Rhein on Energy and Climate

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North Dakota, the emerging US shale gas/oil paradise, and northern German wind energy regions are learning similar lessons: Both produce more new energies than they are able to sell, due to inadequate pipeline and grid systems.

The consequence is a waste of energy, through gas flaring in North Dakota and temporary over-supply of wind and solar power in Germany.

In both cases, market exaggerations and/or excessive production incentives are responsible for the mismatch.

  • In North Dakota, the rapid development of shale gas operations by far exceeded the regional demand; and the subsequent price slump made the construction of gas pipelines to distant consumption centres economically uninteresting. Flaring of surplus gas became therefore a necessity.
  • In Northern Germany, attractive feed-in tariffs and purchase guarantees by grid operators led to increasing over-supply due to insufficient grid capacity unable to transport the wind electricity to the consumption centres in southern Germany.

From a climate perspective, the US dilemma is much worse than the German one: flare gas is burning continuously and it contains methane, which is more dangerous for the atmosphere than C02. In the case of Germany, old coal or gas power plants have to be temporarily re-activated leading to short-term increases of C02 emissions.

The lesson to be drawn should be the same in both cases:

When introducing new energy systems policy makers should pay more attention to a balanced development between production and consumption. They should have foreseen that North Dakota and Northern Germany would need to ship most their increasing gas or electricity output to distant consumption centres and given appropriate directives for creating the transport infrastructure.

It will, however, take several years before the necessary pipelines or grids can be installed. A more radical short-term response would be a moratorium during which investors would abstain from completing new production facilities. But for legal reasons that is more easily said than done.

Society will thus have to put up with the consequences of imperfect investment choices, as it has to permanently.

Brussels 29.01.2013 Eberhard Rhein

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