The Energy transition show: Transition in Europe podcast transcript

Chris
nelder: Let's bring them in on the conversation now welcome Claude to the En
ergy Transition Show.
Claude Turmes: Welcome from Europe. Yes. Hi.
Chris
Nelder: Thank you. So your new book Energy Transformation: An Opportunity
for Europe opens with a scene from 2008 in which the European parliament a
pproved the Renewable Energy Directive you had worked long and hard to pu
t into effect as a member of parliament. And that directive, if I understand it co
rrectly, you set goals to achieve 35 percent of electricity and 20 percent of all f
inal energy consumption across Europe by 2020, but each country would set it
s own national targets toward those goals. And actually that sounds fairly simil
ar to the structure of the Paris Accord. So what did the Renewable Energy Dir
ective achieve and do you think that example can tell us anything about the pr
ospects for the Paris Accord.
Claude
Turmes: So this directive was, this renewable legislation at EU level, was reall
y really instrumental. We see in the statistics that. So this legislation we did it i
n 2008 and 2000 and 9- 10- 11- 12 boom years in European renewables for s
olar and for wind. And this boom is continuing. So having legislation which giv
es mandatory obligations to every member state. So it was us from Brussels t
o say you have to do X percent, France you have to do X percent, so, so gove
rnments in a certain sense have no choice but to invest into renewables. That
was a really really important because what you need, you need so it's not gov
ernment's, it's not public money who invests in wind or solar. It's private mone
y. So you need to get investor certainty. And the more stringent framework, th
e lower the risk for investor and the lower the risk for the bank who lends mon
ey to an investor. So, the lower the overall cost, because renewables is capital
intensive. Wind and solar doesn't make any oil, so all the capital costs are in t
he moment when you raise it. And so the more binding you are in policy, the l
ower you have to pay for capital. That is what gives you then the cheapest ren
ewables.
Chris
Nelder: Ok. The Renewable Energy Directive then allowed renewables to be b
uilt at a lower cost of capital. But what did it achieve in terms of actually buildin
g the renewable energy capacity?
Claude
Turmes: So Germany alone has since done then 40 gigawatt of solar. Spain di
d solar. UK did a lot of offshore wind. So Denmark continued. Sweden did all t
he onshore wind. And, very importantly, before that legislation, Eastern Europ
e was almost nowhere on renewables. And now we have, for example, the thr
ee Baltic states very big in biomass - you have all the forests. And we have, fo
r example, Romania is very big in wind. Romania has, with Scotland, probably
the best onshore wind resource and the biggest wind onshore turbines projec
t starting in Romania - 700 megawatt in a row which is big for Europe because
we are more densely populated than the U.S.
Chris
Nelder: Right. Wow, I didn't know that about Romania. So the EU's Renewabl
e Energy Directive of 2009 created an opportunity for millions of citizens and s
mall businesses across Europe to invest in wind and solar projects either indiv
idually or cooperatively, and a key part of your story in the book is about the s
o-
called Magritte Group, which consisted of 8 leading European energy industry
bosses who gathered in Brussels in 2013 at a museum dedicated to the famo
us Belgian surrealist artist Rene Magritte. And that group included the CEOs o
f GDF Suez, a large French energy company, the German utilities RWE and E
ON, the Spanish firm's Iberdrola and Gas Natural Fenosa, the Italian compani
es Eni and Enel, and GasTerra from the Netherlands. And you allege that thes
e companies were losing significant market share as a result of the Renewabl
e Energy Directive and that they worked together to stall the development of r
enewable energy, to get rid of renewable energy subsidies, to create capacity
markets to protect their legacy conventional power stations. That's quite an all
egation. I mean was this truly a conspiracy to stymie energy transition or was i
t merely the independent actions of those who stand to lose from it - those wh
o had legacy power plants they wanted to keep operating just acting in their o
wn self interests?
Claude
Turmes: We have with the Renewable Energy legislation, which we are talking
about, plus other legislations in the field of energy efficiency, we have comple
tely changed the business model of electricity in Europe. So, the energy oligo
polists which gathered in this Magritte group, they earn money in the system b
uilt on old assets - coal, nuclear and a bit of gas. And so what we have done i
s, we have a very powerful energy efficiency legislation, a bit like California, a
s we have near zero energy new buildings; we have eco-
design and labelling for every refrigerator, TV and so on; we have CO2 and le
gislation. So, in overall, oil consumption is going down in Europe, gas consum
ption is going down in Europe, and what is even more surprisingly, electricity c
onsumption is stable or going on in Europe. So you can imagine you are in a
market which is stable, which is not growing anymore, and then in that market
we go from 15 percent of green electricity renewables, wind and solar, to 35.
And this growth of 20 percent in a frozen not growing market, not coming from
the energy oligopolists but coming from citizens, because we had an easy-to-
invest-
in system based on feed in tariffs, and that has completely exploded in a certa
in sense, the existing business model, and therefore its not so surprising is tha
t all the old guys were really, they were really stressed by all these legislations
which we were not able to prevent, and then they gathered to create a new lo
bby group and the message from this lobby group is really "Slow down with re
newables. Slow down with energy efficiency. Keep the old coal and gas in the
system because we want to earn money". And they were, this lobby, this Magr
itte Group was extremely skillful in a sense - they had a very good lobby strate
gy. So they went to every prime minister, in a combination of - for example wh
en they went to Rajoy the Spanish prime minister they took the Spanish comp
anies plus one or two guys from the European so from other European countri
es. When they went to the French, they took the French branches. So these C
EOs of these big power companies, they have of course the telephone numbe
r of the prime ministers, they are good friends with the energy minister and tha
t has led to a very successful lobby by them to a very bad decision at the level
of EU heads of state in October 2014. So, it took some one and a half year in
a certain sense to almost destroy our success story of 2008 and 2009.
Chris
Nelder: So this is Magritte Group, this has an identifiable group of people with
a very public position on energy policy.
Claude
Turmes: Yes. They are. Mestrallet, who is the boss of this troupe reactionary g
uys from yesterday, he has produced a video where he's explaining the strate
gy by saying "and tomorrow we go to Hollande, and next we go to Spain, and
a week after he goes there". So, all this is on record and the book is out. I am
still not in jail, so. So, which means that they have no ammunition to say that I'
m not right, what I'm writing.
Chris
Nelder: Wow. Well let's hope that you remain free. So you discuss in the book
how the Hinkley Point C nuclear plant in Britain managed to get approved with
a guaranteed subsidized power purchase agreement of ninety two pounds fift
y per megawatt hour, which is double the current wholesale price of power, an
d it's actually indexed to inflation for thirty five years. And you point out that th
e commission backed this massive twenty four billion euro project at the same
time that it cut support for renewable technologies which was an obviously hy
pocritical stance, not only against fair market principles but against their own s
tated policy, in order to benefit EDF, the French company behind the Hinkley
Point C project. So how did this happen?
Claude
Turmes: It happened because of massive massive massive political interferen
ce from Cameron, the then Prime Minister of UK and the whole French power
establishment and of course the French government. And it's complete hypocr
isy. So in the very same moment where we had these precious homes in Mag
ritte Group to say look no support anymore for renewables, renewables gettin
g every day cheaper, so pressure from EU commission not to allow any more
wind for 80 or 75 euro per megawatt hour, they allow a nuclear power plant for
one hundred and ten euro per megawatt hour - which is roughly the translatio
n of the pounds you announced. And it is completely going against the line of
commissions that we have a fair internal market in which we have no supports
or only support renewables and so it's a complete distortion. Why was it possi
ble to get this through is because Cameron at that time, remember we were b
efore Brexit referendum, so we were in a period where each time Cameron wa
nted something he came to Brussels and to say "if I don't get Hinkley, I will cal
l a referendum and we wish to go out". And that was a bit the way where basic
ally he's got commission to accept it and then, in a certain sense, commission
is hiding behind a dinosaur part of our European treaty Euratom, which is from
the 50s. It has a brilliant Article One where basically people in Europe will be
happier if we have a lot of nuclear energy, so it's worth reading it. So, legally, t
he legal construct was to use this old treaty to say, in a sense, nuclear is outsi
de the competitive European internal market, which is absurd. But politically it
is what Cameron and then the French together got, and the Germans becaus
e they didn't want, in a certain sense, to go against these two neighbouring co
untries basically allowed them to do it.
Chris
Nelder: Wow. So you're basically saying that Cameron held Britain's members
hip in the EU hostage to this Hinkley Point C project.
Claude Turmes: Yes.
Chris
Nelder: Wow. OK. So, do you believe that nuclear power should actually be o
ne of the solutions we seek during the energy transition since it can generate
carbon free power?
Claude
Turmes: I think 10 years ago we always said "look, too risky. So what if it blow
s up and and then Fukushima...", unfortunately right?
Chris Nelder: Right.
Claude
Turmes: Today, I think the Greens have been joined probably by each and ev
ery banker of the world. And I would say 85 percent of all CEOs of all energy c
ompanies in the world. And in U.S. you see the companies who, like Westingh
ouse, were still in this ideology of nuclear when Areva was in the same ideolo
gy in France, and the power companies we have embarked on it like EDF, so
called third-
generation nuclear power plants, they are in financial limbo. So be aware that
the two nuclear reactors which are in the build - one is in Finland and, one in
Olkiluoto, and one is in France - so they start, as it were he were, on paper ad
vocated with contracts of 3 billion and they will turn out 10 billion plus. So giga
ntic colossus, which has already made...
Chris Nelder: Yea, Over budget and over schedule as usual
Claude
Turmes: Yeah. Yeah. And so and in the same moment, So, go back to 2008,
at the time we had the promise that a nuclear reactor would be three billion. It
turned out 10 plus. At that time, solar was still at probably 150 euro per mega
watt hour. Now it's in Europe around bigger instillations around 50/55. Maybe i
n Spain and Portugal maybe even at 40/45. So we have seen fantastic develo
pment on cost of renewables. So today a large scale solar is two to three time
s cheaper than a new nuclear reactor. Onshore wind is two times cheaper. An
d the very beautiful story of the last three years is offshore wind in Europe is n
ow also twice cheaper, two times cheaper than new nuclear, and offshore win
ds that's five thousand hours steady production over the year. So also this arg
ument that solar would only be 12 or 15 hundred hours compared to seven-
eight solid hours of nuclear with offshore wind that doesn't fly anymore. So I th
at beyond those who have always been anti-
nuclear, we have now, I think, all those who would have to invest into nuclear
will say "this is a damn bad investment decision so we will definitely not do it".
Chris Nelder: And yet nuclear continues to enjoy strong political support.
Claude Turmes: Yes so that's a bit, uh.
Chris
Nelder: We continue to give it subsidies and government support. I mean why
is this?
Claude
Turmes: Yes. Because sometimes I think it's about, you have a generation whi
ch has to die out.
Chris
Nelder: You know, that's exactly what Jeremy Leggett said. Jeremy Leggett, fr
om the UK, said exactly that. He said, it's men of a certain age that just are stil
l in power".
Claude
Turmes: So it's a bit of - don't forget that these people who are so 60/70 years
old, that they sometimes on the far right, but also on the, for example in Franc
e the Communist Party was the most radioactive of all. So these people have
grown up with this idea. Nuclear is the future, endless energy, cheap - they for
got that the tract record is basically completely different, but they don't want to
look at the tract record.
Chris
Nelder: Alright. Well, moving on then. Up until a few years ago the European e
lectricity markets were energy only markets. But in recent years capacity mark
ets have begun to emerge even as it's becoming clear that Europe is generall
y facing an overcapacity situation with falling prices for power, not the under c
apacity and rising prices that were always forecast. And this actually looks ver
y much like a situation we now have here in the U.S. For example in the PJM
RTO where prices in the most recent capacity auction there were so low that s
ome of the major points including the Three Mile Island nuclear plant failed to
clear the auction, and that prompted Exelon, who owns the plant, to announce
its intention to close the plant in 2019. And the PJM currently has our reserve
margin well above what's required, yet I'm not hearing calls for the elimination
of the capacity market that's at least partially responsible for this oversupply si
tuation nor am I hearing calls for the accelerated retirement of older plants in o
rder to bring the market back into balance. All i'm hearing as a lot of talk about
how to fix the capacity market so it will continue to support these old plants th
at we no longer seem to need. So what do you think should be done about thi
s? I mean can capacity markets be fixed? Should we even try to fix them? Bec
ause in some ways it seems to me like they're just an impediment to energy tr
ansition, that they're not a help.
Claude
Turmes: I largely agree with you. So what we try to do in this very moment in
Europe is to prevent new capacity regimes and then at least to qualify those w
hich we can't prevent then. So one of the qualifications which has been added
to a more recent legislation which is now on the table is basically out of a me
ntal performance standards for those who would qualify for a capacity paymen
t, five hundred fifty gram per megawatt hour, which basically excludes all coal.
And so I would say, yes, the best is especially you are in over capacity. No ca
pacity payments. And if you are not sure if the markets delivers enough price
signals for the short term DSM and maybe some of the very flexible batteries
or open cycle gas turbines, then you have to do a very very very focussed cap
acity payments. But rather my option, my favorite option this moment is a clea
r no. It's absurd in an overcapacity moment to create basically a payment for o
ld installations which basically should go out of the system and not stay in the
system.
Chris
Nelder: So you describe in the book your hope for a 100 percent renewable el
ectricity system for Europe, and that gets under some interesting questions th
at we've grappled with on this show. You argue that European countries shoul
d commit to regional cooperation in electricity markets because it would be ch
eaper for all if there were a larger balancing area they can take advantage of i
mports and exports and maximize each country's resources. For example, Nor
way's abundant hydropower resources could act as electricity storage for all of
Europe, whereas Norway could never use all of those resources just for itself.
You know we talked about this kind of cooperation with Kees van der Leun in
episode 34 with regard to the North Seas Countries Offshore Grid Initiative, or
NSCOGI, and he explained that each country essentially committing to build
a certain amount of transmission capacity within its own borders that will event
ually be stitched together to create an international transmission grid. But he n
oted that the physical part is actually easier than figuring out how to harmoniz
e all the wholesale markets. So that, for example, some countries don't feel th
at they're paying more into the system than the benefit that they get from it, or
so they don't feel that they're being inadequately compensated for their contrib
utions to the system. So can you talk a bit about this? I mean how can these
wholesale markets be harmonized and the cost and benefits be fairly distribut
ed.
Claude
Turmes: So we have over the last I would say 15 years succeeded to build up
quite a liquid housing market in Europe, which is day ahead, and now moving
more and more into intra-
day with 15 or 5 minutes clearing times. That's true for all Europe, particularly
a well develop in Scandinavia, and so the Baltic states along the Baltic Sea, ar
e very good for Central West which is Germany, France and then the smaller
countries by the looks around, and we still have a bit of work to do in South Ea
st Europe. So that is doing quite well. Where we have difficulties is to get the
member states out of purely national thinking when it comes to coordination of
grid, which is starting but which has to be better. And then also doing commo
n renewable projects. And in this moment we have a new legislative package
on the table which is the Energy Union Legislative Package, which is now pavi
ng the way for 2030 - So for the decade 2020-
2030 with energy efficiency policies renewables but also design of the market.
And in that I'm one of the draftsmen. And I'm now proposing that we gradually
go to, what I would call, renewable projects of European interest. So, if I have
a big offshore wind that this offshore wind is labeled of European interest, so
beyond national, gets some support from you European budgets or under the
form of a grant or let's say a guarantee to be able to access to cheap loan. An
d then open this to several countries. So I take an example - Netherlands, in D
utch waters, you have twelve hundred megawatts offshore wind project, the D
utch government does the tendering and then says I will take from the 12 hun
dred I take nine hundred and I offer to other member states smaller member s
tates which don't add ocean like Luxembourg or or maybe Belgium which has
a coast but thats a coast which is not so so long that they don't have as much
opportunity on offshore than the Netherlands - we offer our neighbouring coun
try shares in this tender. And then the tender would go ahead. The bid would c
ome at at zero, so the market price plus zero or a market price plus five or sev
en depending on where the market is and wind conditions of said particular pr
oject. And that will allow us to have gradually more cross-
border cooperation also on renewables. And the reality in Europe is our power
markets. We will have three or four regional power markets. One will be Scan
dinavia. One would be Southeast Europe, which is Romania, Bulgaria, but als
o Serbia and going to Austria, Italy. And then we have central west which is G
ermany, France, countries down to Italy, Spain and Portugal. And then we has
the North Sea. So that will be the regional markets and in this regional power
markets we can optimize then with the system I have described, also part of th
e renewal deployment. So renewables will be largely also in future national. S
o 100 percent renewable electric Germany, probably 80 percent of all installati
ons will stand on German soil or German water. But then you can do some co
st optimization for Germany, maybe by joining Denmark on certain offshore wi
nd Netherlands offshore wind and so on.
Chris Nelder: So it will be a series of bilateral agreements essentially.
Claude
Turmes: Yeah. Bilateral or multilateral. So basically what I try to get is an easy
to handle system. So under the local renewable approaches of European inte
rest, we as member states big and small could be linked in with as little as pos
sible bureaucracy.
Chris
Nelder: Gotcha. You know there are certainly some countries that seem eager
to participate in a joint EU electricity market. In episode 31 for example Eamo
n Ryan told us how Ireland could actually be a net electricity exporter if it reall
y exploited its marine energy and its offshore wind potential. And in the news
segment of episode 40 we talked about the North Sea Wind Power hub projec
t which could connect up to 100 gigawatts of offshore wind farms around the
North Sea, including Britain and the Netherlands. But, at the same time, we ha
ve the ugly fact of Brexit and the UK's inability or unwillingness to participate i
n these EU wide projects, for a similar shortsighted reasons I suppose, as tho
se that Trump gave for withdrawing from the Paris Accords. So what are your
thoughts about this? Do you simply hope that the advantages of being in a co-
operative regional market or even a global accord will eventually outweigh nati
onalistic and isolationist moves?
Claude
Turmes: Yes, so I think this Brexit is an unfortunate event after a very populisti
c and narrow minded nationalistic campaign which unfortunately a lot of Britai
ns fall into the trap and especially the young people in Britain didn't even go to
vote. Which is really a bit crazy, and good. The trump accident - accidents ha
ppen in history. Good. I think this is probably also four years, a bit of shaky tim
es for U.S., but afterwards people will understand that Trump has fallen out in
a certain sense of history. And we could come take to that. So, and what is int
eresting is that even the hard Brexiters, so those who want UK to move, they
want to do it on everything but more than energy. Because facts are very clear
. The British are paying for its electricity, almost double of the continent. Whic
h is easy to understand because if you have an isolated system even on a big
island like Great Britain this is always more expensive. Then you have a huge
continent like Europe, where then, of course, you can have much more taking
benefit of larger geographical - you can shape the peak, you can optimize rem
aining conventional power plants, you can optimize renewable deployment. Ev
en Teresa May is calling to remain in the EU internal market, which means tha
t she has understood said basically it's an advantage to have a link on energy
within the internal market.
Chris
Nelder: So just talk a bit about the European trading system, ETS, since, is th
at what it's called the European trading system?
Claude Turmes: Yes.
Chris
Nelder: So since that was supposed to be one of the key mechanisms of a ma
rket based approach to energy transition for Europe and this system is essenti
ally a cap and trade system for CO2 in which emission allowances are issued
and then traded. And the idea was that the total amount of allowances would
be reduced over time and thus would squeeze emissions out. But it hasn't act
ually worked that way. Too many emission allowances were issued in and inst
ead of fetching around 40 euro per ton, which would have been an effective w
ay to promote decarbonization, the market has been hovering around a five e
uro mark for the past six years straight. And in fact you write that an impact st
udy that the commission did understand the effects of its policies actually cont
emplated this very scenario could come to pass. So what happened? I mean
why haven't the emission allowances been reduced more and faster, and is th
ere any hope for a cap and trade as an energy transition policy tool?
Claude
Turmes: So in 2008 when we did this first energy and climate package, efficie
ncy legislation, renewable legislation and then this CO2 cap and trade regime,
we got it right on the efficiency, we got it right on renewables but our trading c
arbon trade, we did not get it right. Why? Because first we had the industry lob
bies shooting big loop holes in it, like international credits. So there were mom
ents, especially in 2011 and in 2012, where almost two billion certificates were
bought from China and India for zero point five euro per ton. So international
carbon credits were allowed into the European credit, which I was also against
because I said look, who will know what will be the international presence an
d of course are we really sure what are the cleanest of these projects, so is th
at was a big error. And the even bigger error was the setting of the targets. So
back in two thousand and, So January 2007 commission propose 20-20-
20 targets: 20 percent efficiency, 20 percent renewables, and 20 percent redu
ction of greenhouse gases, which then is also basically the cap in the cap and
trade system. And commission had a known study showing that if Europe doe
s 20 percent raising energy efficiency and 20 percent overall renewables goin
g from 10 to 20 percent in renewables, that automatically would lead, because
of more efficient investment, more efficiency and more renewables, that auto
matically would lead to 20 percent domestic carbon reduction. So if you want t
o have a market which functions you would need to be more ambitious than th
e 20 percent. And see, big political error was that despite commission knew p
erfectly that proposing 20-20-
20 would lead to a completely toothless EU cap and trade, they did it. At first t
hey did it, they said 20 percent now and then 30 percent if we get an agreeme
nt in Copenhagen, so we all know that Copenhagen was not a success, good,
and then we had never the political momentum to go beyond the 20 percent b
ecause Poland and other Eastern Europeans, but also the German industry, w
as blocking - moving from 20 percent climate ambition in 2020 to 30, 35 or 40,
 which would have been what we needed to get this system up and running. A
nd as a result, and its a dramatic result, we have seen a boom of coal in Euro
pe. Which is a disaster because climate is a volume problem. So if I emits a C
O2 molecule today it is in the atmosphere. So we have eaten up huge amount
of our carbon budget which we have still in Europe until 2050. And that, it was
policy. I warned everybody. People didn't listen and now we have a bad result
.
Chris
Nelder: Alright. It's a sordid history. So the first part of your book is actually a v
ery detailed history of the EUs formulation of energy policy and its transition ef
forts over the past two decades or so, and you had a front row seat to at all, fo
r the past 15 years as a member of the EU parliament, a story you tell with the
zeal of a true activist. So, after all these efforts, what is your view of energy tr
ansition in the EU now? Is it going as well as you had hoped, and what can w
e learn from this history they can help us be more effective going forward?
Claude
Turmes: So the thing which is really really encouraging - we were largely right,
and we did the right things. Standards for refrigerators, deep freezers. TVs, e
very electronics - it is very effective. So we are saving away unnecessary elec
tricity and energy. Standards for building, standards for cars, it's fantastic. And
this has affects beyond Europe. Because look to the Exxon General Assembl
y the shareholders these days ,even the Exxon management now has to admi
t said we will have peak oil demand.
Chris Nelder: Yeah.
Claude
Turmes: And that is a result of European policies from 2005 on, seven, eight,
and then all the last years. Then copied by the Obama administration, becaus
e Obama the also did CO2 and cast legislation. And now, the Chinese are ver
y good observers of what functions in Europe and what functions in California.
So they have taken up some of these success story. And that leads to a com
plete change in the world, geopolitics of energy. And that's where Trump, he h
asn't understood anything, is the world of energy geopolitics was "if I have the
resources I'm strong. I am Russia. I am Saudi. I am US". But now the world is
"I have the technology and I'm winning", and therefore it's so interesting that T
rump is now sidelining with Saudis and Putin being basically going against (Pa
ris and climate?) , whereas Europeans are teaming up with China. So the two
technology giants, the technology winners are going ahead on climate change
and the losers - the yesterday boys in Saudi Arabia, in Russia and with Trum
p in US - have not understood said they will even use more. And interestingly
Exxon, even Shell has understood such we are in a new world where its techn
ology leadership, which dominates energy geopolitics and not availability of re
sources, but which Trump seems to have a bit of a limited brain good sense,
more your problems are my problem or his problem. But I think it's really intere
sting that the Trump administration hasn't understood at all that they are out o
ut of history in some sense.
Chris
Nelder: The yesterday boys, I like that. It's almost like a movie title. So, you kn
ow, at this point I wonder what you hope for. Like what do you think the ideal o
utcome of Europe's energy transition efforts would be? And what would be the
best kinds of markets and policies that we could pursue in the future?
Claude
Turmes: So now what we need to do is on new buildings we have solved. We
and California, we have near zero energy for all new buildings. We do it in Eur
ope in 21, and California somewhere 25 or 28. So new buildings everybody kn
ows it's near zero, and the future will be plus energy building. Every building, a
bit like Jeremy Rifkin has also recognized now, is every building is a potential
power plant. That's for new buildings. We have a big chunk of work to do in th
e existing building stock. In Europe 80 percent of all buildings which will stand
in 2050 are already standing now, so we will have to be much better in existin
g buildings and what we need is long term building renovation roadmaps and t
hat's exactly what I will now try. So we have it already has a bit but now we wil
l reinforce that in the new legislation. Then.
Chris Nelder: I was just going to say, so efficiency. That's number one.
Claude
Turmes: That's number one. So efficiency first. On buildings, in industry, also i
n transportation. Good. Second is renewables. And on renewables, for exampl
e Denmark, so Sweden has a political agreement 100 percent renewable elect
ricity in 2040, Portugal in 2035. Denmark is now discussing 100 percent rene
wable electricity in 27. My best guess is that in Europe, I think we should aim
at being 100 percent renewable electricity. So in the power sector in 2035, so
15 years from here, we should be very close to a hundred percent. Especially
if we are able to work regionally together building on the large scale offshore
wind but also citizens involved in local community cities like Paris, Copenhage
n, will go also forward on helping local citizens to invest into PV and so on. So
power sector will move first and then we will have in the building stock we ne
ed efficiency, we will use some of the renewable electricity to drive very efficie
nt heat pumps. And then we come over to what will probably be the most diffic
ult job is transportation, because transportation is the worst performing sector
in Europe. Emissions in transport have gone up since 1990, so hundreds of co
nferences about climate change and transport and transport is still are growin
g. Now we need to do I think very quick electrification of everything we can do
in transportation, especially starting with cars, with bicycles, with scooters. An
d the good news is, we are, in a certain sense, the U.S. administrations - Oba
ma, EPA and CARP in California - has given us one of the best gifts ever whe
n it comes to transportation. It was CARP and EPA who found out the tricks of
diesel. And today we know dieselgate is not Volkswagen . Dieselgate is all Eu
ropean and probably all international diesel manufacturers. And that's great be
cause that shows that diesel is over, and that's the future of cars is for sure el
ectronic.
Chris
Nelder: Yeah, in fact it seems like Volkswagen is going to be responsible for t
he largest construction of charging infrastructure in the U.S. as a result of this,
and I wonder if some of the other auto manufacturers, when they pay their pe
nalties, are also not going to wind up building electric infrastructure.
Claude
Turmes: I think, so in the power sector, E.On and RWE which you mentioned
before, basically they have completely changed their business model. Today,
we have so new E.ON, which is renewables energy efficiency grids, and we h
ave a bad bank which is then still handling the old assets RWE is defacto, and
then you have energy which is now the renewable energy branch of RWE. An
d I think the same will happen in automotive. So dieselgate is the end of the c
ombustion engine, and now the game is on. Only those car companies will sur
vive which should be fast enough to move over to electro mobility. And Tesla i
s a fast mover, also because Musk doesn't have any old assets in cars, so he
doesn't have to care for any production line of diesel and gasoline. And the Ch
inese are moving fast. So my message to the European car industries, look ta
ke dieselgate as an opportunity that now is the moment to move into a new w
orld.
Chris
Nelder: That's an exciting vision. I love it. So you describe how the commissio
n has continued to use unrealistic estimates in its impact assessments. Not on
ly does it continue to assume carbon pricing at around 40 euro ton, which is o
bviously far too high, but it also assumes prices for renewables that are obvio
usly far too high as well. For example, it assumes 110 to 2055 euro per mega
watt hour for offshore wind power when the two most recent contract in the Ne
therlands and Denmark came in at 72 and 50 euro respectively. It assumes 79
to 148 Europe a megawatt hour for a solar, when the recent German Dutch c
ontract was actually just 54 euro. And you know this to me sounds a lot like th
e kind of forecast that we have troubles with everywhere. I mean those in the r
enewable energy sector look at forecast from the EIA and IEA and we just sha
ke our heads because they don't seem to be realistic at all about the actual pri
ce trajectories of renewables. And they don't just get these forecasts wrong on
ce, they get wildly wrong year after year for decades in exactly the same way.
But they don't change their methodology. And as a result we still form policy ar
ound these projections and that has the effect of making policymakers think th
at, for example, coal and nuclear plants might be around a lot longer than they
probably will and that this growth of renewables will be a lot slower than it act
ually will. So why do you think this is? Why are our official agencies, including
European Commission, so incredibly bad at this? Why do they have such aby
smally bad track record's and still they don't change their methods?
Claude
Turmes: Good question. I think there's only one one answer which is vested in
terest, and the EU commission was, in a certain sense, instead of being ambiti
ous and being with the citizens, being with the progressive side of energy poli
cy, they decided to basically follow the heads of states who had called for this
only 40 percent greenhouse gas in Europe in 2030 and then the 27 percent re
newables and 20 percent efficiency, and just look at the figures. If we are able
to go from 10 to 20 percent in a decade to 10 to 20 why should we only go up
7 percent of renewables between 2020 and 2030, when the costs are much l
ower, and when the urgency on climate is now recognized to be even faster. S
o it is really pressure from lobbies and commission had to justify that only 40 p
ercent greenhouse gas reductions, so not being Paris compatible but being ni
ce to prime ministers who had been under the lobby influence of that Magritte
Group in order to show us that numbers would back up that this would still be
somewhere justifiable they had to yeah to use cost assumptions which were c
ompletely outdated and outrageous. So the commission had to justify the unju
stifiable and therefore they were they were allowing themselves to take figures
which which are not justifiable. And then you have IEA, I think at IEA you hav
e international energy agency, you have some good people on the renewable
s unit but in the world energy outlook which is a bit Fatih Birol's bible, come on
Fatih Birol was of course an oil man - OPEC was set up as an oil organization
and it's not yet a renewable and efficiency organization, still a bit in the old wo
rld.
Chris
Nelder: Yeah. Political interference it's everywhere, isn't it, in energy transition
.
Claude
Turmes: Yeah, but energy is billions, billions of bucks. Come on, let's not be n
aive. Exxon, Shell, E.ON, all these kind of big energy companies, coal lobby,
oil lobby, gas lobby. Come on they want to sell their stuff. It's dealers who wan
t to sell their stuff. They know that it is poisonous for the planet and its citizens
but they don't care. What they care about is short time, making money and th
ey are ruthless. So that's exactly, that's reality. Then the good thing is that we
have done fantastically well. We know today how to build efficient cars, electri
c cars. We know how to build plus energy houses. We know how to build very
efficient refrigerators, TVs and so on. We know how to build big wind, big sola
r, very cheap solar. So we know how to design markets to do all this. We have
millions of citizens ready to engage. We have hundreds of thousands of cities
like Paris, Copenhagen, New York, San Francisco, Toronto, Tokyo, Shanghai
, I don't know and I could continue. So, the energy revolution is up and runnin
g. And these poor guys from the Old World, they are so damned scared that in
stead of thinking about how do we move over into the new world, they are still
hoping that the lobby capture they had for decades on policymakers, on certai
n policymakers, that it's that lobby capture which have kept them alive. I think t
hat lobby, if they believes that, they will go down with the very same policy ma
kers because the new world is the new world. It's about also the economics, it'
s about the rational of climate change, so the new world is on, it's just an issue
of how fast we will get there. Will we be fast enough to win the race against cl
imate change. That's the real story.
Chris
Nelder: Yeah, I couldn't agree more. Well let's leave it there because that's a
wonderful optimistic note to leave it on, so thank you very much Claude, I reall
y appreciate you taking the time to be on the show.
Claude Turmes: And I appreciate that you have read every page of that book.
Claude
Turmes: Well not every page but I did study it pretty closely for this interview,
yes.
Claude Turmes: Thanks a lot.
Claude Turmes: Thank you very much.