply unthinkable. This assumption was accepted by nuclear power plant operators and was not challenged by regulators or by the government. As a result, Japan was not sufficiently prepared for a severe nuclear accident in March 2011.” This is the foreword to the report by Yukiya Amano, IAEA Director General, published in 2015. The International Atomic Energy Agency (IAEA), set up by the United Nations in 1957, acts as an auditor of world nuclear safety, and this role was increased greatly following the Chernobyl accident. It prescribes safety procedures and the reporting of even minor incidents. A nuclear safety inspectorate works in each country which operates nuclear power plants, and all of them work closely with the IAEA. As Japan’s Nuclear and Industrial Safety Agency declared, the Fukushima Daiichi 1-3 accident is a Level 7 on the International Nuclear and Radiological Events Scale (INES), and thus ‘a major accident’ in the history of nuclear power plants. The two other major civil nuclear reactor accidents were Three Mile Island and Chernobyl. The nuclear-related death toll—and fortunately, we can only talk about such a thing in the case of Chernobyl— is 56. The costs related to the Fukushima accident compensation payments, stabilisation and decommissioning of the reactors, water management and the clean-up of the whole area, have risen to a staggering level: $188 billion in total, although this also covers tsunami-related damages. (In terms of the big picture, it is also true that the fossil fuel-related accidents have had a much more severe impact on human 74

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lives and infrastructure than the nuclear-related ones, even though we have been using them for much longer.) Statistics for Nuclear Energy As the World Nuclear Association (WNA) states, a commercial-type power reactor simply cannot under any circumstances explode like a nuclear bomb—the fuel is not enriched beyond about 5 %, while explosives require much higher levels of enrichment. This is quite important considering that most people are reportedly afraid of this kind of accident. However, the WNA also emphasizes that “no industrial activity can be represented as entirely risk-free.” Nuclear power plants are designed to be safe in their operation and safe in the event of any malfunction or accident—incidents and accidents may happen, as in other industries. New designs naturally introduce the improvements learnt from former mistakes. This is reinforced by that fact that the aforementioned accidents were the only major ones that have occurred over more than 17,000 cumulative reactor-years of commercial nuclear power operation in 33 countries.

International Nuclear Events Scale (INES)

With this in mind, let’s take a closer look at the numbers. The International Nuclear and Radiological Event Scale came into being for the purpose of “promptly and consistently communicating to the public the safety significance of events associated with sources of ionizing radiation.” Level 7— denoting major accidents—is reserved only for the worst events that can happen. So what about lower-level accidents? Spencer Wheatley and Didier Sornette at ETH Zurich (Switzerland) and Benjamin Sovacool at Aarhus University (Denmark) made a larger statistical analysis of nuclear accidents, which reveals that “there is a 50 per cent chance that a Chernobyl event (or larger) occurs in the next 27 years” (until 2050). They had compiled their own, wider list of accidents and defined an accident as “an unintentional incident or event at a nuclear energy facility that led to either one death (or more) or at least $50,000 in property damage.” Scientists at the Max Planck Institute for Chemistry (Mainz, Germany) have calculated that such events may occur once every 10 to 20 years (based on the current number of reactors), which is about 200 times more frequent than previously estimated. The rational frequency of degraded core or core melt accidents is a mandated safety indicator. In the US, these types of accidents may occur once in 100,000 years; for the best currently operating plants, this figure is about are about 1 in 1 million, compared to the ones to be built in the next decade, where it is almost 1 in 10 million. Core damage frequency is used as a safety metric in Europe as well (probabilistic safety analysis—PSA). These are just a few examples, of course, as there are a multitude of methods and tools for risk assessment (comparative, statistical, probabilistic etc.) worldwide. Political Decisions Risk based on statistics are rather malleable, the consideration of which is optional. This claim also applies to several aspects of politics. For any decision, a number of political considerations need to be taken into account, such as

legal framework, as well as security, emotional, scientific, economic, and further political aspects (e.g. reputation). In this process, a society (and maybe the decision maker) instinctively has a fear of this invisible power resource and its ability to be destructive, but this does not necessarily the ultimate decision—although, in democracy, it should. The same fear can go hand-in-hand with the question of security. For example, in Italy, nuclear power was rejected in a referendum in 2011, even though environmental risks—mainly frequent earthquakes—would probably have prevented the constructions anyway. The spread of terrorism cannot be ignored either, since it has reached the world of nuclear power stations, as indicated by several incidents. As for the environmental impact of nuclear power use, its CO2 emission is very low, and effective waste disposal is feasible, but from all other aspects it represents a difficult and expensive technology (the costs of decommissioning, for example, are included in the price of each kW). Costs are calculated based on the availability of fuel and its price, which may also depend on the relationship with exporters. Generally, the first point of view is the economic one, i.e. costs and return: Due to stricter safety rules, construction has become more expensive. Overnight prices range from $2021/kWe in South Korea to $6215/ kWe in Hungary, or, in the case of China, from $1807/kWe to $2615/kWe. A predictable return can be assured by the state for a company through a fixed electricity price. These aspects are only examples highlighting the complexity of a decision. As for statistics and estimates, the probability of an accident is very low—so why is there a mistrust toward nuclear energy? The Black Swan Theory If one takes all the aforementioned aspects into consideration, there still remains one “outside-the-box” element. Beyond the numbers of probability, there is a science-based theory that questions the sense of traditional probability calculations in case of events like Fukushima, called The Black Swan Theory. Its creator, Nassim Nicholas Taleb, a Lebanese-American risk anaGEOPOLITICS

TOKYO JAPAN - MAY 8, 2015: Anti-nuclear occupy tent

lyst, professor at several universities (e.g. New York University Tandon School of Engineering), and former trader states that statistics is a fundamentally incomplete field, as it cannot predict the risk of rare events, a problem that is acute in proportion to the rarity of these events. Together with mathematician Raphael Douady, he called the problem “statistical undecidability” (Douady and Taleb, 2010). Based on the statement that unpredictable events by their very nature are things that lie outside our common experience, Taleb defines the concepts of “Mediocristan” and “Extremistan”: The first one is the realm of properties that are Gaussian in nature, like people’s weight or height, while in the second properties like a person’s fortune, market behaviour or success in intellectual or artistic endeavor are unevenly distributed, and the inclusion or exclusion of one extreme outlier can massively change the overall picture. Events like 9/11, the 2008 financial crisis, World War I, or even the rise of internet are such things. These are all events of considerable magnitude and 76

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consequence, and have a defining role in history. Taleb’s model is used to safeguard investors against crises caused by rare events. Black swans may seem predictable and preventable in retrospect, but their future brethren do not. If one accepts that black swans will always exist, we should consider not just their probability, but also their consequences for human health and life, ecology, and lastly, the economy.

SIGNIFICANT STILL COMPLEMENTARY—NATO’S CONTRIBUTION TO ENERGY SECURITY Péter Stepper The main purpose of NATO as a military alliance is to defend its member states from any external attacks with all means available. After the collapse of the Soviet Union, more and more nonconventional threats appeared, thus NATO had to reinvent itself and adapt to the new security challenges. Access to vital energy sources has always been essential for its member states, but they rarely considered international institutions as useful tools which can contribute to their energy security. Even less efforts have been put into an energy cooperation within NATO, a transatlantic military alliance based on the idea of consensual decision-making. Despite this, after a decadelong series of negotiations, NATO member states decided to contribute to energy security initiatives in the framework of the Alliance. Over the past decades and in the course of a complex discourse, the Alliance formulated a legal framework, a kind of ‘acquis,’ related to energy security, based on three strategic priorities: political consultation and intelligence sharing; stability projection; and nuclear and nonnuclear critical energy infrastructure protection. The International Energy Agency (IEA) has a broad definition of energy security, whereby energy security equates to the “adequate, affordable, and reliable access to energy fuels and services, it includes availability of resources, decreasing dependence on imports, decreasing pressures on the environment, competition and market and market efficiency, reliance on indigenous resources that are environmentally clean, and energy services that are affordable and equitably shared.” NATO first referred to energy security in its 1999 Strategic Concept. In this document, while

the Alliance noted that its core function was still to deter and/or respond to armed attacks on the territory of any of the Allies, it emphasized that NATO’s security could also be affected by other factors, such as the “disruption of the flow of vital resources.” Although the topic was mentioned at the 1999 Washington Summit, a long period of silence followed until 2006. In 2006, the Russia-Ukraine gas dispute raised serious concerns about energy security. The dispute reached a climax on January 1, 2006 when Russia cut off supplies to Ukraine. After that, Poland put forth a proposal suggesting that NATO members commit themselves to helping one another during energy crises. U.S. Senator Richard Lugar, a highranking member of the Senate Committee on Foreign Relations, went even further, arguing that energy security should be a commitment under the Article 5 mutual defense clause of the North Atlantic Treaty. At the Riga Summit (29 November 2006), Senator Lugar argued that “because an attack using energy as a weapon can devastate a nation’s economy and yield hundreds or even thousands of casualties, the Alliance must avow that defending against such attacks is an Article Five commitment. This does not mean that attempts to manipulate energy for international political gain would require a NATO military response. Rather, it means that the Alliance must commit itself to preparing for and responding to attempts to use the energy weapon against its fellow members.” Although Lugar was cautious enough not to suggest a military response to Russia’s political move, his expressions clearly reflect the seriousness of the situation back in 2006. GEOPOLITICS

However, it was not in the interest of NATO to apply Article 5 commitments to the field of energy security. There was a fundamental concern about putting additional pressure on the NATO-Russia relationship, and turning energy security debates at NATO into a Russia-criticizing discourse. The Riga Summit Declaration (2006) highlighted the importance of energy infrastructure security and directed the member states to consult on the most immediate risks in the field of energy security and ‘define the interests, where NATO may add value to safeguard the security interests of the Allies and, upon request, assist national and international efforts.’ The Bucharest Summit (2008) was the next step in defining common interests and articulating a NATO acquis in the field of energy security. The Allies have identified the principles which will govern NATO’s approach in this field and outlined options and recommendations for further activities. Based on these principles, “NATO will engage in the following fields: information and intelligence fusion and sharing; projecting stability; advancing international and regional cooperation; supporting consequence management; and supporting the protection of critical energy infrastructure.” The 2010 Lisbon Summit was again a significant step forward, as it resulted in the adoption of a new Strategic Concept. The Strategic Concept noted that in the emerging new security environment, terrorism, “failed states” and cyberattacks will pose the most serious challenges in the future, but it also addressed the importance of energy security: ”some NATO countries will become more dependent on foreign energy suppliers and in some cases, on foreign energy supply and distribution networks for their energy needs. As a larger share of world consumption is transported across the globe, energy supplies are increasingly exposed to disruption.” The most important result of the Summit was that the Declaration required member states to integrate energy security considerations into NATO’s policies and activities. Thus, over the course of summits in the past decade, NATO 78

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has not only included the notion of energy security into its framework step by step, it has also developed a kind of acquis for energy security. This acquis has three main pillars: political consultation and intelligence fusing and sharing; projecting stability; and Critical Energy Infrastructure Protection. Beside the traditional forms of political consultations, information sharing has already been institutionalized to a certain extent in terms of energy security. NATO established an Energy Security Section inside the Emerging Security Challenges Division, and it has a NATO Energy Security Centre of Excellence (ENSEC COE). Training programs have demonstrated considerable results. Partnership programs such as the Partnership for Peace (PfP) contribute to the broader strategic environment in the field of energy security. Multinational approaches are also of great importance in this dimension, as energy infrastructure links NATO allies with nonNATO countries. New security challenges have on multiple occasions required NATO to reassess its methods. The field of energy security is a good example, demonstrating that the traditional military approach used during the Cold War era is not always appropriate. In this case, the classical retaliation-based approach and the notion of geographical security may prove inadequate in addressing competing energy interests. In relation to pipeline protection, preventive cooperative measures such as political consultations and partnership building may be much more efficient than classical deterrence policies. To sum up, the above analysis indicates that NATO has chosen to undertake a role in the field of energy security. However, this will be a limited and complementary, rather than a leading role? This role will be limited and complementary, rather than leading one. Although energy security is not going to move to the centre of NATO’s agenda, it is bound to get growing attention. Threats to energy security are real and imminent, but preventive measures could generate satisfactory solutions.

Enhancing Energy Efficiency in the Military: The Green Army? Enhancing energy efficiency in the military serves the purpose of reducing the energy consumption of military vehicles and camps, as well as minimising the environmental footprint of military activities. A significant step forward in this area is the adoption of NATO’s “Green Defence” framework in February 2014. Global trends show the growing energy needs of rising powers, the depletion of global fossil fuel reserves, the general increase in the price of raw materials and Europe’s growing dependence on gas import. These trends reveal the necessity to decrease energy consumption in most of the NATO member states. It is easy to understand that the price of fossil fuels can directly affect military forces when every $1 increase in a barrel of oil adds approximately $130 million to the US energy bills. The US Department of Defence spends about $20 billion per year on energy, $15 billion on fuels and $5 billion on facilities. On the one hand, fixed military installations need a huge energy supply every single day of the year, but calculating these costs is relatively unproblematic. On the other hand, areas of operations have special energy needs in order to provide services in remote places and keep the number of casualties on a level as low as possible. During the ISAF mission, fuel convoy attacks happened on a regular basis, and the costs of transporting fossil fuels to generators huge enough to be able to provide electricity for a military base were very significant. Most of the fixed installations in the military use the commercial power grid to acquire the necessary electricity to be operational 24/7

Solar PV Arrays at Fort Bliss.

in 365 days/year. It is not just expensive, but creates vulnerabilities. Power supply cut-offs caused by environmental risks such as storms and earthquakes can threaten critical military infrastructures. In order to prevent these risks, the U.S. military supports the adoption of micro-grid initiatives supplied by renewables, particularly by photovoltaic systems. One of the most successful projects is Fort Bliss, where there is a 1.4 MW set of photovoltaic system installed, and a further 13.4 MW rooftop solar array to cover the needs of post housing. Another success story is the Hickham Air Force Base in Honolulu, where a photovoltaic system of 3.4 MW is in operation. In 2013, a 384 MW of renewable capacity was available at the Department of Defence (DoD) installations, but in 3-5 years, this capacity is planned to increase to 706 MW. Speaking of solar energy, we can find several arguments to use its potential in the military. A 2010 simulation analysing the potential effects of using renewables in foreign operating military bases led to the following conclusions: 1. For each megawatt of solar PV energy acquired, the forward operating bases achieve 6.7 % of fuel savings. 2. Installing a 2 MW solar PV array would reduce expected supply casualties by 12 %. 3. Modern equipment such as the Rucksack Portable Power System (REPPS)—containing a 4.5 kg portable battery recharging kit that features a 62 W solar panel blanket—eliminates the need to return to operational centres to recharge batteries, thereby enhancing the mobility of Special Forces. NATO has been active by and large in terms of increasing energy sustainability since the 2012 Chicago Summit. The Energy Security Section within the Emerging Security Challenges Division launched several energy-related projects. Allied Command Transformation (ACT) has also been involved in raising awareness at the military strategic command level and holding several training courses together with ENSEC COE. The NATO Support and Procurement Agency (NSPA) is relevant in terms of promoting renewables in the field of military logistics. A Smart Energy Team (SENT) was established right after the GEOPOLITICS

Chicago Summit to create innovative ideas and to provide a platform to present them for stakeholders. How Does NATO Contribute to Energy Security? Based on the above-mentioned initiatives, NATO decided to contribute to energy security in several ways while maintaining its complementary approach towards energy issues. The first way, which was already present in the three pillars, is information and intelligence sharing. NATO offers different types of consultations for its member and partner states, including regular meetings on energy security. During these consultations, NATO can act as a facilitator on energy security and pipeline protection planning, and on sharing concerns, expectations and best practices, and developing cooperation. The Alliance also has the capabilities to support the direct protection of critical energy

Solar blanket in a Rucksack Portable Power System. 80

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infrastructures against risks. It identifies four main types of such risks: natural disasters, technical failures, political instabilities or conflicts and man-made attacks. Upon the request of the concerned states, NATO can support the relevant authorities in these cases with technical tools, communication services, technology transfer, or training and education facilities. Last but not least, NATO could save a vast amount of energy supporting sustainable energy sources such as renewables and solar power in particular. Using photovoltaic systems in areas of operations or in fixed installations at home also helps to reduce energy costs. Portable devices decrease the need for recharging batteries, thereby increasing the mobility of troops and reducing the risk of casualties. Implementation of such modern energy sources could not just lessen fuel costs but enhance tactical capabilities and save lives at the same time.

REVOLVING AROUND 2020: CLIMATE AND ENERGY POLICIES IN THE UN AND THE EU Kinga Szálkai The attention of global and environmental policy-makers is centred on climate change and emission reduction since the adoption of the United Nations Framework Convention on Climate Change, the so-called Rio Convention in 1992. Since then, time and science have proved that mankind just cannot be too cautious in preventing the collapse of the ecosystem through the effects of its activities, especially in terms of energy production and use. At the 25th anniversary of the document, it is more obvious than ever that our future will be defined by the successes and failures of international and regional climate and energy policy agendas. The international consensus in this issue is visible in the number of the 197 Parties of the Rio Convention and in the increasingly specific commitments of the 21st meeting of the Conference of the Parties (COP) in Paris. The Paris Agreement, ready to entering into force in 2020 since November 4th 2016, turned over a new

leaf in the history of global climate action, as it is the world’s first comprehensive and (in a certain sense) legally binding climate agreement, bringing 148 of the 197 Parties, including China, the U.S., the European Union and India together. The main and most well-known aim of the document, specified in Article 2 is ‘holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.’ Besides, the Paris Agreement also emphasises the need to increase adaptation and resilience to climate change, calling for consistent financial flows, a new technology framework and an enhanced capacity-building framework to support these aims. Regarding these targets, low greenhouse gas emissions, and therefore, energy policy approaches are of key importance.

Parties and Signatories of the Paris Agreement. GEOPOLITICS

The Paris Agreement does not prescribe detailed binding emission targets for its Parties, instead, it emphasises so-called ‘nationally determined contributions’, NDCs (see Art. 3. and 4.). These NDCs are required to be ‘ambitious’, planned ‘with the view to achieving the purpose of this Agreement’ and to ‘represent a progression over time’. The document, in the meantime, pays significant attention to the different capabilities and needs of developing countries, underlining that these criteria have to be fulfilled ‘in the light of different national circumstances’. Parties are required to report their emissions and the outcomes of their efforts to reduce them regularly in order to increase transparency. Although the document does not tackle energy issues directly, it is more than obvious that its aims necessitate significant changes in energy policy approaches. The European Union has traditionally been a worldwide pioneer of sustainable energy use and a ‘good student’ in establishing and implementing practical measures in this field. It is also not a coincidence that the Paris Agreement reached the necessary amount of ratifications (the so-called emissions threshold of 55 %) to enter into force with the approval of the EU—the integration played an enormous part in formulating the

Helping Energy Cross Borders. 82

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ambition coalition and the political will behind the document, and is unquestionably committed to the fight against climate change. It is also telling that at the beginning of 2015, the European Commission adopted its Energy Union Framework Strategy together with a preliminary Communication on the expectations towards the COP21 in Paris. The Energy Union is one of the main priorities of the European Commission and the relatively new, developing core of the EU’s climate and energy policies. The aim of the Energy Union is to provide ‘secure, affordable and climate-friendly’ energy to European citizens based on a single energy market and the additional, fifth-like freedom of the flow of energy. It consists of five policy areas that are in line with the targets of the Paris Agreement: 1. Energy security, solidarity and trust 2. A fully-integrated internal energy market 3. Energy efficiency 4. Decarbonising the economy 5. Research, innovation and competitiveness Increased interconnectivity among member states is necessary to reach the aims of the Energy Union. Therefore, a further Communication on Interconnection was also

issued with the Energy Union framework, setting out the measures to achieve 10 % electricity interconnection by 2020. This aim is to extended to 15 % by 2030, but the decision will depend on the outcomes of the efforts until 2020. Beside the recent tendencies to intensify the climate and energy cooperation in the framework of the Energy Union, there are also more mature climate and energy targets, the outcomes of which are already measureable. These are the goals conceptualised by the 20/20/20 package and the 2020 Energy Strategy, namely: • reduce greenhouse gases by at least 20 %; • increase the share of renewable energy in the EU’s energy mix to at least 20 % of consumption; • improve energy efficiency by at least 20 %. For reducing greenhouse gas emissions in cooperation with the industrial sector, the European Union implemented an advanced framework already in 2005. The EU Emissions Trading System (ETS) is the world’s first and biggest international emissions trading system based on the ‘cap and trade’ principle. Between 2013-2020 (during the so-called phase 3), the ETS is going through a significant restructuration process in order to increase its efficiency. By the end of this period, it is expected that

Progress of the European Union towerds its ‘20-20-20’ Climate and Energy Targets

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Energy Efficency first

A fully integrated energy market

Energy security, Solidarity and trust

Decarbonising the economy

Research, Innovation and Competitiveness

Policy Areas of the EU Energy Union

emissions from sectors covered by the system will be 21 % lower than in 2005. If the ETS functions in line with the present commitments, in 2030 it may induce 43 % lower emissions in the covered sectors. The evaluation of the EU’s climate and energy policy related to the Paris Agreement seems to depict a positive picture. Overall, EU greenhouse gas emissions fell by 18 % in the period between 1990 and 2011. As for the three main 20 % targets, official data for 2014 indicate that the decrease in greenhouse gas emissions has already reached the 20 % target. The share of renewable energy is increasing faster than it was initially planned, therefore, by 2020, it will most possibly reach the 20 % target level. Energy consumption is decreasing at a pace that will expectedly ensure to reach the 2020 energy efficiency target. The EU is committed to carry on with more ambitious aims after 2020: the 2030 Energy Strategy targets a 40 % cut in greenhouse gas emissions (compared to 1990 levels), a 27 % share of renewable energy consumption, and at least 27 % energy savings compared with the business-as-usual scenario. The long-term commitments presented in the Energy Roadmap 2050 focus on reducing greenhouse gas 84

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emissions by 80-95 % compared to 1990 levels. However, the global and regional picture of climate and energy policies is not as rosy as the above-described processes would appear. The development of climate and energy policies of the UN pioneered by the EU has raised new, controversial and disturbing questions recently. Turning back to the Paris Agreement, one of the loudest controversies centre around its legally binding nature. The document is a ‘treaty’ according to international law, which, on the whole, consists of a specific blend of mandatory and non-mandatory provisions. Although it was praised worldwide to be unique in the sense that it binds its Parties to make visible efforts in reducing their emissions, maintain NDCs and report on their implementation regularly, it is true that there are no binding enforcement mechanisms to tackle possible cases when Parties do not meet the obligations of the document. There are also other controversies concerning the legal character of the document, which may sound troubling and shadow the implementation of the allegedly ambitious aims of the Paris Agreement. Nevertheless, there are also debates about the actual level of ambitiousness, or even about the relevance of the 2 °C target. “No scientific assessment has clearly justified or defended the 2 °C target as a safe level of warming”—argued a number of authors in Nature Geoscience in 2015, and it is inevitably true that even the present level of global warming (of 0.8 °C) means a certain threat to our already changing ecosystem. The widely known Stern Review on the Economics of Climate Change drew the attention to the harmful effects of climate change even under 2 °C as early as 2006. Moreover, among others, UNEP claims that the pledges under the Paris Agreement will not be sufficient to reach even this 2 °C target. According to its report, based on the present pledges, the increase in temperature is rather likely to reach 3 °C above pre-industrial levels, which may lead to tragic consequences. In addition, UNEP argues that taking significant action before 2020 “is likely the last chance to keep the option of limiting global warming to 1.5

2030 Energy Strategy Targets

°C”. Overall, it is important to bear in mind that the 2 °C target does not provide a silver bullet against climate change, it is also necessary to take further actions to reduce anthropomorphic effects and to boost our resilience towards the changing circumstances. In terms of strengthening commitments, however, the recent signs are not very encouraging. On June 1, 2017, Donald Trump, the President of the United States announced his intention to withdraw the United States from the Paris Agreement. As the U.S. is the second largest greenhouse gas emitter country of the world, this step would likely have very serious consequences on the future of the fight against climate change. The other three members of the top four emitter states, China (1), the European Union (3) and India (4) reacted by pledging their strengthened commitment

to the Paris Agreement. Albeit the retreat of Washington led to the reaffirmation of the commitments of the leading actors in this fight so far, it may also discourage other states from meeting the criteria of the Paris Agreement. Even if this scenario will not happen, the withdrawal of the U.S. alone would be more than enough to shake the global climate change regime, both in the normative and in the financial sense. According to the Paris Agreement’s formal withdrawal procedure, however, it is not possible to leave the treaty earlier than four years, more specifically, until November 2020. All things considered, in the light of the recent developments, it is not a premature prediction that 2020 will mean a very significant turning point in the history of global climate action.

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NATURAL GAS AS A BRIDGE TO A LOW-CARBON EU SOCIETY Mihály Kálóczy

First, the constraints: • Natural gas is indeed the least carbonintensive fossil fuel, but it cannot be an ultimate tool in the progress towards a low-carbon society until the storage or the conversion of carbon-dioxide is solved. • Moreover, it is a hindrance in terms of the goals regarding greenhouse gas emissions. • Extension and improvement of renewables in the Member States’ energy mix implies flexible backup technologies (such as hydroelectric power plants and gas-fired power stations). • More member states (e.g. Ukraine, the Baltics) in the European Union have a relationship with Russia that is uncertain and full of tension. • Many member states depend on natural gas: In the EU-28, dependency was 69.3 % in 2015, up from 67.4 % in 2014. Finland, the Baltics, etc. import the gas from Russia, but they are looking for alternate supply sources. • The EU considers nuclear energy as a decarbonisation option, but most of the market (Member States) would prefer not to rely on it. • The European Union cannot order a member state to change its energy resources or policy. In terms of the big picture, this is not a question for the EU only: Almost every developed country aspiring to use renewables as much as they can has to face it. Globally, natural gas fields are highly concentrated, so the abundancy of this resource at first sight is misleading. The three main regions where it can be found is North America (shale gas), Russia, and the Middle East (primarily Qatar and Iran). EU Interests As for climate change, the key EU targets for 2020 are a 20 % cut in greenhouse gas emissions compared to 1990, 20 % of total energy consumption coming from renewable energy, a 20 % increase in energy 86

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efficiency, and for 2040, an at least 40 % cut in greenhouse gas emissions, at least 27 % of total energy consumption coming from renewable energy, and an at least 27 % increase in energy efficiency. These numbers have become hugely important as climate change became one of the drivers of energy management. Consequently, the European Commission came out with an EU Adaptation Strategy with the aim to have Member States adopt national plans to cope with the inevitable impacts of climate change by 2017. Some of the Member States have already done so. The EU’s future energy supply is quite controversial. On the one hand, the decision to create a low-carbon economy necessitates cuts in the use of coal and other fossil fuels. On the other hand, the expansion and reasonable public mistrust towards nuclear fuels prevents it from becoming a substitute to fossil fuels. With these factors—as well as current international relations—in mind, the EU has introduced its Energy Roadmap 2050. According to it, the share of nuclear power in primary energy consumption will not undergo major changes before 2050, but the share of renewables and natural gas will. These long-term goals are more or less in accordance with the Kyoto Protocol and the Paris Agreement. Thus, if the EU does not want to use oil and coal (both have been losing significance for decades), build more nuclear power plants, and, based on the state of technology, is not ready to supply its economy with renewables only, what can be used in the next few decades? The answer is natural gas, of course, because the EU does not have any other choice. This resource will definitely play a key role in the transition in the short and medium term—which means until at least 2030 or 2035. Having the appropriate technologies, we know the

accompanying emission values and that gas has the lowest environmental impact amongst fossil fuels. To find a solution to making it usable in the long run, the EU and further institutions have invested significant funds into the development of Carbon Capture and Storage (CCS) technology. Carbon Capture and Storage is expected to be applied from around 2030 onwards. This choice makes sense but begs the question: Where will that gas come from? The answer is a bit complicated. Firstly, technological advancements have made it possible for LNG (liquefied natural gas which has been converted into liquid form) to be stored and transported with ease even from Egypt. Secondly, the amount of natural gas necessary is going to change. Although its importance in the EU Member States’ energy mix will increase, the energy consumption of the EU has been decreasing in the last ten years, due to energy efficiency measures. These mainly concern the residential sector, expected to cause a 25 % drop until 2030. The natural gas production of EU-28 fell by 9.3 % from 2014 to 2015. The main reason

is the natural aging of fields in the North Sea and production limits at the Dutch Groningen field, the biggest in Europe. However, being ‘green’ is not just a choice for the EU, it is also a necessity. The lack of cheap fossil resources forces states to import them (mainly gas), which in turn makes the Union vulnerable to changes in the political and diplomatic climate. In case of gas, the main outside factor is Russia. Speaking of Russia Russia’s energy mix is 89 % made up of fossil fuels, which means a 53 % share for natural gas. Beyond its own needs, Russia possesses reserves of these resources so large that oil and natural gas exports accounted for 43 % of Russia’s federal budget revenues in 2015. In the same year, the EU imported almost 30% of its crude oil and more than 30 % of its natural gas from Russia. On the other side, almost 60 % of Russia’s crude oil exports and more than 75 % of Russia’s natural gas exports went to Europe. These numbers explain why Russia and Europe are interdependent in terms of energy.

Distribution of Russia’s natural gas exports by destination (2015)

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Natural gas valves and piping

Following the Russian Military Intervention in Ukraine, in 2014 the United States and the European Union imposed a series of sanctions on Russia, hindering its economy by, among others, restricting access to U.S. capital markets, deepwater technology, and limiting export to Russia etc. One of the consequences was that virtually all involvement in arctic offshore and shale projects by Western companies ceased. These resources are unlikely to be developed without the help of western companies like ExxonMobil, Eni, Statoil, and the China National Petroleum Company (CNPC). As a short-term effect, all large-scale investments with western companies were halted, but no further damage was made, since these technologies would not begin to produce oil until 5 to 10 years later. Independently of this, the price of oil fell by more than half, causing the state deficit to grow and the government to raise the taxes on oil and gas companies and related activities. As a further consequence, the government collected double dividends than it normally did, and sold some of its share in the oil company Bashneft.

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Looking for a Way Out As conventional gas production declines, the European Union will have to rely on significant gas imports in addition to domestic natural gas production and, potentially, indigenous shale gas exploitation. The EU is interested in diversifying its energy mix, as well as its supply of imported natural gas. The energy strategy of the EU, particularly the extension of renewables, will likely intensify the need for natural gas as a dispatchable resource. Around 2030, technical solutions concerning shale gas and CCS may change gas prices and competitiveness. As the aforementioned events and numbers suggest, Russia’s reserves will ensure its natural gas exporting ability in the next few decades; however, the EU is already seeking alternate supply routes.

FROM THE CASPIAN TO THE RED SEA—NEW OPPORTUNITIES FOR EUROPE’S ENERGY SECURITY Tamás Kozma and Zsolt Csepregi

As the International Energy Agency’s definition of “energy security” suggests, “the uninterrupted availability of energy sources at an affordable price” means that access—or rather the impossibility of denying access—to vital energy resources is of prime interest of any international actor. Applying this definition to Europe, we see that, alongside the supply via maritime shipping routes (LNG) secured by the vital principle of customary international law, the freedom of navigation, the region which should be at the top of our list for go-to places for natural gas is the borderland between our continent and the Middle East and Central Asia. This region, a two-thousand-kilometre-wide strip of land between the Caspian Sea and the Red Sea, is unfortunately most commonly known for its current instability, which nonetheless does not—or at least should not—negate its position as a vital source of hydrocarbon imports to Europe. While certain areas such as Syria and North-Western Iraq are indeed in a great turmoil, it would be a mistake to take a general negative view regarding this region. Home to key states with significant hydrocarbon reserves such as Azerbaijan, Turkmenistan, Israel, and Egypt—not to mention the second tier to the Southeast, Iran, and the Gulf States—European access to these sources is relatively easy to guarantee if there is a political will and the funds to match the scope of the endeavour. As Europe aims to diversify its sources for hydrocarbon imports to guarantee the maximum degree of energy security, it is crucial to include this region in the European “sphere of energy influence,” as we shall argue. Gasified Fruits of the Eastern Mediterranean If there ever was a territory known for zero-sum games, it is the lands surrounding the Eastern basin of the Mediterranean Sea. The region,

which connects three continents—Europe, Asia and Africa—has been home to a number of regional great powers which were struggling to expand their influence and become pancontinental empires, such as the Ottoman Empire. Currently, three powerful states define this region in a tug-of-war competition: the Republic of Turkey, the State of Israel and the Arab Republic of Egypt. Between these countries, the Eastern Mediterranean basin acts as a liquid highway with the divided island of the Republic of Cyprus, depending on political will, blocking or enabling increased interaction between the regional great powers. Israel is a relative newcomer in the club of energy exporting countries, with gas in the Israeli Exclusive Economic Zone (EEZ) only being discovered after the turn of the millennium. In recent years, estimates of Israeli natural gas reserves have rapidly expanded towards the figure of one trillion cubic metres, of which the Leviathan gas field alone constitutes 500 billion cubic metres, with promising opportunities for further findings according to the country’s Minister of Energy Yuval Steinitz. While Israel plans to restructure its economy to rely on energy from natural gas in order to reduce the possibility of outside interference, the current consumption of roughly 10 bcm (billion cubic metres) of natural gas, expanding at an annual rate of 10 %, would still potentially leave ample (more than a hundred bcm of) energy resources for export. The second vital source of natural gas for Europe is Egypt, with the combined reserves of the Egyptian EEZ and the Nile basin. The country was a significant energy exporter until 2014, but the rapidly expanding energy needs of the populous nation could not be met du to a lack of investment in the energy production sector. This negative trend will be halted by the entry of GEOPOLITICS

the Zohr gas field, discovered in the summer of 2015 by the Italian Eni energy conglomerate. The Zohr supergiant gas field, which took the title of the largest gas field in the Mediterranean from the Israeli Leviathan, is estimated to hold 850 bcm, nearly doubling the total Egyptian reserves. Production is planned to begin in 2020, which could not come soon enough for the largest Arab state, currently under heavy budgetary pressure. On the other hand, beyond 2024, as LNG demand is expected to outgrow global supply, Egypt will be well positioned to reap the maximum benefits from its energy resources. Our last case, Cyprus, is positioned (not only in the geographical sense) in the centre of the natural gas question of the Eastern Mediterranean. While previous findings were lacklustre, setting available reserves to somewhat above 100 bcm, with the discovery of Zohr adjoining the Cypriot EEZ, potential investorsâ&#x20AC;&#x2122; interest has picked up once again. With current reserves bordering on the minimal limit which would be economically warrant the construction of an independent LNG terminal, the Major gas fields in the Eastern Mediterranean

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three countries expressed interest to join forces and use underutilized existing LNG terminals to prepare energy resources for exports. Joint ventures are troubled by geopolitical factors, with Cyprus providing aÂ prime case study for the issues at hand as the Republic of Turkey strongly protests against any moves that would exclude it and/or the Turkish Cypriot community. The partition of Cyprus must be solved to reap the most benefit from the already discovered natural gas reserves of the Eastern Mediterranean, although even without it, three possible methods are available to Europe to start importing and securing this vital source. The LNG infrastructure of Egypt presents the medium-term solution to the need for imports, and there are also plans to build an Israeli-Turkish pipeline and an IsraeliHellenic-Italian pipeline, which would reach the shores of Europe in the Southern-Balkans and later the Italian peninsula. One must also note that, since natural gas is used not only based on economic interest, but diplomatic positioning, countries such as Israel also plan to use their reserves to cement their relations with their

neighbours and partners in this unstable region. Therefore, the European Union, interested in creating a “sphere of energy influence” on its borderlands, would be advised to use its significant political clout to support peaceful relations in the Eastern Mediterranean, reducing the amount of natural gas needed for diplomatic manoeuvres and centralise the maximum amount of energy reserves for its own use. This European interest is in line with the Cypriot understanding of the “natural process” of broadening its existing trilateral frameworks of cooperation between Greece, Cyprus and Egypt, Israel, Jordan and the Palestinian Authority respectively, into a regional, Eastern Mediterranean body. Such an initiative, focusing on the hydrocarbon resources, could, as envisioned by Nicosia, become the region’s own “European Coal and Steel Community” leading to deepening regional peace and prosperity. An Energy Belt through the Caspian The hydrocarbon resource-rich Caspian Sea basin has long been a focus of geostrategic

thinking and this interest has specifically been connected to the rise since the dissolution of the Soviet Union. The growing attention of the international community towards the region gave birth to a sort of ‘great game for energy’. The latter expression refers to the analogy of the great powers’ struggle for control of Central Asia during the 19th century. In the current discourse, the focus has been shifted slightly to the western edge of Central Asia, namely to the Caspian Sea, as a consequence of the enormous hydrocarbon discoveries. The access to Caspian-origin hydrocarbon resources has rapidly become a key interest of the European Union (among others), and these potential supplies were identified as tools for creating greater energy security for Europe and balancing the share of Russian hydrocarbon in European imports. If we narrow the analysis to natural gas, there are several important initiatives and projects around the Caspian Sea basin, which are not only to be assessed from the aspect of business, but also within a wider geopolitical framework. The EU’s determination to import natural gas from

Oil and gas infrastructure in the Caspian Sea region: March 2012

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the Caspian Sea basin will give birth to pipeline projects and, at the same time, will endow transit countries with specific geopolitical advantages. Turkey is a typical example. Looking at the big picture, Azerbaijan, Turkmenistan, and Iran are the countries in the Caspian Sea basin that most frequently appear in the European discourse as potential sources of additional natural gas supplies. The likelihood of the utilization of these supplies varies greatly—or, at least, potential projects stretch over a longer timescale. In an era when energy security becomes an increasingly determining factor in international relations, it is vital to break down this overall analysis into case studies focusing on each country that plays a significant role in these regional natural gas dynamics. Historically, Azerbaijan was considered a strategic territory due to its oil reserves. Recently, this image has become amended or even redrawn by the discourse on Azerbaijani natural gas. Nowadays, Azerbaijan is being widely considered one of the most probable alternative source countries in Europe’s energy diversification plans. The discovery of Azerbaijan’s largest natural gas field, Shah Deniz (situated approximately 70 kilometres from Baku), in 1999, was a milestone that made Azerbaijan a potential key player in the eyes of European countries. Azerbaijan’s geostrategic strength can be identified in its position as a point of departure for oil and gas exports; however, it should be noted that Azerbaijan’s natural gas reserves are highly exceeded by the ones of Iran, Turkmenistan or Qatar. The South Caucasus Pipeline, which has carried natural gas to Turkey since late 2006, is now undergoing capacity expansion. According to the plans, the second stage of the Shah Deniz project will allow Azerbaijan to add an additional 16 billion cubic metres of natural gas annually to its current export via the South Caucasus Pipeline and its connecting pipelines that are currently under construction. Compared to the natural gas fields in the Eastern-Mediterranean, LNG developments are hardly possible in case of Azerbaijan, due the landlocked nature of the Caspian Sea, and therefore the focus is on the pipeline deliveries. 92

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Turkmenistan’s potential role in Europe’s natural gas supply has long been on the agenda. Statistics show that Turkmenistan sits on the world’s fourth largest natural gas reserves. The country’s export portfolio has undergone significant changes in the past few years: Its main export markets were Russia, Iran and China but its gas relations with Russia eventually went downhill, resulting in the total disruption of its gas trade. Previously, natural gas from Turkmenistan could reach European markets, since Russia imported and then re-exported it to European markets. Since the break-up of this gas tie, Turkmenistan’s primary option has been to sell its natural gas to China via its existing pipeline and to sell it to Iran. An undersea Trans Caspian pipeline linking Turkmenistan to Azerbaijan would be a great opportunity for Turkmenistan and Europe to route Turkmen gas towards Europe. However, without settling the legal regime of the Caspian Sea, such an infrastructural development is hardly possible, as all littoral states’ consent would be needed for such investment, which seems to be fairly problematic. Therefore, the establishment of Turkmenistan’s natural gas window to Europe is still questionable despite an active dialogue among the parties, the main basis of which is the Memorandum of Understanding and Cooperation in the field of energy between Turkmenistan and European Union, signed in 2008. Iran, bordering the Caspian Sea from the south, not only possesses the second largest known natural gas reserves, but also shares the largest natural gas field in the world with Qatar. The lifting of international sanctions against Iran in early 2016 has definitely given a boost to the country’s reintegration into the world economy, and this can become especially relevant in the field of energy. Iran’s current natural gas production is mostly fed into its domestic gas grid and its real export capacities have remained unutilized until now. Although Iran is the second largest supplier of Turkey, it has not developed other extensive exports. Despite the enormous reserves of the country, so far its natural gas has been mostly used for meeting domestic demand. It is imperative to highlight that Iran’s energy

infrastructure needs a significant upgrade, and thus there is a need for foreign investments to boost and modernize the country’s production capacities, such as to build its export channels inclusive of pipelines and LNG facilities. Apropos of the Iranian presidential elections in May 2017, it is important to point out that Hassan Rouhani’s re-election is seen from the EU as a sign of openness towards Europe, as well as the expectation that there will be further opening, which might play key role in the future in dealing with potential natural gas flows from Iran to the European Union, for instance via the TANAP pipeline, which might be able to carry Iranian gas once the necessary infrastructure is in place. Accordingly, Iran appears not only as a potential source of extra supplies to Europe in the long term, but also as a place for lucrative business for European energy giants that can invest in the development of the Iranian energy sector. Although Turkey’s position is different from the aforementioned scenarios, it is worth having a look at. Turkey is poor in hydrocarbon resources and imports 99 % of its natural gas consumption. Despite this vulnerable position, Turkey’s strength can be identified in its strategic location. As highlighted in the official Synopsis of the Turkish Foreign Policy, Turkey is an emerging energy terminal and transit state playing a vital role with respect to European and global energy security. Thus, Turkey has gained greater significance in energy security-related discourse, and the country’s territory has been chosen as a location to accommodate various pipeline projects. At the same time, Turkey’s transit role has to be assessed in a reflective way. A strategically important crude oil pipeline— namely the Baku-Tbilisi-Ceyhan pipeline— enables oil export from the Caspian Sea via Georgia to Turkey and further to the world market. The South Caucasus Pipeline already became operational a decade ago. The latter is the infrastructure that carries Azerbaijani natural gas to the East of Turkey. However, the great breakthrough in the field of natural gas is still yet to come, as Caspian natural gas still lacks the infrastructure that would enable its flow to Europe. The nearly

decade-long planning of the Nabucco pipeline was not crowned by success, and its failure compelled its signatories to look for alternative solutions. This situation may be changed by the Transanatolian Pipeline (TANAP) and its continuation, the Transadriatic Pipeline (TAP). The TANAP, running through Turkey with a length of 1850 km, is currently under construction, and promises to be a crucial export channel of Azerbaijani natural gas to Europe. Moreover, it will be considered Turkey’s strategic contribution to European energy security. This role might be further strengthened after the initial capacity of 16 bcm per annum is upgraded according to plan in order to enable the pipeline to carry extra quantities towards Europe.

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AN ERA OF LOW OIL PRICES: CHALLENGES AHEAD OF OPEC Tamás Kozma “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” The above quote from former Saudi oil minister Sheikh Zaki Yamani became a well-known point of departure for discussing the state of oil affairs. His thoughts are quite telling. In an era where decarbonisation appears to be a strategic direction for energy markets and renewables are on the rise, it is fairly complicated to predict the future of both oil production and its institutional background. The Organization of the Petroleum Exporting Countries (OPEC), which was established primarily for the coordination of policies with regard to what is probably the most important commodity among the largest producer states, has proven to be an enduring international

The OPEC member states 94

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organization. When OPEC came into being in 1960, the international order, including the energy markets, were considerably different than today. Given the changing times and circumstances, it makes sense to ask what current and foreseeable the organization is facing. Energy issues are often viewed through the lenses of energy security or access to energy. This classical approach does not seem, however, to be the most relevant with regard to the contemporary discourse about crude oil and OPEC’s role. The current discourse is not about scarcity or access to resources. OPEC members’ crude oil reserves currently account for 81.5 % of the world’s total proven crude oil reserves, which is clearly a very significant figure. The current oil debate is about the low

ebb of oil prices and the current oversupply that affects oil producer countries negatively, and it is also about OPEC’s ability to tackle this challenge. The past ten years have brought dramatic changes into the oil markets, prices fell from a record high of 150 USD/barrel level to a record low of 30 USD/barrel. Since June 2014 the prices have not shown signs of recovery, and therefore, in late 2016, OPEC member states agreed to cut production, but these cuts failed to impress markets and price levels have remained at undesirably low levels. Thus, in May 2017, a decision was made to prolong measures aiming to boost oil prices. Given their interest in increasing oil prices, non-member Russia and other countries joined this joint effort. At the same time, OPEC member states’ participation was not fully inclusive: due to prior agreements, conflictprone Libya and Nigeria were exempted from implementing the measures. It is important to note that OPEC is facing multiple challenges at the moment. Politically, the recent Gulf crisis between Qatar and a group of Arab states might negatively affect the coordination efforts of OPEC, similarly to the tense relations between two major oil producers, Saudi Arabia and Iran. Besides the current low oil prices, the role of renewable energy resources is also part of the agenda. From a general perspective, it is disputed to what extent renewables can become alternatives to oil in the coming decade. In terms of OPEC countries, how the largest oil suppliers think about their own use of renewables is a very concrete issue. Other than their primary interest to sell crude oil at favourable prices, an emerging tendency of investing into renewables can be observed in OPEC countries too. For instance, the United Arab Emirates is reportedly planning massive investments to boost the use of alternative energy over the coming decades, and similar plans can be identified in several other OPEC countries as well. The so-far unutilized solar power capacities all over the Gulf region are especially relevant in this regard. The expectation towards the vast shale oil discoveries to bring extra quantities to markets and thus risk the success of current production cuts are both worrisome from OPEC’s point of view. Moreover,

the low oil prices not only affect member states’ income, but also consequently hinder their further investments and modernization efforts. Of course, it is necessary to see that time plays a crucial factor in the transformation of the energy markets. Decarbonisation is not an overnight process, and no one can expect rapid shifts from one main energy resource to another. Thus, oil and natural gas will presumably continue to play key role in energy affairs, but it should be emphasized that OPEC needs to adapt to lower oil prices, as well as to the changing architecture of energy markets. Even though there is an increase in the use of renewables and the price of crude oil is unfavorable, it would be premature to talk about a post-oil or post-OPEC era. Oil remains a key fuel of the global economy and at the center of geopolitical interests, along with natural gas. Based on the latest estimations, global oil demand will even increase to over 109 mn b/d by 2040. From another point of view, the raison d’être of OPEC is also justified by the fact that oil producing countries seek gains from OPEC membership. Equatorial Guinea joined in May 2017, while Gabon rejoined after twenty years of absence in 2016. Thus, the number of OPEC member states reached fourteen just recently.

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THE ECONOMICS OF ENVIRONMENT: WILL WE EVER STOP USING FOSSIL FUELS? Cecília Varsányi “Fossil fuels are depleting - a great advantage of this statement is that it is easy to understand, its main disadvantage is that it is not true.” (Cesare Marchetti)

renewable energy use, social expectations and policies. Yet there is no certainty about how much environmental damage might occur before a renewable energy transition.

In order to achieve the decarbonisation objectives, by 2050 the European Commission aims to cover up to 75 % of the total energy used by renewables. The question is what kind of transition between fossil fuels and renewable energy sources can be expected, as without a doubt phasing out fossil fuels for renewables would not be a straightforward switch. If ever there could be a shift from fossil fuels to renewable resources—what seems to be a utopian idea at this moment—which factors could be the decisive influencing components of this process? There are several components that can affect the speed of the transition, for example scarcity caused rise in fossil fuel costs, technological development in extraction efficiency and

Scarcity, Forecasts The extraordinary decline and the projected depletion of fossil fuel capacity have been discussed in various scientific reports, stating that due to the current rate of extraction of non-renewables we may face serious resource challenges in the near future. Without a doubt, from time to time increasing demand for resources causes serious price volatility, which sometimes inevitably generates apocalyptic narratives about the future of our energy sources. Similar projections may lead us to the conclusion that we will use up all our reserves in the near future. However, if we think it over properly, the major threat is not that we might lose all of our resources: we must concentrate on international conflicts that might be caused

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The McKelvey box

by the decline of regional capacities. These conflicts are likely to reach our society sooner than the complete depletion of the mineral resources would happen. Identified and Undiscovered Resources When discussing the exhaustion of our energy resources, it is worth taking into consideration how these resources might be classified based on geological knowledge and confidence, given that the available mineral resources might appear in different forms. The McKelvey box (beyond) is a diagram that helps to understand the distinction between resources and reserves and the extent of the economic accessibility of these minerals . The main factor when it comes to classifying the deposits are the degree of certainty about the subsistence of the deposit and its commercial profitability, comparing extraction and selling prices. Under “resource” we understand the full amount of a certain mineral, this is the whole base and is in fact a geological category. When talking about “reserves” we refer to a certain material which, based on today’s technology and current sales prices, is feasible to recover. From an economic point of view it would be a mistake to assume that the whole mineral wealth could be considered as potential reserve. For this, the prices should be infinite.

Opportunity Costs There is an important question regarding depleted resources: when should they be consumed in order to minimize user’s opportunity cost? Is it worth preserving mineral reserves for the future? From the producer’s point of view, the current selling price should not only cover the marginal costs of the most efficient production method. It should also include the “opportunity cost,” which is the benefit of the future use or sale of the product. The short or long-term strategy of producers in the energy market competition will be determined by how they evaluate this future benefit. Technological Improvement and Replaceable Resources Since technological improvement is a significant scarcity-moderating factor, it should also be taken into account how (scarcity caused) increasing costs can be balanced by technological development and extraction efficiency. The pace of technological improvement is mainly influenced by the scarcity of the resource. (To mention one of the most recent examples, petroleum prices at the beginning of the 21st century have led to renewed interest in the innovation of shale gas and oil extraction, despite the fact that history of the oil shale industry in the United States goes back to the 1850s.)

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Innovations emerge on a daily basis, including the ones that improve the extraction efficiency of the above mentioned—much-disputed and not really gratifying—non-conventional energy carriers. Due to the expansion of advanced technologies, shale gas as well as the production of shale oil became a rapidly expanding business, which refute the pessimistic predictions about the depletion of oil and gas resources of the globe. With progressive technology and efficiency improvement, some previously-existing mineral resources, whose production has previously fallen into the uneconomic category, may be temporarily “set up” as reserves: due to the shrinking supply and the high energy prices generated by the growing demand, it is worth temporarily extracting deposits which were not economically feasible before. The question is how long it takes to exploit the cheaper yields and after emptying the main, economically available resources, what level of business risks corporations have to take to get into non-traditional mining investments. Corporations might be forced to invest in extraction sites which are no longer producing profit, but on a long term they might lead to financial loss. Giant corporations such as Chevron, ExxonMobil and Shell have steadily expanded their capacities over the past few years, but in spite of the huge investments, profits of all three companies fell sharply over the same period. Merely considering the financial background of extraction technologies, oil prices should remain high in order to finance innovation for better extraction efficiency, so an upward trend in fossil fuel prices over time is likely. Perhaps we can say that cheap oil is out of stock, but there is still plenty of expensive oil. Substitutability of resources is another crucial factor when it comes to depletion of fossil fuels. If there are existing substitutes or technologies that can perform the same task, at the same or similar price level, the economy will shift to a substitute resource. This substitution depends absolutely on future technological developments. In case of renewables, resource storage, which aims to extend the economic span of the 98

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As stocks are steadily shrinking, oil extraction is

increasingly shifting to the less accessible North Pacific Ocean and other non-conventional oil

stocks, making it difficult to access these hardto-find raw materials.

resource, is one of biggest challenges that needs to be solved in order for renewables to be able to compete with non-renewables. For instance, plants operated by fossil fuels or nuclear energy aim to produce the necessary amount to power the grids; energy has not generally been stored. If the problem of storing the massive amount of excess electricity produced by the sun and wind would be solved, energy produced by renewable resources could function as a perfect substitute. A Long-disputed Scenario: Peak Oil The first oil peak theory for the United States’ oil production was born in the mid-1950s. The general and controversial peak oil theory predicts an end to the growth in global oil consumption, where production will peak and begin to drop. In fact some analysts say it has already happened. As consequences of the oil peak, we should not only think of high prices, we should be prepared for extreme swings, with serious price rises and significant drops. Exploration of newer and newer oil wells and the development of technology related to their production can cause the illusion that, for example, the United States or Canada will flood the rest of world with cheap oil. However, according to the IEA’s 2013 survey, the yield of light tight oil wells decreases much faster than conventional wells. There are serious concerns about the fact whether the newly-discovered non-conventional deposits will actually be able to provide a costeffective solution for the growing global demand on the long term. Selling prices should remain high in order to enable economically feasible projects for producers. Geological and economic conditions give an increasing impetus to the expanding use of renewable energies and social expectations are

Hard transition/landing: it comes from the finite nature

of fossil resources and requires the complete depletion of fossil fuels before the transition to renewables and

the preparation for adequate replacement of the missing capacities could commence.

Soft transition/landing: the amount of fossil fuels produced and consumed gradually decreases until

the use of renewable resources becomes cheaper

than exploiting non-renewables. At the switch point, renewable resources will be consumed and consumption of non-renewable resources will stop.

pointing towards the transition of clean energy. It is most likely that capital will first get out of the fossil production investments rather than actually exhaust the stocks and it is unlikely that we will have to expect a hard transition. The debate around this question has enormous literature and cannot be settled with airtight answers. And the biggest question remains; that is, whether such a rearrangement (even a soft transition) can be done peacefully.

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COAL DUST AND MIRRORS: TRUMP’S PROMISE TO THE MINERS Zsolt Pálmai

“I went to a group of miners in West Virginia— you remember, Shelley—and I said, how about this: Why don’t we get together, we’ll go to another place, and you’ll get another job; you won’t mine anymore. Do you like that idea? They said, no, we don’t like that idea—we love to mine, that’s what we want to do. I said, if that’s what you want to do, that’s what you’re going to do.” With these words, Donald Trump celebrated his signing of an executive order on 28 March 2017, bringing to an end an Obama-era temporary ban on coal mining, as well as a measure aimed at preventing the pollution of streams. Miners (both those who wear hard hats to work and those who wear suits) applauded the move, feeling vindicated in their vote for Trump at the 2016 presidential election. However, the president’s promise of putting coal miners back to work will most likely seem a short-sighted vote grab in the long run, as politics and regulations do not appear to be the catalyst behind the decline of US coal.

First, about that decline. Coal was a big winner of the economic and population boom that followed World War II, and, in a remarkable feat, its popularity remained high for the remaining decades of the century, and only peaked in 2008. According to the BP Energy Outlook, in 2015, the United States still held the single largest reserve of coal in the world, but as the below graph reveals, this fossil fuel had been on the way out for quite some time by then—and the drop in its share of the total US electricity generation roughly coincided with Barack Obama’s term in office. Donald Trump, echoing sentiments popular among coal industry figures, identified government favoritism as the reason behind the falling out of favor of coal—as well as, by extension, the loss of a large percentage of coal mining jobs, which is particularly important due to the dominant themes and tone of the 2016 elections.

Donald Trump as President Elect at a post-election rally in “coal country” 100

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Indeed, in 2014, President Obama’s Environmental Protection Agency (EPA) introduced the Clean Power Plan, aimed at reducing carbon emissions in the power sector by 32 percent over a period of 15 years by closing hundreds of coal plants, freezing the construction of new ones, and replacing them with wind and solar farms. Trump directed repeated and fervent criticism at the measure (as well as the broader progressive agenda that it was a part of), as did coal bosses like Robert Murray of Murray Energy, the largest private coal mining corporation in the country. However, as the previously cited data shows, the Clean Power Plan is more accurately described as a reaction to scientific advancements and changes in demand than reckless interference with the free market. Most notably, the degree of coal’s decline has shown a remarkable correlation with the rise of natural gas as an energy source (in addition to a slow but steady increase in the popularity of non-hydro renewables, and practically negligible changes in the share of nuclear power). According to an Energy Department report, the amount of coal in the national energy generation mix (both Fuels and Electricity Generation) has declined by 53 percent since 2006, while natural gas saw a 33-percent increase over the same period. It is true that, in the wake of the Plan, coal

production “fell off a cliff” (more specifically, dropped by over 50 percent), as the following chart shows, but the drop clearly came in the wake of a seven-year tendency showing a clear shift in the prospects of coal. Thus, while the new, Democratic administration apparently decided to speed up a trend rather than try to reverse it, the trend was already obvious by the time these relatively drastic measures were implemented. Natural gas—now more consistently priced, affordable, and still abundant (the US possesses the fourth largest reserve in the world)—had begun pushing out coal as the power industry’s primary fuel source, eventually overtaking it in 2015. Meanwhile, solar, one of the most popular up-and-coming renewable energy sources in the United States, has seen remarkable gains in added capacity and new jobs year over year, with a nearly 25-percent increase in employment between 2015 and 2016, amounting to over 250 thousand jobs according to the Solar Foundation. By contrast, going by the number of people employed in coal mining, the glory days of the industry are long gone, with employment down to approximately 50 thousand workers, a major drop from past decades, when coal companies—experiencing a bankruptcy rate of 25 percent in 2016—provided the livelihood GEOPOLITICS

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of hundreds of thousands. With this process, beyond market forces (which are influenced by a variety of factors, including concern for the health and safety of workers and the sustainability and environmental effects of fuels), the role of government intervention is further eclipsed by the rise of automation, as advances in technology have made it possible for a smaller number of people to achieve greater productivity. All this casts serious doubt over President Trump’s promise and effort to put coal miners back to work. Even the aforementioned Robert Murray attempted to rein in expectations regarding the effects of the repeal of the Obamaera “anti-coal” measures, which suggests that even the industry has admitted to fighting a losing battle. In the long term, the relevance of coal is projected to continue to drop in the US energy mix, which, coupled with new technologies that will allow for even more productivity with even less manpower, will almost certainly lead to further job losses in the field. Of course, Trump’s 102

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populism and reliance on clear symbolism made the coal miner a potent icon of the forgotten blue-collar laborer, whose frustration over the decline of traditional industries was a major factor in Trump’s surprise victory in three states of the American Rust Belt. Of course, catering to groups who can help promote a politician’s own political interests makes political sense, but the forces of the market appear too strong to be swayed by such opportunistic short-termism, and the market already seems to have spoken.

A WATERSHED MOMENT—ENERGY POLICY LESSONS FROM THE 2013–2015 DROUGHT IN BRAZIL Zsombor Szabolcs Pál

With 12-14 % of the reserves available on the planet, the continent-sized country, Brazil, possesses the largest share of freshwater resources among all nations. As its hydroelectric power plants have an almost 75 % share in electricity production (as opposed to the world average of 16 %), one might assume that it will never run out of sustainable energy. This assumption, however, is far from being true, and it seems generally accepted now that the country needs to think more actively about the future of its electricity production. Many problems of Brazil’s energy system were effectively demonstrated during the water crisis

of 2013–2015, which also gave rise to an energy crisis in the Southeast Region of the country. While this area gives home to almost 42 % of Brazil’s whole population, and it is responsible for nearly 60 % of the county’s GDP, it has only 6 % of all the fresh water reserves in Brazil. Obviously, even though the country has plenty of water, its distribution is rather unequal and lopsided in regions with lower population density and economic output. The distribution of precipitation throughout the year is also greatly uneven which is usually compensated by large reservoirs. The otherwise well-calculable seasonal alternation of dry and rainy periods broke in 2013,

Schematic diagram of the most relevant climatic elements which bring the humidity to the places East to the Andes and South to the Amazon basin GEOPOLITICS

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Brasil’s Southeast Region when, from November onwards, usual rainfalls did not come to the Southern and Southeastern part of the country. The direct reason for this climate anomaly was a change in the regional circulation with a high-pressure block that barred the “flying rivers” coming from the more waterabundant Amazonas area between November and March to reach the region. Coupled with extreme high temperatures, this phenomenon was quick to generate severe water shortages which seriously affected the everyday life of the 40 million people living there and caused formidable damages to the national economy. Next year, the same situation recurred, and, by January 2015, reservoir storage levels decreased drastically. Apart from the more direct industrial and agricultural maleffects, the water crisis also provoked difficulties in the energy production causing many blackouts throughout the region. It is still contested to what extent the crisis was due to human activity, deforestation in the Amazonas, and high urbanization. It is quite clear, however, that it were not just weather irregularities that led to problems. The most crisis-hit zone was Greater São Paulo, where there was a mix of mismanagement, political profiteering, and waste of resources that gave rise to the problems which, otherwise, had been looming for at least a decade. It has also become evident that, as climate might keep on changing, new rain-drought patterns may seriously affect 104

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the sustainability of the highly water-reliant Brazilian power generation system, and this requires further steps from the authorities. Now, there are two imminent challenges that need to be addressed. First, sudden drops in hydropower production and spikes in electricity consumption, both due to future extreme weather conditions, require new ways of electricity management. Second, the yearly 2-3 % growth in electricity consumption predicted for the coming decade cannot be met by the present form of hydropower production alone, and new forms of energy generation need to be incorporated into the Brazilian grid. In the short run, brief drops and spikes can be managed by energy rationing, which is cheaper than setting up idle production capacities, such as huge reservoirs and more thermoelectric plants, as these involve disproportionately huge investments and are severely opposed by environmentalist. On the other hand, of course, rationing is not the best way of building a strong and competitive economy either, since that would affect the more substantial energy consumer, the industry, and consequently the national economy, too. A reconsideration of the government’s electricity pricing policy, which, at the moment, concentrates on keeping consumer’s costs low, might also help by not sending bad economic signals to customers who believe there is plenty of energy and there is no use in saving it, and by increasing profitable investments as well as the number of constructions brought to completion in a sector afflicted by low profit margins. In the medium run, the better use of hydroelectricity might be a solution. This requires, on the one hand, investment in water-related infrastructure since nowadays there is a 37 % waste of water throughout the country’s pipe network. Obviously, solving this issue would leave the reservoirs with significantly more water for energy production. On the other hand, authorities have to come to terms with environmentalists who support run-of-river hydroelectricity and try to bar the construction of power plants with storage capacity. While run-of-river power production is believed to be greener than the use of reservoirs, a dragging drought might render it useless.

Finally, more money should be devoted to interconnecting distant capacities as in a huge country like Brazil one region’s rainlessness often means other region’s rain excess, and surplus energy could be transmitted from rainy areas to another temporarily arid regions. Still, in the long run, the country is not likely to avoid the diversification of its energy matrix. Since the previous extensive brownout due to the drought in 2001, the country has increased the number of its thermoelectric plants, which are supposed to be fired up when hydropower fails. However, according to official figures, the country draws on them increasingly, even though they are way too pricey and polluting. They might be phased out in the coming decades except for the ones burning natural gas, which are likely to gain even more importance. The government also tends to raise the share of nuclear power in its matrix as it has plenty of uranium (5 % of world total) and atomic energy would help to reduce pollution. However, nuclear power is also overpriced as opposed to hydro, while security and environmental issues as well as corruption scandals might cripple its advance. Two other viable solutions that would also

help to meet the country’s renewable and CO2 emission targets would be the use of biomass, nowadays responsible for 8 % of electricity generation, and wind power, whose price has become increasingly competitive and which still has plenty of room to grow; while both solutions have a limited operation season around the year, they show a remarkable complementary pattern to the periods of lower water influx. There is little doubt that, after the recent water crisis has brought to light the fragility of the Brazilian electric system, changes are to come. It is still unclear, however, what exact path the next governments will choose to diversify Brazil’s one-sided structure. But in a country which is home to the largest rainforest and freshwater resources on the Earth and has one of the biggest, increasingly energy-hungry economies, the choices they might make are far from being negligible.

The participation of different resources in the Brazilian electricity generation according to the conservative estimation of Economia e Energia magazine (historical and projected data)

Participation by Resource

Hydro Projection

Biomass Other renewables Nuclear Natural gas Petroleum and gas derivatives Mineral coal and its derivatives GEOPOLITICS

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THE GLOBAL STRATEGIC SIGNIFICANCE OF ENERGY STORAGE Tamás Péter Baranyi

Arabia, a country that has never been under colonial yoke and played a mostly symbolic role even in the Muslim Ottoman Empire, has become a major power in the 20th century due to its vast oil reserve. As our Earth runs out of oil, the future weight of such oil-rich countries are increasingly unstable, and the question becomes whether there is a potential geopolitical “power” to emerge after oil. Will there be an “OLEC” in the place of OPEC? Will Bolivia be the next Saudi Arabia? The Division of Energy Sources and Energy Storage Apart from being a pollutant, almost all of oil’s characteristic features were beneficial to humankind, as it is not merely a source of energy but in a unique way it is also a method of energy storing in itself. It a form of energy that does not expire, does not get spoiled, is transportable, storable, and usable whenever needed. Energy from the Sun or the wind need not only be harnessed but also stored—two problems in the place of one. In the foreseeable future, a dual solution to both producing and storing energy is very unlikely to be found. In the era of oil, the geopolitics of energy supply and demand was fairly simple—at least, simpler than with clean energy. The biggest players on the supply side included the Soviet Union (or Russia), the United States and the Saudi Arabia-led OPEC (Organisation of Petrol Exporting Countries). On the demand side, the three big players were China, the European Union, and the United States with their massive and energy-hungry markets. This energy policy environment is clearly about to change—a process in which the oil and gas exporting nations could be the losers, especially those that would not or cannot diversify their economies. The political significance of 106

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the Middle East and the Persian Gulf would never be the same as in the 20th century. The political matrix of clean energy would likely be more complicated, as not only the availability of energy sources (Sun, wind and earth metals), but also know-how, storage and transmitting, as well as legal and political background would play a major role—which would eventually put someone at an advantage and others at a disadvantage. Oil—both a source of and a way to store energy—never brought so many variables to the geopolitical equation. This is precisely the reason why there are multiple contests going on between energy sources: fossil fuels vs. clean energy, clean vs. clean, and, for that matter, there is still a race between different fossils. Notice that the situation is by no means deterministic: Different forms of clean energy especially could complement each other, and sometimes newer technologies in gas could also add to the picture, thus not only competition but also cooperation is a possible way forward. Grassroots Energy? The way people think about energy has a huge role in determining our future energy use. China and Germany, for instance, are on the opposite sides of the scale when it comes to nuclear energy, while Texas and Europe think differently about CCS. The reasons behind this are mostly not economic but political. Today it seems that wind and solar energy systems are the ones that could replace fossils in most places without social resistance and with limited investment. If this indeed ends up being the case, what will it mean in the geopolitical order of the world? Obviously, clean energy sources are available everywhere in the world, unlike fossils. It would then be a logical consequence that energy imports and exports would decrease to the minimum, the political weight of the demand-

Oil made Saudi Arabia rich. Is another resource capable of making rich someone else?

side and storage countries would approach those on the supply-side, and the significance of storage and infrastructural functions would take over producing capacities. Moreover, since the energy of the Sun can be captured by solar panels installed on our rooftops and balconies,

many are talking about a new kind of democratic energy revolution. It is an empowerment unseen before: enabling the people to become consumers and producers at the same time. Is it the dawning of a “brave new world of everyone’s energy”? Likely not. During the energy transition and thereafter, in the maintenance phase of the new energy system, a key role would be assigned to the state, which at first could use incentives to endorse the energy source deemed the best, and then regulate and oversee the critical infrastructure and energy distribution, and guard over the “smart systems.” The limited number of expensive self-sustaining houses would not be able to challenge state monopolies. In the meantime, there will still exist upstream and

Bolivia’s richest reserve, the Salar de Uyuni

Sociedad Química y Minera

in-law of the overlord of Chile, Augusto Pinochet—

One of the world’s biggest lithium producer is the

has been increasing its influence in the company

Mining Company), abbreviated as SQM or Soquimich

company makes a huge yearly profit: 553 million

Chilean Sociedad Química y Minera (Chemical and [pronounced “soh-qui-mitch”]. A precursor to the

company has been founded in 1882 as AngloChilean Nitrate and Railway Company, and was

privatised in 1970s. Through its privatisation, the

forest engineer Julio César Ponce Lerou—the son-

of which he has been the director since 1983. The

dollars only in the second quarter of 2017. Besides

other activities, they process the lithium gained from Salar de Atacama. Since 2005, Potash Corporation

(Canada) owns 32 % of the shares—which is the maximum amount allowed by the inner rules of SQM. GEOPOLITICS

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Electric Cars

Compared with cars with internal combustion engines,

As per definition an electric car is such an automobile,

electric cars have no tailpipe emissions. They are

electrical energy stored in rechargeable batteries.

vehicles. Most of the batteries of these cars are based

which is propelled by an electric motor, using The first ones were introduced already in the 1880s, but were unpopular because of the cheaper gasoline

vehicles. Their renaissance started in 2008 as there were more and more concerns about increasing

oil prices and climate change. This trend does not seem to decline in the future, on the contrary. Norway,

which is the most advanced in using electric cars in the world, has set a goal of selling only electric

or plug-in hybrid cars by 2025. France wishes to

ban sales of petrol and diesel cars by 2040. The Netherlands has debated a ban for diesel and petrol

cars by 2025. Some federal states in Germany are

planning to phase-out by 2030. It is said, that such

an uptake of electric vehicles could potentially reduce

oil demand by eight million barrels a day globally and increase electricity consumption by 5 %.

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significantly more expensive, than conventional on lithium, a substance which is finite and is in some

cases in areas with unstable governments. Nonetheless, battery prices are expected to drop and a variety of

alternative batteries can be used. Other questions

concerning the electric cars are the limited range, poor

performance and the small size of these cars. A huge game-changer was the arrival of the Nissan Leaf in

2010, a five-door, five-seater with a family-friendly layout. Today, electric vehicles offer a 300-mile range, there are 7-seater models, and with models such as the

Tesla S with a cutting-edge technology, so with more

choice than ever, for example the United Kingdom’s electric car market is booming, with a new registration of plug-in cars increasing from 3,500 in 2013 to around 3,500 to 15,000 by the end of June 2017, as is the trend in most Western-European countries.

downstream countries, only not depending on their access to energy but their cost-efficiency, storage capabilities, and infrastructure. Yes, the Sun shines bright both in Spain and Latvia, but it is still better and more stable to use solar energy in Spain because of its incessant nature. This unevenness and instability together imply that a clean energy revolution would not put emphasis on different countries but rather on different infrastructural and storage issues. The Saudi Arabia of Lithium The sources and storage capacities of energy have been divided. Two major ways are gaining prominence in storing clean energy: One is the PHES (Pumped Heat Electrical Storage) and the other is precious metal accumulators. The standard version of the latter is presently the nickel–metal hybrid used in Toyota Prius cars, but there is a shift taking place to lithium ion. There are a good many places on Earth where lithium can be found—but not in industrial quantities. In fact, it is also debatable what quantities can be labelled as industrial or commercial. Lithium can be found in the salt lakes of Earth’s volcanic deserts, under the salt layer (salar). Salars occur when water with high amounts of salt and lithium-chloride accumulate in basins without drainage. Water evaporates over time, leaving dried salt layer behind. Underneath it, there is a small pool of groundwater (brine) with a really high concentration of lithium-chloride. This brine is the material that has to be brought to surface and dried in the Sun in order to reach the right concentration of lithium. Obviously, lithium alone is enough for this process, as certain conditions in temperature, height, and precipitation are also needed. In the vast deserts in Australia, Chile, and Bolivia, there many deposits, but their exploitation is not necessarily profitable. In Chile, for instance, where centuries of mining tradition and good infrastructure are available, extraction is much easier than in Bolivia, where these conditions are not given, and where the business environment is unable to draw foreign capital and technology. In addition, Bolivia’s deposits are not concentrated but diffuse, which makes distillation even more difficult. Bolivian lithium also contains

above-average amounts of magnesium and thus needs to be cleaned first. In short, the Salar de Uyuni (Bolivia) hide more lithium than the Salar de Atacama (Peru) but exploitation in Bolivia is not cost–efficient, while in Peru it is. Even if there is infrastructure and capital available to process lithium, it is still likely that South American countries not unacquainted with “resource curse” would not be able to capitalise on it to such an extent as to have their geopolitical roles changed. A supranational organisation, something like an Organisation of Lithium Exporting Countries (OLEC), based on the model of OPEC, could help with common pricing and advocacy but different features and regional quarrels among member states would make it hard to build a lasting cooperation. It is worth keeping in mind that Bolivia was stripped of its maritime ports by none other than Chile in the 19 th century—a fact that Bolivia does not recognise to this day, so much so that it even maintains a naval fleet in the landlocked country of highlands. Apart from the perspective of serious extra income and from the fact that greater powers would hold a stake in the stability of these countries, Bolivia, Chile or Peru are not likely to experience a drastic geopolitical upward turn because of their rare metal treasure. It is more reasonable to expect an increase in Australia’s regional weight, as the Englishspeaking country is already capital-rich, could import technology easily, its export capacities are also good, and it is among the world’s most stable countries in terms of politics, military, and economy. If it were able to produce industrial and commercial quantities of lithium, it would possibly amplify its regional or even global role. Power Round-Robin It seems that a neutralisation of state-centred geopolitics or a return to the grassroot, is not likely to happen with the transition to clean energy. Moreover, a transition to clean energy is not as simple as we hope. In fact, clean energy and fossil fuels are expected to exist side-by-side in the coming decades, and it will be the result of tough lobbing fights that some will eventually be propelled to the foreground, some harmful GEOPOLITICS

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technologies will wither, while others will flourish. When nuclear plants were no longer encouraged in Germany, it was not only clean energy that replaced them—Berlin needed to restart some old coal powered plants to gain extra energy, even though they were much more polluting than nuclear plants. Embracing a technology or a certain resource is a political decision by the state. Moreover, it is a political decision whose precise consequences and future circumstances are impossible to foresee: solar power or CCS? Lithium ion or nickel-metal accumulators? Which is better for the environment, the economy, and the citizens? As those questions are not clear yet, such a transition will take decades and will possibly generate an even tougher geopolitical contest. There is a big potential in the competition between fossil and clean, clean and clean, fossil and fossil, and, as previously mentioned, smart cooperation can also emerge. In certain countries, federal states or regions with different prevalent energy sources will create opportunities for neighbours to take advantage of loopholes: In 2016, Massachusetts forced its companies to buy energy from seaborne windfarms or hydro plants in order to reduce emissions. The former would eventually enrich European entrepreneurs, while the latter the Canadian companies present in Massachusetts. Moreover, not only clean energies, but the different fossils with different pollution levels are also still in the race. As long as the energy demand of a certain territory can not be met with safe and sustainable clean energy, we will still need fossil fuels. Even coal-burning is not out of fashion—though the fight against coal is a low-hanging fruit as they have arguably the lowest lobby capacity with the highest pollution rate. Carbon capture and storage (CCS) is a technology which can seriously reduce the harm caused by oil and gas, and even coalburning. In other words, fossils are also capable of adapting to the new markets. Nuclear energy, whose harmful by-products are calculable and localised if there are no accidents, remains in the race. Fossil fuels could also find other ways to stay in the race: They can reduce their 110

GEOPOLITICS

prices, which might result in more consumption and higher profits, or they can increase prices after they have used their enormous capital to make themselves into a fashionable branch of 1 clean energy.10 Geopolitical Turn—Only 360 Degrees Energy shift seems to be bringing about a geopolitical turn—only it is going to be a full circle, 360 degrees. Why is this likely? Because a shift to clean energy is not a matter of years but decades, during which the most important players, states and companies, will have enough time to adjust to any kind of change. If there will be changes in the distribution of critical resources, it is not going to be the decisive factor. Rather, it will be producing and storing capacities, and ultimately the access to the most modern technologies and capital. Lithium ion accumulators are a good example: Lithium is being mined in Chile, but there is already a significant Canadian expansion in this industry (see the text in brackets). What is more, the final step before putting the material in cars, namely, processing lithium hexafluorophosphate, a highly specialised process, is only done by two specific factories in Japan. Actual car batteries using this material, in turn, are being manufactured in only 12 factories across the world, of which 7 are located in Japan, 2 are in Korea and the U.S. respectively, and one in China.112 The situation is somewhat similar with windfarms: The biggest companies are German Siemens, American GE, Danish Vestas, Chinese Goldwind, and German Enercon. In other words: It may well be that the wind blows everywhere, but its energy is harnessed by the richest companies of the richest countries. There is no doubt that there are great geopolitical changes underway today. They are not disconnected from the energy issue, but they 1. Sergey Paltsev: The complicated geopolitics of renewable 10. energy. Bulletin of the Atomic Scientists. Volume 72 (2016), Issue 6. 20. 11. Global Economy: The Geopolitics of Car Batteries. Stratfor. <https://worldview.stratfor.com/analysis/global-economy-geopolitics-car-batteries > 17 August, 2009. Accessed: April 30, 2017

Wind plant near Boston harbour. Is it enough to electrify the megacity?

are fundamentally political in nature. One of the great changes are the shift from West to East, from the shores of the Atlantic Ocean to those of the Pacific. The other great shift is the evergrowing power of non-state actors. Scientific and technological changes that would be able to transform the nature of politics are yet to be found. Earlier changes, like the oil price shocks of the 1970s, did in fact change the situation, but not fundamentally. The oil shocks and the restructuring of the world economy did ruin the Soviet Union in the long run, impoverished many monoculture economies in the developing world, but it also propelled some into the first echelon: Singapore, Taiwan, and Korea are all prime examples. We can count on such changes this time as well: major losses in petroleumexporting countries, some innovative small countries gaining ground (Estonia, Denmark), some “old-timers” may get a chance to stabilise their positions (Great Britain, Italy), and stronger regional players will possibly emerge (Australia, Chile)—but there will be no landslide changes. Some changes in the whole system, like the absolute decline of fossil fuels, the diversification

of energy use, and the decentralisation of energy supply are likely to bring real changes and a more balanced and peaceful contest—but all this correlates to the above-mentioned two current geopolitical changes. And all this is for the long run. Meanwhile, due to the increasing diversity, we can also count on a more hectic and less calculable behaviour on the part of great players. In such a scenario, a shift from fossils to clean energy may also be as rocky as was the shift from the Cold War era to the multipolar world order.

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most Polluting Countries TOP5 MOST POLLUTING COUNTRIES OF THE WORLD (MILLION METRIC TONS PER YEAR)

POLLUTION PER CAPITA (METRIC TONS)

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Worst Energy-related Disasters after 2010

BP Deepwater Horizon (2010) One of the most devastating environmental disasters of the century is the BP Deepwater Horizon oil spill in the Gulf of Mexico on the Macondo Prospect. The fiery explosion caused the death of 11 people, injured 115 crew members, and spilled millions of gallons of oil into the Gulf of Mexico. The disaster, apart from environmental damage, had incalculable consequences: more than a third of federal waters in the gulf were closed to fishing at the peak of the spill, and tourism was also affected. The devastating environmental impact is still being evaluated.

Fukushima (2011) A powerful earthquake sent a series of tsunamis towards Japan›s shores in March 2011, which also destroyed the Fukushima Daiichi nuclear power plant, causing one of the worst nuclear accidents in the history of nuclear power generation. After the disaster, Japan shuttered 48 nuclear reactors, amounting to nearly one-fifth of the country’s electricity generation capacity, and Japan is still struggling to find replacement for it. Another serious challenge the industry had to face in Japan is the loss of public trust.

India Power Blackout (2012) In 2012, the largest power blackout in history struck India, leaving around 670 million people—approximately 10 percent of the world’s population—without power for about two days. This was the largest electrical blackout in history, when India’s summer peak power demand exceed supply. India’s grid challenges are not a new phenomenon, poor infrastructure and growing demand problems call for a “smarter” grid system.

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The Soma Coal Mine Disaster (2014) A fire broke out in the local coal mine and one of the pits was engulfed with carbon monoxide: the explosion occurred 2 kilometres below the surface and caused the mine’s elevator to stop working. The mine accident was Turkey’s worst industrial accident ever: the explosion killed 301 people and trapped another 600 underground.

Lac-Megantic Train Explosion (2013) On 6 July 2013 in the town of Lac-Megantic, Canada’s worst rail accident happened when a freight train carrying crude oil derailed, causing six massive explosions that killed 47 people. The environment also suffered terribly, as 5.5 million litres of oil burned or leaked, the estimated costs of decontamination reached $50 million. TOP 5 WELCOMING WORDS

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Which countries run on almost 100 % renewable energy? Costa Rica Regarding its sustainability streak, Costa Rica is already in a winning position. Based on its hydroelectric and geothermal generation capacity, Costa Rica made it into headlines in 2015 for having been running only on renewable energy for more than 2 months. This is possible primarily due to the country’s heavy rains and immense river systems. It is a risky option and not the same as having a steady system that fulfills all the country’s needs, but it is still impressive. Additionally, in the first quarter of 2017, Costa Rica generated 99 % of its electricity from renewables according to the National Center of Energy Control (CENCE).

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Iceland In Iceland, 87 % of the homes are supplied with heat by geothermal energy. Reykjavik has been using natural hot water to heat its buildings and homes since 1930. The use of this natural resource has weightily reduced the country’s dependence on fossil fuels. Additionally, the hot water from low temperature fields can be used directly for heating houses without any heat exchangers or treatment through the 1,300 km distribution system into homes.

Albania Albania relies almost entirely on hydropower generation, with Fierza dam on the Drin being the backbone of the country’s electricity generating system. The large-scale hydroelectric grid enables Albania to get about 85 % of its energy from renewable sources. In spite of this impressive performance, draught in 2017 forced Albania to import electricity because the water level in the main Fierza dam had significantly dropped, as it was 15 meters lower compared to the same period in the previous year. Denmark Recently, Denmark has been able to supply the entire country for a day with wind energy alone. This achievement was partly due to the installation of a new offshore wind farm. The country is aiming to reach 100 percent renewable electricity by 2035 and 100 percent renewable energy in all sectors by 2050.

Paraguay The Itaipu Dam, jointly run with Brazil and nominated by the American Society of Civil Engineers as one of the 7 wonders of the modern world due to its size and output, provides about 90% of Paraguay’s electricity demand. However, these countries have something in common:All of them have small populations and great natural resources, but they are demonstrating that life without fossil fuels is possible—at least for the moment—for small countries. TOP 5 WELCOMING WORDS

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Volcanic Electricity The new solution is based on exploiting the heat of molten rock by drilling into volcanoes. Normally, however, it is exceedingly hard to find magma to drill into. After tapping water into the magma-heated rocks, its steam can be used to turn turbines. The process is not simple at all, and special tools which withstand such extreme conditions are still under development. Seemingly it is worth investing into the development of the new technology, as it might be significantly more effective than any other methods before.

Newest Renewable Energy Developments in Production and Storage Methods The “Impossible” Microwave Thruster In Southern France, a 35-year cooperation project has been set up to build the world’s largest carbon-free source energy system. The system, which is based on the same principle that powers our Sun and stars intends to prove the feasibility of fusion energy and preparing the path for future fusion plants. The machine was designed to produce 500 MW of fusion power. (The world record for fusion power is 16 MW from a total input power of 24 MW (Q=0.67). The plan with is to produce a ten-fold return on energy (Q=10)).

deut.

trit.

E=m*c

neutron

Superconducting Magnetic Energy Storage This system stores electricity as part of a magnetic field, which is created by the flow of current in a superconducting coil. A typical superconducting magnetic energy storage consists of two parts: a cooled superconducting coil (cooled to below a critical temperature point) and a power-conditioning system. Ideally, once the superconducting coil is charged, the current will not decay and the magnetic energy can be stored indefinitely. (The electromagnetic field requires very little energy to maintain, and energy is released by discharging the coils). 118

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Sea Waves, Tidal Power With special technologies, the power of waves and tides can be captured and converted into electricity. The arrival time of these natural energy resources is quite predictable, it is especially true for tidal energy, as they are driven by the gravitational pull of the moon and sun. The common model usually involves a dam or barrage, including a sluice. The tide creates uneven water levels on either side of the barrage, the sluice is opened, and water flows through low-head hydro turbines in order to generate electricity. However, these barrages have environmental disadvantages as well that influence fish populations. Several other models for tidal facilities have emerged in recent years, including tidal lagoons, fences, and underwater tidal turbines. Perhaps the most promising is the underwater tidal turbine to be placed offshore or in estuaries in strong tidal currents. Harvesting Human Energy The idea of using movement to generate electricity is not new, but portable energy harvesters that use human motion are yet to appear on the market, mostly because they do not generate enough energy yet, says Harry Zervos, an analyst at the market research firm IDTechEx. The principle of the whole idea is to harness motions, such as walking and running, in order to power sensors and wearable gadgets. Not too many of us would like to wear clothes full of harvesters, but putting these sensors into shoes can be a feasible solution, and this is where the most energy is located says the inventor, Sangtae Kim. TOP 5 WELCOMING WORDS

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The Antall József Knowledge Centre (AJKC) in Hungary, during its seven years of existence, has introduced a variety of events targeting Hungarian students enrolled in higher education, as well as domestic and international professional audiences. The Knowledge Centre’s main objectives, in line with the Antall philosophy, are talent management and providing students and young professionals with wide-ranging practical knowledge through various events. Having seven years of experience in the field, the Knowledge Centre aims to become a regionally relevant think tank that is “unavoidable” when it comes to certain issues such as the Visegrad Cooperation, the future global role of the US, China, and Russia, security policy, sustainable development, as well as technological and social innovation. Our institution is structured into three international offices—dealing with the EU and the V4, the USA, and Asia and Africa—three thematic offices—focusing on security policy, sustainable development, and talent management,—two regional offices in Pécs and Győr, as well as the Brussels Office, all of which are working toward strengthening institutional relations both at the national and international level, developing scholarship and internship programmes, and

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boosting professional cooperation via international conferences, workshops, and event series. The publishing activities of AJKC involve releasing professional publications, scientific works on political and social sciences (with special regard to security policy and international relations), as well as university textbooks. In our autobiographical series, prominent personalities of the Cold War period, including Ronald Reagan, George Bush, Margaret Thatcher, and Helmut Kohl recount crucial years and decisions still affecting their lives. Reacting to events of political, social, and economic significance in the 21st century, the professional publications series of the Knowledge Centre is made up of works incorporating the latest results of international relations and geopolitics, the history of politics, economics, and psychology. In spring 2015, the Brussels Office of the Knowledge Centre was established. The bust of Prime Minister József Antall was inaugurated in the József Antall Building of the European Parliament on 31 March 2015 as part of the first instalment of the Variations on Europe conference series, which continued in May and September. In January 2017, at the event organised jointly with the KonradAdenauer-Stiftung, Hungarian Prime Minister Viktor

Orbán delivered a speech entitled Europe 2017 on the challenges of our common future. The event was opened by Dr Hans-Gert Pöttering, Chairman of the Konrad-Adenauer-Stiftung and former President of the European Parliament. Our newest and largest event is think.BDPST. The main aim of the project focusing on innovation, new technologies, and regional development is to put Hungary on the map of large-scale regional conferences, such as GLOBSEC, the Krynica Economic Forum, and the Prague European Summit, by organising the most significant innovation forum in the region, thereby facilitating a dialogue between the representatives of the economic, governmental, and scientific spheres. The event enjoys the support of the Ministry of Foreign Affairs and Trade of Hungary and the International Visegrad Fund. In addition to innovation, the Knowledge Centre puts special emphasis on sustainable development. During the three instalments of the SUSCO Budapest conference series, many topics were examined including sustainable development in general and the sustainable development goals (SDGs) developed by the United Nations, smart cities and sustainable transportation, and water and the city. This

year, the topic of global energy landscape will constitute the main theme of the conference. In 2017, the Knowledge Centre organised the fifth Antall József Summer School. Every year, 40-50 students from more than 20 countries enrolled in different MA and PhD programmes participate in the two-week event, the aim of which is to strengthen and render the Visegrad Cooperation more visible in the field of education. The Antall József Summer School provides those interested in Central European studies with the opportunity to deepen their knowledge of the V4 region and Hungary. The objectives of the Knowledge Centre include talent management and the establishment of higher education network. For these purposes, AJKC organises the annual Danube Regatta. The number of participating universities has grown year after year since its inception: in 2016, teams from 16 Hungarian and two British universities, Oxford and Cambridge, competed against each other in rowing eights and dragon boat races. Other aims of the Regatta include encouraging a diverse use of the Danube and improving the image of Hungary.

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PAST EVENTS

German Federal Elections – A Real Crossroad Ahead? 26 September 2017

Conference on East Asia’s Future: Economic Opportunities and Prospects of New Initiatives of Cooperation 28 September 2017

Two days after the German Federal Elections, the Knowledge Centre organised a roundtable discussion that analysed the results of the elections and their effects on Germany and Europe. Frank Spengler, Resident Representative of the Konrad-Adenauer-Stiftung in Hungary, addressed the challenges for Germany in his opening speech – as a long negotiation process to form a new governing coalition lays ahead. Although the CDU won the elections, they expected much better results and the fact that the AfD made it into the parliament is a worrisome phenomenon in many respects. Panellists included Dr András Hettyey, Senior Lecturer at the International Relations and Diplomacy Department of the National University of Public Service and Professor Dr Hendrik Hansen, Chair in International and European Politics at Andrássy University Budapest. Moderation was provided by Roland Menyes, Research Fellow of the Knowledge Centre.

The conference presented the most important economic trends and initiatives in East-Asia which will greatly affect the future of all countries in the region and analysed the regional and transcontinental trade agreements currently under negotiation, and high-scale international governmental infrastructure development projects aiming to encourage regional economic integration and growth. The second part of the event focused on prospects of the One Belt One Road initiative which has the potential to transform existing trade patterns in Eurasia. Experts invited included Dr Hyeonjung Choi, Director of the External Relations Department of the Asan Institute of South Korea, Xiaochuan Gao, Professor at the School of Advanced International and Area Studies of East China Normal University, Kumiko Okazaki, Research Director at the Canon Institute for Global Studies in Tokyo, and Shada Islam, Director of Europe and Geopolitics at Friends of Europe.

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FUTURE EVENTS

SUSCO Budapest 2017 - The Global Energy Landscape: Is our supply mix future proof? 26 October 2017 – Budapest

The Future of Healthcare in the Age of Digitalisation - How Does eHealth Affect Our Lives? 8 November 2017 - Brussels

This year’s conference will concentrate on sustainable and secure global energy supply and use, reflecting upon the Sustainable Development Goals (SDGs) adopted by the United Nations in September 2015. The SDGs among others set milestones and call for action to ensure universal access to affordable and clean energy (SDG 7). SUSCO BUDAPEST 2017 discusses issues on global energy supply and energy security. The focus of the event will be on geopolitical disruptors impacting global energy security, evaluating the current situation and the constant evolution of the renewable energies as leading potential solution to the global energy supply security. We are searching for answers to questions such as how to develop a sustainable energy mix in the given geopolitical conditions and how emerging technologies and on-the-move solutions can offer answers to energy supply related issues.

Digitalisation and the Information and Communication Technologies (ICT) for health and wellbeing are crucial today to be able to provide high-quality care to each European citizen. The European Commission also made its objectives clear in the eHealth Action Plan, which are expected to be achieved by 2020. The common goal is to make healthcare more efficient at lower costs while also being economically efficient. There is a trend of growing healthcare expenditures within the EU as the share of elderly and very old populations within society is projected to grow. Innovation in the health market brings new business opportunities for SMEs and can open up closer cooperation between the public and private sector and the member states. The two panels of the event will explore public policies, laws, and general public knowledge about eHealth, as well as the implementation of new methodologies, applications, and approaches that could positively influence patient care and everyday life.

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NEW RELEASES

Daniel Yergin: The Prize: The Epic Quest for Oil, Money, and Power About the Author: Daniel Yergin was born in 1947 and graduated from University of Yale in 1968, and from the University of Cambridge in 1974 in International Relations. He is a recognised international expert on energy security, international relations, economics, and geopolitics. He is the winner of the Pulitzer Prize, author of many international bestsellers, and current Vice President of IHS Markit Consulting Company. About the Book: The Pulitzer-Prize-winning book, The Prize, has had many reprints in the world since its original release in 1991. The first Hungarian edition of the book will be released by the Antall József Knowledge Centre in 2018. Although it is a thick volume, it is such an enjoyable read that it is impossible for the reader to put it down. The book was compiled with the help of hundreds of hours of interviews, narratives, and thousands of pages

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of scanned documents. It has unquestionably become a work of reference for the energy industry, in particular for the oil industry; and it is a must-read course book for many areas of study focusing on energy policy and geopolitics. The author tells a gripping story of oil and people related to its history. The heroes presented are usually uncompromising personalities who are willing to sacrifice everything for success. At the same time, the book is a great historical overview of the end of the nineteenth century and the twentieth century. The author guides the reader through the formation of oil production, which started with an unpaid $ 526.08 debt, to the burning down the oil rigs of Kuwait on the order of Saddam Hussein. Through the journey described in the book, history flashes before our eyes. Winston Churchill decides that, in order to defeat Germany at sea, warships should switch from coal to oil, thereby inescapably giving a new strategic role for the resource. The formation, fragmentation, or termination of oil-associated companies might determine the destiny of people and countries. Oil plays a central role in bloodthirsty wars, crises, and economic miracles that influences the lives of all of us. Events are not only determined by willpower, senses, friendship, competition, and talent, but also by mere chance. For instance, we learn from the book that it is when Alfred Nobel read his own obituary notice that he decided to establish a prize for science named after him. It is also sometimes mere chance that oil is found just before giving up and wrapping up the drill gear. It is also revealed that almost every moment, we are surrounded by objects or devices that are made from or connected to extracted oil. The book shows us how we became such passionate users and addicts of a raw material that is an unnoticeable accompaniment of our everyday lives. It is worth knowing what consequences this dependence has on us. The Prize helps to get around this.

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CONTRIBUTING AUTHORS

Tamás Péter Baranyi

How Energy and Technology Have Been Changing Society

Historian,PhD Candidate Head of Research

The Global Strategic Significance of Energy Storing

Antall József Knowledge Centre

Zsolt Csepregi International Relations Expert, MA

From the Caspian to the Red Sea—New Opportunities for

Head of Office, Security Policy Office,

Europe’s Energy Security

Asian and African Relations Office Antall József Knowledge Centre

Cecília Varsányi

Basic facts Energy Mix—Baseload and Peaks, or Renewables

Economist, MA

and Flexible Backup? Subventions on the Energy Market

Head of Office, Sustainable

German and French Lessons about Energy Transition The

Development Office

Economics of Environment: Will We Ever Stop Using Fossil

Antall József Knowledge Centre

Fuels? TOP5

Mihály Kálóczy

Basic facts Big Bicture The Future Role of Nuclear Energy

Environmental Engineer, MA

Renewable Energy Sources—Is this the long-expected bre-

Project Manager

akthrough? Energy Carriers I. - The Limits to Conventional

Antall József Knowledge Centre

Resources Energy Carriers II—Renewables as the tools of energy independency Energy Mix—Baseload and Peaks, or Renewables and Flexible Backup? Smart Grid—The Dream of Prosumers The Legacy of the Fukushima Daiichi Accident—Stricter Regulations versus The Black Swan Theory Natural Gas as a Bridge to a Low-carbon EU Society

Enikő Jancsek International Expert, MA International Relations Manager Antall József Knowledge Centre

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How Energy and Technology Have Been Changing Society

Roland Menyes

Smoke-tinted Green—Energiewende in Germany

Lawyer MA, Technical Manager MA, PhD Student Researcher Antall József Knowledge Centre Tamás Kozma

From the Caspian to the Red Sea—New Opportunities for

International Relations Expert, MA,

Europe’s Energy Security

PhD Student Researcher

An Era of Low Oil Prices: Challenges Ahead of OPEC

Antall József Knowledge Centre Viktória Anna Papp

China’s Energy Policy Priorities

International Relations Expert, International Law Expert, LLM International Relations Manager

Zsolt Pálmai

Coal Dust and Mirrors: Trump’s Promise to the Miners

American Studies Major Head of Office, Transatlantic Relations Office Antall József Knowledge Centre

Zsombor Szabolcs Pál

A Watershed Moment—Energy Policy Lessons from the 2013–

Historian, PhD Candidate

2015 Drought in Brazil

Researcher Antall József Knowledge Centre

Péter Stepper

Significant still Complementary - NATO’s Contribution to

International Relations, PhD Candidate

Energy Security

International Relations Manager Antall József Knowledge Centre

Kinga Szálkai

Revolving around 2020: Climate and Energy Policies in the

International Relations Expert, PhD

UN and the EU

Researcher Antall József Knowledge Centre

In order to make this printed edition as eco-friendly as possible the magazine does not contain the complete list of references. They can be found in the online version available at www.ajtk.hu ANTALL JÓZSEF KNOWLEDGE CENTRE

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REFERENCES OF PICTURES AND USED DATA

Interior cover: Shutterstock Page 16: Vintage steam engine at a rural train station. These were the ones that revolutionised transport in the 19th century: ShutterstockPage 20: Sleep disorder was the price for the cities ‘that never sleep’: Shutterstock Page 21: A 20th century nightmare: no gasoline at the stations. United States, April 1974: Shutterstock

Page 22-23: Shutterstock Page 24: The transformers of a coal-fired power plant: Shutterstock Page 25: A look at 10-year cycles shows a clear slowdown in population growth compared to the end of each previous decade: IEA Statistics © OECD/IEA 2014 ( iea.org/stats/index.asp ), subject to iea.org/t&c/termsandconditions Page 25: Global population growth (1972, 2000, and 2015 highlighted): IEA Statistics © OECD/IEA 2014 ( iea.org/stats/index.asp ), subject to iea. org/t&c/termsandconditions Page 26: Energy consumption globally and within the EU, in kilograms of oil / person (data from 2000 and 2013 highlighted): Based on IEA data from the IEA Statistics © OECD/IEA 2015, www.iea.org/statistics Licence: www.iea. org/t&c; as modified by Antall József Knowledge Centre Page 27: Energy production in the EU (1990-2014): Based on IEA data from the IEA Energy Statistics © OECD/IEA 2016, www.iea.org/statistics. Licence: www.iea.org/t&c Page 27: Global energy production (1972-2014): Based on IEA data from the IEA Energy Statistics © OECD/IEA 2016, www.iea.org/statistics Licence: www.iea.org/t&c Page 28: The reactor chamber of the Zwentendorf Nuclear Power Plant: Shutterstock Page 29: Share of nuclear energy production: IEA Statistics © OECD/IEA 2014 ( iea.org/stats/index.asp ), subject to iea.org/t&c/termsandconditions Page 30: Expiration dates of power plants in the EU: https://www.carbonbrief.org/the-trouble-with-europes-ageing-nuclear-power-plants Page 31: Photovoltaic panels on a mountain in the centre of Crete: Shutterstock Page 33: Global renewable power capacity was 1,829 GW at the end of 2014 around 1,000 GW more than in 2000, Image: Renewable power capacity – cumulative capacity, from the report Renewable Energy Capacity Statistics 2015. Courtesy of IRENA: http://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Capacity_Statistics_2015_slide_deck.pdf Page 34: Gradual shift in the global energy mix: 2017 Energy Outlook © BP p.l.c. 2017 Page 34: In 2014, primary energy production in the EU-28 states combined for a total of 771 million tonnes of oil equivalent: “Simplified energy balances - annual data, [nrg_100a] © European Union, 1995-2017” Page 35: EU roadmaps for eliminating CO2 emissions: Energy Roadmap 2050 © European Union, http://eur-lex.europa.eu/, 1998-2017 Page 37: Distribution of global coal reserves (2015): BP Energy Outlook 2016 © BP plc. 2016 Page 37: Distribution of global coal mining (top) and use (bottom) (2015): BP Energy Outlook 2016 © BP plc. 2016 Page 38: Distribution of global natural gas reserves (2014): “The World Factbook 2013-14. Washington, DC: Central Intelligence Agency, 2013” https:// www.cia.gov/library/publications/the-world-factbook/index.html Page 38: Distribution of global natural gas extraction (top) and consumption (bottom) (2015): “The World Factbook 2013-14. Washington, DC: Central Intelligence Agency, 2013” https://www.cia.gov/library/publications/theworld-factbook/index.html Page 39: Distribution of global natural oil reserves according to OPEC (top) and BP (bottom) (2015). BP’s numbers account for secondary supplies in

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Canada, while OPEC’s only take into account traditional reserves: OPEC Annual Statistical Bulletin 2016, BP Statistical Review of World Energy June 2016 © BP plc. 2016 Page 39: Distribution of global oil extraction (top) and demand (bottom) (2015): OPEC Annual Statistical Bulletin 2016 Page 40: Global distribution of reasonably exploitable uranium reserves (2015): © World Nuclear Association. http://www.world-nuclear.org/furniture/masterpage-items/permission-for-use-of-content.aspx Page 40: Global distribution of uranium demand (2016): © World Nuclear Association. http://www.world-nuclear.org/furniture/masterpage-items/ permission-for-use-of-content.aspx

Page 42: In production, China has reached higher levels than Brazil, Canada, and the USA combined. Due to the difference in the amount of energy produced per country, it has a different share and significance in energy mixes. (In terms of capacity, the USA leads Canada.): © World Energy Council 2017. https://www.worldenergy.org/data/resources/resource/hydropower/ Page 42: World Map of Global Horizontal Irradiation (2013): GHI Solar Map © 2017 Solargis Page 43: The expansion of global wind capacity until 2015: GWEC: GLOBAL WIND REPORT ANNUAL MARKET UPDATE 2015 Page 45: The share of fuels in electric power production including the provisions of EIA: U.S. Energy Information Administration (2012) Page 46: Electricity generation, transmission, and distribution: U.S. Energy Information Administration (2016) Page 47: France’s average daily generation by source, November 21, 2014 through July 20, 2016. The data shown are daily averages, so daily variations in generation will not be visible: Chart published by Dr Euan Mearns at http://euanmearns.com Page 48: Renewable energy on the grid: Shutterstock Page 49: Electrical grid evolution: IEA (2011), Technology Roadmap: Smart Grids © OECD/IEA 2011, subject to iea.org/t&c/termsandconditions Page 51: A smart grid will consist of sensors, controls, computers, automation, and equipment, interconnected by the electrical grid and working together to respond digitally to our quickly changing electricity demand: Shutterstock Page 53: Estimates for global fossil-fuel consumption subsidies: Based on IEA data from IEA 2016 World Energy Outlook © OECD/IEA 2016, www.iea. org/statistics. Licence: www.iea.org/t&c Page 53: Biggest fossil fuel subsidies of the world: Based on IMF data, created by http://www.stuff.co.nz as modified by Antall József Knowledge Centre Page 54: Solar power capacity cost drop in the U.S.: GTM Research, Solar Energy Industries Association (SEIA) @2017 Page 55: The price is right: http://www.windpowermonthly.com/article/1421836/wind-costs-heading-right-direction

Page 56: Shutterstock Page 67: Energy revolution in Germany - a green path with no clear end in sight: Shutterstock Page 68: Comparison of the strategic goals of the two countries: http:// library.fes.de/inhalt/digitale-bibliothek.html Page 69: Annual CO2 emissions (metric tons per capita) between 1991-2013 and latest data from 2013: Based on Carbon Dioxide Information Analysis Center data, Environmental Sciences Division, Oak Ridge National Laboratory, Tennessee, United States. Chart modified by Antall József Knowledge Centre Page 70: Coal mine near Hailar, Inner Mongolia: Harry Lawford via Flickr, CC BY, https://www.flickr.com/photos/herry/35148674/in/ photolist-479tC-479mK-4fgcdn-3925kW-hXgrg-hXgb7-hXfLZ-okk1QX7kEdPM-7wJa5b-32TjG3-hXg1R-hXg7N-hXg53-hXfQh-hXftX-jNn5BB6kAdNB-73xhBH-pVCjgF-hXfrd-6xNNrq-hXgwC-hXfne-4fghu6-hXfCR-hXfwz-7fMvid-hXgC9-6kEdMs-hXfzp-6kEFcN-aLxbhr-hXgtN-hXggz-itpcV5-hXgzu-NAHSP-6kzGwH-hXfVz-hXgoy-ipa6hz-521iyP-hXfFM-hXfXM-invrW4-

6kAs7F-5FWqC-6kzS4H-i9nFR1 Page 71: The highly controversial Three Gorges Dam is the world’s largest power station: Shutterstock Page 72: China’s primary energy consumption (million tonnes oil equivalent) 2012-2016 Based on: BP Statistical Review of World Energy 2017: BP Statistical Review of World Energy 2017 Page 72: Longyangxia Dam Solar Park in Qinghai Province is the world’s largest solar farm with its 850 MW of capacity and 4 million solar panels: NASA Earth Observatory images by Jesse Allen, using Landsat data from the U.S. Geological Survey, https://earthobservatory.nasa.gov/IOTD/view. php?id=89668&src=ve Page 74: Internation Nuclear Events Scale, International Atomic Energy Agency (IAEA): http://www-ns.iaea.org/tech-areas/emergency/ines.asp Page 76: TOKYO, JAPAN – May 8, 2016: Anti-nuclear occupy tent Page 79: Solar PV Arrays at Fort Bliss: Texastribune ©Ivan Pierre Aguirre, https://thumbnails.texastribune.org/gbzKW4UQkf4aaFL0E13NDf5LAQQ=/ fit-in/800x1000/filters:quality(95)/https://static.texastribune.org/media/ images/TxTrib-FtBlissSolar-012.jpg Page 80: Solar Blanket in a Rucksack Portable Power System: https:// upload.wikimedia.org/wikipedia/commons/6/61/Defense.gov_News_Photo_110906-N-YO394-014_-_Explosive_Ordnance_Disposal_Technicians_ Petty_Officer_3rd_Class_Matt_Miga_left_and_Petty_Officer_2nd_Class_ John_Piowaty_deploy_a_Power_Management.jpg Page 81: Parties and Signatories of the Paris Agreement: by L.tak, Wikimedia Commons, CC SA 4.0 https://commons.wikimedia.org/wiki/File:ParisAgreement.svg Page 82: Helping Energy Cross Borders: European Commission Infographic Page 83: Progress of the European Union towards its ‘20-20-20’ Climate and Energy Targets: European Environment Agency, CC BY 2.5 DK Page 84: European Commission: Energy Union and Climate. URL: https:// ec.europa.eu/commission/priorities/energy-union-and-climate_en Page 85: Energy Union and Climate Action. URL: https://ec.europa.eu/commission/sites/beta-political/files/2-years-on-energy-union_en_0.pdf Page 87: Distribution of Russia’s natural gas exports by destination (2015): BP Statistical Review of Worlds Energy 2016 Page 88: Shutterstock Page 90: Major gasfields in the Eastern Mediterranean: U.S. Energy Information Administration, USGS, HIS Edin https://www.eia.gov/todayinenergy/ detail.php?id=12611 Page 91: Oil and gas infrastructure in the Caspian Sea region: March 2012: CIA - Library of Congress Geography and Map Division Washington, D.C. http://hdl.loc.gov/loc.gmd/g5692c.ct003595 Page 94: The OPEC member states: Shutterstock Page 96: World Energy Consumption by source, 1990 – 2040: U.S. Energy Information Administration (EIA) Page 97: The McKelvey box: Energy Education Page 99: Typical production curve for a light tight oil well compared with a conventional oil well: http://oilprice.com/ Page 100: Donald Trump as President Elect at a post-election rally in “coal country”: https://www.flickr.com/photos/80038275@N00/31533340062 Page 101: Annual Share of Total U.S Electricity Generation by Source (19502016): U.S. Energy Information Administration, Monthly Energy Review, and Short-term Energy Outlook (March 2016) Page 102: Since 2015, Coal Has Fallen Off A Cliff (1984-2016): U.S. Energy Information Administration, JORDAN WIRFS-BROCK | INSIDE ENERGY http:// insideenergy.org/2016/05/03/listen-to-u-s-coal-production-fall-off-a-cliff/ Page 103: Schematic diagram of the most relevant climatic elements which bring the humidity to the places East to the Andes and South to the Amazon basin: MARENGO, J. A.; ALVES, L. M. Crise hídrica em São Paulo em 2014: seca e desmatamento. Geousp – Espaço e Tempo (Online), v. 19, n. 3, p. 485494, mês. 2016. ISSN 2179-0892 Page 104: Brazil’s Southeast Region: https://shutr.bz/2ta8ACK Page 105: The participation of different resources in the Brazilian electricity generation according to the conservative estimation of Economia e Energia magazine (historical and projected data): http://ecen.com/eee89/eee89p/ Proj%20Energia%20Primaria.htm Page 107: Oil made Saudi Arabia rich. Is another resource capable of making rich someone else?: Shutterstock Page 107: Bolivia’s richest reserve, the Salar de Uyuni : Shutterstock 108: Electric cars: Shutterstock Page 111: Wind plant near Boston harbour. Is it enough to electrify the megacity?: Shutterstock

Top 5 Page 113: Most polluting countries of the world: BP Statistical Review of World Energy 2017 Page 113: Pollution per capita in the same countries: Based on Carbon Dioxide Information Analysis Center, Environmental Sciences Division, Oak Ridge National Laboratory, Tennessee, United States. Chart modified by Antall József Knowledge Centre Page 114-115: BP Deepwater Horizon (2010): Shutterstock Page 114-115: Fukushima (2011): Shutterstock Page 114-115: India Power Blackout (2012): Shutterstock Page 114-115: Lac-Megantic Train Explosion: Shutterstock Page 114-115: The Soma Coal Mine Disaster (2014): Shutterstock Page 116-117: Costa Rica: Shutterstock Page 116-117: Iceland: Shutterstock Page 116-117: Albania: Shutterstock Page 116-117: Paraguay: Shutterstock Page 116-117: Denmark: Shutterstock Page 118-119: Volcanic Electricity: http://maxpixel.freegreatpicture.com/ Volcanism-Magma-Liquid-Lava-Volcano-Guatemala-406818 Page 118-119: The “Impossible” Microwave Thruster, Chart modified by Antall József Knowledge Centre Page 118-119: Superconducting Magnetic Energy Storage: https://www. google.hu/search?lr=&hl=hu&biw=1366&bih=638&tbs=sur%3Afc&tbm=isch&sa=1&q=superconducting+coil.&oq=superconducting+coil.&gs_l=psyab.3...18472068.18472068.0.18472462.1.1.0.0.0.0.61.61.1.1.0....0...1.1.64. psy-ab..0.0.0.EknfKJ-RNqg#imgrc=fXvVUqqunRWekM Page 118-119: Energy generation in the ocean: Shutterstock Page 118-119: Harvesting Human Energy: https://www.google.hu/ search?q=Harvesting+Human+Energy&hl=hu&tbm=isch&tbs=rimg:CR22Di9hhvMrIjhtEKqbfOPfoQjO375M5MJ-bITJCtYdc4jCFMV55b6U3aX6-1OdSuFY_1dOpTz-rLkhMmnYTQ2xPSSoSCW0Qqpt849-hEQOjWfEbi4wrKhIJCM7fvkzkwn4Rsu3YUxuG_12oqEglshMkK1h1ziBGzK12aBYT7DyoSCcIUxXnlvpTdEWvFbLejzokNKhIJpfr7U51K4VgRa8Vst6POiQ0qEgn906lPP6suSBHTghFBsmBUEioSCUyadhNDbE9JEZBxruXQwzG&tbo=u&sa=X&ved=0ahUKEwiz7JXg3IPWAhUlJ5oKHdMCACUQ9C8IHw&biw=1366&bih=638&dpr=1#imgrc=HbYOL2GG8yuANM

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NEXT ISSUE

IN FOCUS: GERMANY 2017 is a special year from the point of view of Europe’s future. Following an issue focusing on France and the recent presidential elections, the reader can now gain insight into Germany. Although the magazine centres particularly on the German elections, it also provides a thorough picture of Germany in general and its culture, politics, and economy. Will Angela Merkel be able to maintain her position as Chancellor after the elections on 24 September against her main opponent, Martin Schulz? What role will Germany play in the EU? How important is the country’s NATO membership on the world stage? Is there such a phenomenon as “German Islam”? What successes and failures of integration can be detected in Germany? The magazine examines not only the election results, but provides a complex view on the economic and political relations of Germany and the Visegrad Countries. The role of German companies and the German language in Hungary, and its instruction in different Hungarian schools, will also be put under scrutiny, in addition to German tourist attractions and the internationally-renowned Oktoberfest. Among others, topics listed above will be explored in In Focus: Germany, to be published in autumn 2017.

Additional issues of In Focus are available on

the webpage of the Knowledge Centre, www. ajtk.hu. Please kindly note that In Focus can be downloaded free of charge after registration.

CONTACT INFORMATION

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Antall József Knowledge Centre

Publisher: Péter Antall, Director

Address: 2 Czuczor Street, H-1093 Budapest

Editor-in-Chief: Ádám Kégler

Web: www.ajtk.hu

Editor: Mihály Kálóczy

Telephone: +36 20 310 8776

Contributors: Cecília Varsányi, Enikő Jancsek

E-mail: ajtk@ajtk.hu

Cover: Gergely Kiss, Flóra Pálhegyi Layout and Pre-press Preparation: Gergely Kiss The creation of this issue was supported by the ALTEO Group.

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