Experts blame green energy policies for Europe's full-scale energy crisis: 'A warning to the US'

Experts blame green energy policies for Europe's full-scale energy crisis: 'A warning to the US'

'There's been under-investment in fossil fuels in Europe,' an analyst from research firm Rystad Energy tells FOX Business

Green energy policies in Europe designed to rapidly shift the continent away from fossil fuel dependence have contributed to soaring power prices in the region.

The European benchmark index measuring future electricity prices increased to a record $993 per megawatt hour (MWh) on Monday, days after prices in France and Germany surged 25%, according to European Energy Exchange data, compiled by Bloomberg.

By comparison, the average price of electricity in the U.S. hit $129 per MWh in June, federal data showed.

The energy crisis has forced consumers to cut back on power consumption, industrial production decreases and energy rationing across the continent.

The European Union Council (EU) scheduled an emergency meeting of EU energy ministers slated for next week in response to the market conditions.

"The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design,"

European Commission President Ursula von der Leyen remarked during a speech Monday. "It was developed under completely different circumstances and for completely different purposes. It is no longer fit for purpose."

WHY EUROPE'S ENERGY BILLS KEEP CLIMBING

Von der Leyen blamed the record price increases on Russia's invasion of Ukraine, which has upended global energy markets, but added that the crisis was evidence the bloc needed to transition further to green energy.

Von der Leyden is grossly mistaken:

In 2021, EU bureaucrats urged members not to sign long-term pipeline gas contracts with Russia, because it would show the EU as not being serious about moving away from fossil fuels.

Russia responded by selling gas only to countries with long-term gas contracts.

This caused the gas prices on the SPOT market to skyrocket in 2021

Russia refused to sell gas to SPOT market dealers, which would have lowered prices.

EU bureaucrats were pissed, because their naive scheme backfired, as did the sanctions subsequent to the invasion of Ukraine in 2022

The sanctions had made dollars and euros useless to Russia, so it insisted to be paid in rubles, which caused the ruble to become the strongest currency in the world, while the euro was caving, due to poor EU prospects.

Initially, there was much opposition, but most ended up paying in rubles, except a few, who were promptly cut off from Russian gas, such as poverty-stricken Bulgaria 

Russia ended up making much money selling oil, gas, coal, food, fertilizer, etc., at very high prices, and not buying much from Europe and others. The Russian trade surplus is estimated at $300 billion in 2022.

Russia has throttled natural gas supplies to Europe in response to the EU's sanction packages introduced following the February invasion.

However, electricity prices in Europe hit all-time highs months before the invasion.

EUROPE'S GREEN ENERGY POLICIES STRENGTHENED PUTIN, MICHAEL SHELLENB...

A Reuters analysis, published in December, concluded that lower-than-expected wind power generation was a major factor sending prices higher and forcing suppliers to turn back to coal and natural gas.

Russia was the largest provider of Europe's natural gas and coal imports at the time of the invasion.

Ursula von der Leyen, president of the European Commission, speaks to reporters on May 30. 

"The word that comes to mind is nihilism," Michael Shellenberger, an energy expert and founder of the group Environmental Progress, told FOX Business in an interview. 

"You have people that are openly demanding to do more of the same things that actually made the crisis possible," he continued. "That's what you're seeing. They're saying, 'let's go do more unreliable energy.' It's a sign of a disturbed person that keeps engaging in irrational activities that are obviously self-destructive, and that we're seeing that behavior at a mass level."

Shellenberger added that Europe should be "a warning to the U.S. that we should not go down their path."

UKRAINE CRISIS: US MUST LEAD AGAIN ON ENERGY BEFORE IT IS TOO LATE

Over the last several years, EU policymakers have aggressively pushed for the retirement of traditional fossil fuel power plants and a large expansion of green energy alternatives including wind and solar.

The EU announced its so-called European Green Deal in 2021, outlining plans for the continent to massively reduce carbon emissions by investing more in renewables and limiting gas-powered vehicle purchases.

In Germany, the EU's largest economy, wind power alone accounted for the largest share of electricity production between 2019 and 2021. 

However, due to its heavy reliance on wind power has left the nation vulnerable when the wind produces less output than expected.

"There's been under-investment in fossil fuels in Europe," Fabian Rønningen, a senior power markets analyst at the Norwegian research firm Rystad Energy, told FOX Business in an interview. "There have been all these closures of coal power plants."

NETHERLANDS JOIN GERMANY, AUSTRIA, ITALY IN REVERTING TO COAL AMID ...

"If you have a system with a lot of solar and wind, you need backup in the system," he continued. "Until we find a better technical solution than natural gas, you need something to back it up and that is the role of coal,

gas and nuclear in Europe, for at least the next ten years."

Wind turbines produce anywhere between 25-50% of their nameplate capacity, according to the Energy Information Administration.

Solar panels produce 10 (in Germany) to 20 (in southern California) percent of nameplate capacity.

Russia's invasion of Ukraine has upended energy markets. However, price instability existed in Europe prior to the invasion. 

Depending on Russia's actions, the winter, when natural gas demand peaks, could be even more painful for Europeans, according to an analysis from research firm Wood Mackenzie published Thursday.

High prices are expected to lower natural gas demand and, if Russia continues to halt flows via the key Nord Stream 1 pipeline, total EU gas inventories could fall to just 26% by the end of the winter.

"In addition to uncertainty over gas supply from Russia, power market tightness — due to low nuclear, hydro and wind output — and the risk of electricity disruption, are putting additional stress on gas prices futures this winter," Penny Leake, a European gas analyst at Wood Mackenzie, said in a statement shared with FOX Business.

Leake added, if normal weather conditions occur, natural gas prices are expected to fall more than 35%, close to prices recorded late last month, following the winter.

Rønningen said, he does not expect large-scale power rationing or uncontrolled blackouts during the winter, but said costs will remain high for consumers.

"Looking to the winter, I think one thing that is quite clear, is it's going to be very expensive," he said.