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THE DILEMMA FACING EUROPE: European leaders face conflicting energy goals: securing alternative gas supplies to ease immediate supply constraints and prevent a winter disaster, and keeping to their aggressive decarbonization goals.

Cutting ties with Russian gas has required Europe to turn to other sources, such the United States and partners in the Middle East. That, in turn, is necessitating the construction of new infrastructure to accommodate more imports, especially volumes of LNG.

But doing so clashes with members’ commitments to end public support for fossil fuel infrastructure and to advance the green energy transition.

European leaders have maintained that more renewables are ultimately the answer to the continent’s energy problems, and the European Commission’s post-invasion REPowerEU sets out a strategy for reducing demand for Russian gas that includes efficiency measures and moves up the EU’s 2030 target for renewables from 40% to 45% of total supply.

At the same time, the plan blocks off 10 billion euros for investment in “limited additional gas infrastructure,” and heads of state have been traveling all around to seal new gas supply deals which, depending on how long new fossil fuel assets and supply deals last, puts the Europeans’ short-term strategy in tension with its overriding net-zero goals.

The financing dilemma: The Group of Seven’s energy and environment ministers pledged in May to cease “new direct public support for the international unabated fossil fuel energy sector” by the end of this year, although it provides for exception where a member country finds that doing so matches up with the Paris agreement and its 1.5 °C warming limit.

Public support could imply a variety of things, from credits to loans or other financing vehicles, but however members are defining it, they’ve shown a clear initiative to source more gas from abroad.

Some have argued that increasing LNG imports, especially U.S. shipments, in lieu of Russian supplies is a net-gain for the climate because the U.S. product is relatively cleaner.

The imperative to secure “whatever gas they can put their hands on” is what’s really driving new supply agreements between the likes of the Germans and Emirates, or the Italians and the Algerians, as well as the blessing of new infrastructure, said Andrei Ilas, a Europe-based analyst for the Center for Research on Energy and Clean Air.

He likened the G-7’s provision of exceptions to a “get-out-of-jail card.”

“I think everyone has carved these specific circumstances just to allow them to say, ‘Look, this is a short-term thing. We need to plug in those supplies, and this is not what we want to do long term,’” Ilas told Jeremy.

Risk of overshooting: For the gas industry and its friends, the Europeans have a clear risk of being too conservative in expanding gas infrastructure and imports and thereby prolonging this supply crisis across successive winters.

Environmental groups, though, have gone after the commission where it’s proposed support for new gas infrastructure since the war started, initiating legal action against EU-designated gas projects given favor of “projects of common interest.” Building new infrastructure locks in the continued viability of the gas sector, critics maintain, and undermines climate change goals.

Ilas said with new supply deals and infrastructure, the EU risks “overshooting” and establishing what may become an oversupplied market in years to come.

“You don't know exactly what the supply and demand will be in two years or so —three years,” he said.

“So, everybody's rushing to bring their projects to the market, and when the market will have stabilized slightly,” he said, there could end up being “more gas than needed.”

Raphael Hanoteaux, senior policy adviser for environmental think tank E3G, said overall Europe is still on the right track to meet Europe’s medium- and long-term decarbonization goals, and it’s doing “fairly OK” to keep at it with its short-term solutions like national and intra-EU demand reduction measures.

“Even in that case, 10 billion is a lot to invest in infrastructure that could only — that should only stay for the next five to seven years, and then would probably be obsolete by then,” Hanoteaux said. “So, it's definitely a problem.”

Additionally, companies and any heads of state helping to negotiate gas deals with external suppliers need to keep the timelines short — a particular challenge given that suppliers are generally seeking 10- and 20-year contracts.

“The volumes that we need at the moment of gas are no longer going to be needed entering the next decade,” Hanoteaux said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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WHITE HOUSE RULES OUT A GAS EXPORT BAN, DESPITE LOOMING ECONOMIC PAIN: The White House has ruled out any bans or limits on its natural gas exports this winter, two sources familiar with officials’ thinking told Reuters. The move comes as the Biden administration seeks to help its European allies keep their lights on and homes heated in the coming months, even as they brace for anticipated blowback from voters at home—who will also be subject to higher heating costs as a result.

Sources said White House officials had explored the market impact of curbing energy exports to help protect American consumers from the high prices—but said that ultimately, that process only cemented their consensus that any gas export limit would be “too extreme” and risk fracturing key U.S.-EU relationships.

"President Biden made a commitment in March and we have been moving out on it. We surpassed the LNG export goal President Biden set," one senior administration official said, pointing to the fact that since March, the U.S. has doubled its LNG exports to the EU compared to the same period last year.

"And because of the steps we and our partners have been taking, gas storage in Europe is at a significantly higher level than last year. More work remains," the official said.

…BUT DIPLOMACY WON’T HEAT AMERICANS’ HOMES THIS WINTER: The average cost of U.S. home heating is expected to surge to $1,202 this winter, according to a recent report by the National Energy Assistance Directors' Association, or NEADA. That’s a more than a 17% spike in energy costs compared to last year, and worsens an existing crisis for millions of Americans who already could not afford to pay their utility bills.

As of early September, more than 20 million U.S households were behind on their utility bills, NEADA said—owing a combined $16 billion in power bill debt.

NEADA executive director Mark Wolfe told Breanne that he views the number of Americans with unpaid utility bills as a “canary in the coalmine” indicating the overall economic health of lower-income households.

More sobering price indicators: Prices of natural gas, which supplies heat to roughly half of U.S. homes, are also slated to increase by 34% compared to last year—and a whopping 66% compared to the 2020-2021 winter, NEADA said. (Some power companies that are more reliant on natural gas, primarily in the northeast, are warning of an increase of as high as 60%,)

But limiting exports is also a bad option: If the U.S. adopted a natural gas export ban, "[U.S.] natural gas prices would plummet, but if I were the EU, I would almost consider [a ban] an act of war,” Ed Hirs, an energy economist at the University of Houston, told Reuters. “It would really stoke anti-American attitudes and make European countries question the strength of their relationship with the U.S.”

EU ENERGY GIANT RETURN TO FOSSIL FUELS AT BEHEST OF DANISH LEADERS: The energy giant Orsted said it will continue or restart operations at three of its fossil fuel-powered facilities under the orders of Danish authorities, who are employing emergency measures ahead of winter.

The order applied to two of Orsted’s coal-fired plants and one oil-fueled power plant. Two of the plants had already been decommissioned, while the third was due to be taken offline in March.

Orsted said it was ordered to keep the coal and oil powered units running through June 30, 2024—all but upending its target of reaching carbon neutrality by 2025.

Also making headlines is the departure of Orsted deputy CEO Martin Neubert, who announced today that he is resigning from the company after 15 years. In a statement, he praised Orsted’s achievements in the green energy space. He did not address the coincidental timing of his departure, though he noted, “this is the right time for me to step down.”

MEANWHILE, GERMANY MAKES A CONTENTIOUS ANNOUNCEMENT OF ITS OWN: German Vice Chancellor Robert Habeck announced today that European energy giant RWE will now continue to operate two of its 600 MW lignite-fired plants through March 2024—extending operations far past their expected end date this year.

RWE was also granted permission to “raze” the abandoned German town of Lützerath to extract coal from underneath its soil; a decision likely to be met with renewed outrage by climate activists in the country. (RWE has said the coal underneath Lützerath is needed "to operate the lignite fleet at high capacity during the energy crisis.")

"In the current crisis, we are contributing to security of supply in Germany by temporarily increasing the use of our lignite-fired power plants and are thus also helping to displace gas from electricity generation," RWE's CEO said in a statement.

Speaking at a news conference today, Habeck attributed the RWE extensions to the loss of Russian gas as well as the loss of power from French nuclear plants, which are producing less power than expected due to technical issues.

Habeck also cited several studies that he said showed that, “if we want to guarantee security of supply, keep running the two 600MW blocs and save those [other] villages, this is the result.”

"I hope the climate movement will see it this way and accept it to a large extent,” he added. (So far, that seems unlikely.)

SAUDI ARAMCO HEAD ISSUES WARNING ON SUPPLY: Saudi Aramco CEO Amin Nasser warned that the world is too focused on demand and not enough that there will not be capacity to prevent oil prices from rising sharply.

Nasser said that if China opens up from its strict lockdowns, spare capacity will vanish. “There will be no space for any hiccup — any interruption, any unforeseen events anywhere around the world,” he said at the Energy Intelligence Forum in London, according to the Financial Times.

His comments came ahead of a meeting of OPEC+ at which the producer group is expected to agree on a substantial production cut, a prospect that has many analysts predicting the return of $100-a-barrel oil within a few months.

BANGLADESH OUT OF POWER: Technical glitches caused a large-scale power outage in Bangladesh today, which left around half of the country without electricity, Bloomberg reported.

Crews have initiated repair work but officials were unable to provide an estimate as to when power may return as of this writing.

SACHS SAYS US SABOTAGED NORD STREAM PIPELINES: Columbia economist Jeffrey Sachs raised eyebrows yesterday for speculating that the U.S. is responsible for sabotaging the Nord Stream pipelines, citing “radar evidence” of U.S. helicopters in the area and previous comments from top American officials about the pipeline.

“I know it runs counter to our narrative, you're not allowed to say these things in the West, but the fact of the matter is all over the world when I talk to people, they think the U.S. did it,” Sachs said on Bloomberg TV.

Sachs, who advised former Soviet countries in transitioning from communism, received pushback on the air and on social media.

Notably, Vladimir Putin has blamed “Anglo-Saxons” for the leaks. A prominent Polish politician also suggested the U.S. was responsible, in a difficult-to-interpret set of tweets.

Otherwise, though, there has not been much to go on, a week later, leaving plenty of room for speculation like Sachs’. Western officials have offered little in terms of assigning blame, apart from Spain’s government accusing Russia. Biden called Putin’s comments “lies” and has said the U.S. does not know what happened.

NEW YORK EYES CALIFORNIA IN DRAFTING ITS AMBITIOUS EV PLAN: In case you missed it – New York Gov. Kathy Hochul has ordered state environmental officials to issue draft regulations that would require all new car sales in the state to be “zero emissions” vehicles by the year 2035—making New York the latest state to follow in California’s footsteps and adopt its ambitious EV target set earlier this summer.

EV sales in New York would have to be scaled up drastically in order for it to deliver on those goals, however. The plan sets a target of 35% zero emissions vehicle sales by 2026, and 68% by 2030. By 2035, the plan calls for 100% of new light-duty cars to be “zero-emissions” vehicles.

“New York is a national climate leader and an economic powerhouse, and we’re using our strength to help spur innovation and implementation of zero-emission vehicles on a grand scale,” Hochul said in a statement. The state’s regulations are slated to be finalized by the end of this year.

The Rundown

Washington Post ‘The worst we’ve seen’: Ranchers threatened by historic heat and drought

Financial Times Japan moves to fill Asia’s $40tn energy funding gap in China’s stead

E&E News FPL says grid prep paid off in swift post-Ian power revival

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Calendar

TUESDAY | OCTOBER 4

2:00 p.m. The American Association for the Advancement of Science holds a virtual discussion on "Advances in PFAS (Perfluoroalkyl and Polyfluoroalkyl Substances) Destruction." Learn more and register here.

THURSDAY | OCTOBER 6 

1:00 p.m. The Nuclear Regulatory Commission will convene virtually for its meeting of the Advisory Committee on Advanced Nuclear Reactor Safeguards, or ACRS.