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America must learn from Europe’s energy crisis

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America must learn from Europe’s energy crisis.

As the Russian invasion of Ukraine unfolds, Americans are witnessing the worrying global impacts. Oil has surpassed $100 a barrel and the European Union remains indebted to Russia for almost 40 percent of its natural gas supplies.

There is a reasonable fear that Europe’s energy crisis could cross the Atlantic. But it is less understood that the US is already experiencing problems with the reliability and affordability of its electricity supply. And a chaotic transition to renewable energy is making things worse, not better.

Last month, the Wall Street Journal reported on the declining reliability of the US power grid. Power outages, including last winter’s calamitous power grid failure in Texas and ongoing blackouts in California, have been having become increasingly common. While major outages were rare 20 years ago, there were more than 180 serious incidents in 2020 alone.

Add to this a 7 percent rise in inflation last year, fueled by a 29 percent rise in energy costs, and there may be a perfect storm, especially if the crisis in Europe begins to hit energy markets from the United States. However, there is still an opportunity to reset US energy policy, if we learn from Europe’s missteps.

Russia’s invasion of Ukraine is the main problem when it comes to sky-high energy prices. But European energy policy has made the situation much worse, thanks to an energy transition that has meant the rapid closure of nuclear and coal power plants, all in the search for a renewable future that has not yet arrived.

This hasty turnaround has also meant a growing reliance on Russian natural gas. And so, when Europe’s weather-dependent wind turbines and solar panels can’t work, Russian gas keeps Europe’s lights on.

This energy insecurity, in addition to the extraordinary costs to the consumer, should be a clear warning to US policymakers. Indeed, Europe is now making an abrupt U-turn to break its dependence on Russian gas.

As Germany’s energy minister has just announced, all options are on the table, including postponing the closure of nuclear plants and a possible increase in coal-fired generation. As he said, “There are no taboos in this situation.”

The energy situation in the United States is not that of Europe. But there is a general lesson to be learned about the value of a balanced energy mix and navigating the energy transition with great caution.

While US natural gas prices haven’t skyrocketed to the extremes of Europe, they’ve doubled in a year, and consumers are taking a hit.

If the US wants to keep energy reliable and affordable during the next energy transition, policymakers must be careful not to eliminate essential coal and nuclear power capacity before reliable alternatives exist.

Excessive dependence on a single source of energy on demand exposes consumers to sudden price changes and unbalances the network. It also leaves utility operators with much less room for error when climate-dependent renewable resources are not available.

As the crisis in Europe demonstrates, it is time for a reestablishment of US energy policy that ensures energy security, affordability, and reliability.

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