CRISIS EUROPE: Shock Decarbonization of Industry

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Here is an interesting analysis which says that all the mayhem with skyrocketing energy prices in Europe is perfectly on course for the elite because they want high energy prices so that alternative energy sources can compete economically. And if people starve to death, well the MSM won’t complain.  This is a translation from Russtrat.ru from October 7, of this year. I didn’t appreciate where it was headed until today.I’m just gonna paste the whole translation here. It’s not too long. – Darrol

MOSCOW, October 7, 2021, RUSSTRAT Institute. After a slight decline on the news about the start of technological filling of the Nord Stream–2 pipeline in early September, stock quotes of gas futures in Europe again began setting one record after another. The contract for delivery in November at the TTF hub in the Netherlands has risen to $1,360 per 1,000 cubic meters. The December futures contract on the ICE exchange was fixed at $1,456, and on October 6 it even rose to $1,900.

What is happening seems to have no clear explanation of the wildness. The wholesale price in the European part of Russia is about $ 40 per MWh. In Spain, it reached $ 179 (an increase of 4 times in 4 months), in Britain – $ 390 (an increase of 3 times), in Germany – $ 153 (an increase of 1.3 times). In Russia, electricity is supplied to the population for $ 50 per MWh, in Germany-for $ 340.

Officially, according to the European commissioners in dusty helmets, the missing winds in the North Sea, where the main array of European wind generation is located, and, of course, our native Gazprom, are “to blame” for this. The European Commission has launched an official investigation into whether what is happening is deliberate machinations of Russia, which deliberately reduced gas supplies in order to create a shortage in Europe and profit from speculation. Berlin says that the Russians are not to blame for what is happening, but Brussels is not yet listening to Berlin.

It would seem that the EU ruling circles themselves should “put two plus two together” and recognize that the role of scrap metal that destroyed the “Groningen pricing mechanism” and which worked normally for decades. was played by the Greens, the European Energy Charter, the Third Energy Package and the unbridled populism of the idea of “shock decarbonization of European industry.”

However, these groups continue to persist, even in the light of the obvious shortage of accumulated gas reserves just before the start of the heating season. If the EU usually pumped 100-110 billion cubic meters of gas” for the winter season” into storage facilities, at the moment they have barely 72 billion cubic meters of gas stored in them. But for some reason, Nord Stream 2 still needs to be stopped, ostensibly to prevent “Russian expansion.”

Where is the logic? Did the entire European ruling class go mad at once? Have they forgotten how to count? Did they lose their understanding of the scale and destructiveness of the consequences? It is not enough for them to have already stopped petrochemical enterprises and receive notifications about the imminent, literally within the next couple of weeks, shutdown of glass, and sooon after, of steel mills and other mettalurgy ?

Are they not afraid of the risk of stopping the operation of bakeries for baking bread and pasta, which also use electricity? Or do some important influencing factors still exist in what is happening, but which they remain in the shadows?

If you look at what is happening from the perspective of conspiracy theory, then you should remember the recent bestseller “Black Swan” by mathematician and trader Nassim Taleb. In his book, the author clearly shows how only 4% of the population can radically change the world.

Especially in modern conditions, when the “ruling elite” does not feel its connection with society, and when the rest of society becomes very susceptible to outright populism, such as the belief that electricity is taken “just from the socket”, and the “invisible hand of the market” guarantees the preservation of “food abundance in stores” in spite of literally everything.

So, for a number of fundamental reasons, these “four percent” stubbornly want to implement the so-called “green energy transition“, the implementation of which is hindered by two factors: a) the scale of inertia of the existing industrial and economic mechanism, and b) the price of primary energy carriers is too low.

A year and a half ago, IA REGNUM published an analysis of the reasons why the full transition of European (and, more broadly, Western) vehicles to electric traction by 2030-2035, which was declared at that time, could not take place. In addition to the unavailability of the infrastructure and the lack of necessary technological progress in the development of sufficiently efficient and affordable batteries, the main obstacle is the “price of oil”.

More precisely, it’s the price of energy generated by traditional types of generation. Wind turbines and solar panels can compete with them only after the cost of “black gold” exceeds $300 per barrel. The above-mentioned “four percent” have not been able to achieve this in the past five years. Market mechanisms managed to resist and even force the price to return to the corridor of adequate values required by the industry. Today, BRENT crude is trading at $ 78.72. Russia and OPEC+ successfully prevent it from climbing higher.

But if its share in energy generation is reduced from the current 30% (according to data for 2020) to 6-8% (according to EU plans for 2035), and the share of coal (currently providing 27%) is completely zeroed out, and if natural gas prices are raised by purely bureaucratic tricks and a “carbon tax”, then…

In terms of energy equivalent, one barrel of oil (BOE) is approximately equal to 5.8 million British thermal units (MBTU, or MBTU in Russian). This results in a simple calculation. The threshold price of $300 per barrel of oil is equal to $1,740 per thousand cubic meters of natural gas.

As can be seen from stock quotes, today [Oct. 6] the height of $ 1,456 has been “taken”, which is 83.67% of the” necessary “threshold, beyond which” alternative energy “becomes independently profitable within the framework of “natural market mechanisms”.

This will lead to the death of many industries and a radical painful change in the current way of life of the population? So what? Why should the aforementioned “four percent” care about such trifles? The economy will be rebuilt. This is not the first time for a wide-scale purge. Think of the “fencing” out of the commons in Britain, or the Luddite riots. Well, the industry that produces horse harness and horse-drawn transport has died, and then mass horse breeding, and who cares much about this today?

But the “industrialists” will get a strong enough kick to expand the financing of R & D in the field of electricity storage. And the implementation of practical results of these works will be possible without mandatory budget subsidy support.

And then… the era of global mass industrial restructuring of the entire world economy will begin. Not only is this a huge amount of money, estimated in the trillions. The main thing is different. This scale of industrialization will last for a very long time, making it a new long-term source of very fat profits. Against the background of which the suffering of the population “in the transition period “is of little interest to these “four percent”. Read what Marx said about capital being promised 100% profit.

By the way, the Russian Demiurge telegram channel wrote about such a scheme of development of the situation with the “climate agenda” back in early August:

“we need to understand what Biden is talking about when promoting the “climate agenda”, and why Putin agreed with her and supported this “topic”. In fact, we are talking about the fact that the new ecological world, well, to be environmentally friendly and “energy transition”, requires very expensive energy. Do you understand everything now?

Therefore, Anatoly Chubais was appointed to this “topic”, who perfectly understands the amount of” work “we are talking about here, and will not allow Russia’s interests to be cheapened, since his PO and, most importantly, the “bonus”are directly tied to the amount of profit that Russia will receive from the “energy transition”.

If anyone thinks otherwise, I’ll just ask you to recall:  a) a very recent article by Bloomberg about the current and future gas prices, and  b) an excellent analysis The situation with American oil workers, which the administration of “dementia” Joe wants to raise neither more nor less, but by as much as 500 yards, is a crime.”

And on August 20, an article “Truth and Fiction about the Energy Transition” was published on the same topic on the website of the RUSSTRAT Institute with approximately similar conclusions.

Undoubtedly, this all looks logical only within the framework of the logic of “conspiracy theory”. But who says it’s totally fantastic? In any case, what is happening now with the energy sector in Europe fits into such a scenario without any “gaps, distortions and tensions”. 

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