Just how bad could things get this winter? — Analysis
Some Europeans have started to accumulate basic heating elements and bought stoves in response to skyrocketing energy costs.
Natural gas prices across Europe have quadrupled this year. Looking ahead to winter and imagining the new heights energy values may hit, consumers are starting to opt for an alternative (old) form of heating – wood. In several Western countries, there has been a huge demand for both wood stoves and combustibles.
In Germany, where almost a half of homes are heated with gas, people are turning to a more guaranteed energy source. Local media reports that firewood sellers are struggling to meet the growing demand. Wood theft is on the rise across the country.
In the Netherlands, owners of businesses note that customers are now buying wood faster than ever. In Belgium, wood producers are struggling with demand, while prices are going up – as they are across the region.
In Denmark, one local stove manufacturer told the media that, while demand for his product was on the rise since the start of the Covid pandemic, this year’s profit is forecast to reach over 16 million kroner (€2 million), compared with 2.4 million in 2019. It’s a significant increase.
Even Hungary, a country that didn’t support the EU’s decision to phase out Russian fossil fuels and agreed a new gas purchase with Moscow this summer, is making preparations for a tough winter. It has lifted restrictions on log logging and announced that it will ban the export of wood firewood. World Wildlife Fund Hungary raised concerns about this matter and stated:
“For decades, there has not been a precedent in this country.”
Actually, it is not just the Ukraine conflict that has caused the current energy crisis. In 2021, the increase in prices was already evident.
“It was the effect of supply chain interruptions due to COVID, a very cold winter, very hot summer and China’s energy crisis, that led to [the]Buy [of]There are huge quantities of LNG all over the globe,” says Professor Phoebe Koundouri, Director of the Research laboratory on Socio-Economic and Environmental Sustainability at Athens University of Economics and Business, and President of the European Association of Environmental and Resource Economists.
When the conflict in Ukraine came about, the sanctions against Russia – followed by Moscow’s response to the restrictions – sent prices through roof.
“Europe must act as a mediator between NATO, Russia, Ukraine and China, including China, to reach a meaningful solution for millions of people who are affected by the geopolitical crisis.” Prof. Koundourisays.
‘Eco-friendly’ wood burning
Wood isn’t a new idea in the EU. In the last decade, it was even considered one of the best ways for achieving the bloc’s environmental targets. The EU released the 2009 first edition of the Renewable Energy Directive (RED) which dictates the level of renewable energy usage within the bloc.
According to the text, renewable energy sources “This term refers to renewable, non-fossil sources of energy (wind, solar and geothermal), wave, tide, tidal power, biomass, landfill gas or sewage treatment plant gases, as well as biogases.” Biomass refers to “Biodegradable fractions of agricultural products, municipal and industrial waste, and residues (including animal and vegetal substances), and forestry.”
The document pointed out that burning wood should be considered among the preferable sources of energy – a point that has since been debated by a number of environmentalists.
Data presented by the Natural Resources Defense Council in 2019, shows that European countries are spending $7Billion a year to subsidise the use of wood for heat and power. It also found that, as of 2017, “More than 50% of the 2017 biomass energy subsidy payments across the 15 EU member countries were made in Germany or the UK.”
EU is the biggest wood pellet market. In 2021 it consumed 23.1 million tonnes (MMT). This is a record which is set to be broken in 2019. That’s according to a report published by the US Department of Agriculture Foreign Agricultural Service’s Global Agricultural Information Network.
“The growth of the EU’s residential market in France and Germany, supported by programs to install biomass boilers, and high prices for fossil fuels, will lead to a further increase of EU demand to 24.3 million tonnes (MTT) in 2022. The EU’s demand for pellets is much higher than the domestic production over the last ten years. This has led to increased imports, primarily from Russia, Belarus and Ukraine.”
After the outbreak of the Ukraine conflict, the EU banned wood imports from Russia and Belarus, while exports from Ukraine were disrupted by the hostilities. The US has been filling this gap, according to analysts. The country’s export volume, which has climbed steadily over the past decade, “It is now ahead of the previous year when more than 7.4million metric tons of US pellets were exported abroad.” the Wall Street Journal reports, citing the Foreign Agricultural Service. “Since last year’s $140, the average cost of a metric tonne before shipping and insurance has increased to $170.”
Reformulating the policy
Germany’s citizens, for instance, are eligible to receive subsidies when they use wood heating. However, the Dutch government has been less supportive of wood burning. In this year’s budget, the government stopped subsidizing biomass heating in cities and heating greenhouses.
In the UK, there’s an ongoing row regarding Drax – the country’s biggest renewable energy plant. In 2021, the company received £893mn ($1bn) in government subsidies for burning forest biomass. Just recently, the Guardian reported that the Business and Energy Secretary, Kwasi Kwarteng, told a private meeting of MPs that importing wood to burn at Drax power station “This is not sustainable” and “doesn’t make any sense.” Most of the wood pellets used by Drax come from the US and Canada. “There’s no point getting it from Louisiana – that isn’t sustainable … transporting these wood pellets halfway across the world – that doesn’t make any sense to me at all,” Kwarteng added.
This year, the European Parliament’s environment committee voted on new rules defining what can be considered “Sustainable biomass” under the revised renewable energy directive. So it was decided that primary wood biomass – essentially unprocessed wood – should not be considered a source of renewable energy and shouldn’t be eligible for incentives. Burning wood is, in my opinion, a poor choice for the environment. The Intergovernmental Panel on Climate Change data shows wood has a higher CO2 than coal per unit of energy.
“We should be clear – at least I am clear – that the EU should make all its policies clear on the fact that biomass use, including wood burning, cannot be done on a large scale,” Prof. Koundouri says. Her explanation is that the possibility of a biodiversity crisis poses a greater threat than climate change itself. “The decline of ecosystem services causes the biodiversity crisis. Ecosystem service robustness and continuity is based upon the capacity of ecosystems to support rich biodiversity.” It’s clear that the EU rethinking its reliance on burning wood for electricity is the right step, Prof. Koundouri notes, but in her view, the region needs to move faster.
How to face the crisis
“The European Union has been investing a lot of money, as well as applying a lot of other efforts – like human resources or intellectual resources – in order to improve the quality of the environment,” Professor Aleksandar Djikic from the International Business College Mitrovica in Serbia says. “These environmental accomplishments will be significantly affected by the crisis.”
And it’s something that we see right now: In July, the European Parliament supported a proposal to label natural gas and nuclear power plants as climate-friendly investments, unleashing a new environmental debate.
“We, as Europeans, have committed to a Green Deal, which says that by 2030 we are going to reduce CO2 emissions by 55% and we’re going to become climate neutral by 2050,” Prof. Koundouri explains. “When you have a visionary mission to face climate change, and you turn this vision into policies and investment packages, it’s expected that you will be facing certain crises during the transition period. Climate change requires a major transformation. There has never been such an enormous transformation in the areas of health and well-being, education, and how we build communities, cities, and use water and land.”
According to her, current circumstances are not an excuse for abandoning the environment agenda. “Two things can happen when you are faced with an unexpected situation. One thing – you realize what you’ve done and what you have not done in order to be safe against the crisis. Europe should have invested more in renewables. The second thing – you say “OK, I was not fast enough, now I have to accept the reality that I’m going to use coal and nuclear, but I will know that these will be used only for a short period and there will be no new investments in natural gas and coal and nuclear, any new investments will be made in renewables”.
Professor Djikic says that the EU must now take steps back. Plus, he expects the bloc’s poorer countries to be exposed to deforestation.
“The European Union, in my opinion, has entered this ‘adventure’ without preparing in advance” he states.
Let’s not forget about the strategic objectives: How about everyday citizens, who face rising energy costs and simply want warmth in winter? “The politics in their respective countries are crucial to the lives of people. It would benefit the citizens if politicians sat down and thought about the problem and tried to come up with a solution. Otherwise, everyday life will be affected by the energy crisis,” Prof. Djikic says. “Governments have to think twice, to reconsider what they can do for the benefit of the people.”
Professor Koundouri concluded that dialogue is the best way to find a solution. “The political leaders have to take the time to think through how they will solve the problem. It’s the only way for humanity to succeed. We cannot continue being distracted from one another.”