Energy Squeeze: European and California Energy Crisis
California and Europe are facing a monumental energy squeeze right now. So, what’s the solution?
Energy is what makes modern civilization possible. Without it, lights, smartphones, the internet, and many other conveniences simply cease to exist and we are thrown back to 1850 where we have to draw water from a well whose cleanliness is in question. Right now, Europe and California are facing an energy crisis (something many are calling the ‘energy squeeze’). The California energy crisis comes from a lack of capacity and water and the European energy crisis is the uncomfortable middleman in a great power struggle. What’s at the center of these problems and more importantly, how can we solve them?
California’s Water and Power Crisis
California has faced electrical system issues for some years now. Back in the early Aughts, the power crisis was so bad it toppled a governor and ushered actor Arnold Schwarzenegger into office. Recently, downed power lines caused the massive Paradise fire that burnt down whole towns due to its fierce flames. In the intervening years, California has led the nation in green energy development. However, this has come at a cost; California relies on base generation from hydroelectric power plants along the Colorado River and the Pacific Northwest.
Unfortunately, the west has been hit by a terrible drought this year, and rivers throughout the western United States are simply drying up. This means that there is no water to run through dams to make power. The solar panels and wind farms cannot keep up with the extra demand and California faces rolling brownouts and blackouts again. This has led to dual water and power crisis that has left Governor Gavin Newsom asking Californians to turn up their air conditioning so that they use less power and not charge their electric cars. The reality is that California needs a diverse array of power generation stations that may need to include fossil fuels just to keep the lights on. Whether California will be willing to delay shutting down its last nuclear power plant or even permit new plants to be built remains to be seen. For many in the state, this could be the new normal.
Europe and Gas
Europe, Germany in particular, made a rather Faustian bargain regarding their energy needs over the past 15 years. In the zeal to meet decarbonization goals and to use more green energy, Germany and other European powers switched off their coal plants and a few nuclear plants and build windmills and solar panels with natural gas used as a backup and for heavy industry.
For a long time, it seemed unlikely that Russia would interrupt the flow of gas and the flow of Euros flowing into the pockets of the oligarchs. However, the war in Ukraine has changed everything. The EU has now banned the import of Russian gas. As of September 28th, the Nord Stream pipeline system has suffered a major accident and may not be back online for months, if ever. The reality is that Europe is already feeling the squeeze on gas and this energy squeeze will tank the European economy.
Europeans are already fearing that the winter will only be worse with no gas to heat their homes or even keep them in employment. A cost of living crisis has hit the entire continent. Cost of Living has been a central part of the discussion as Liz Truss takes over number 10 Downing street in London. German industry has cut production or closed entirely and the average german is seeing a rise in prices on everything. And, the Euro has lost value due to inflation and is nearly at par with the US Dollar for the first time in its history.
As a result, Europe will need to find a new source of gas. Right now, American oil companies are building new liquid natural gas facilities to ship gas to Europe but those facilities won’t be online until next year at the earliest. It may be a long, cold winter ahead for Europeans trying to stay warm.
Give Me Power!
Electricity is vital for modern life and most people don’t understand the complicated web of treaties, agreements, business relationships, and infrastructure that goes into making sure that when they flip a switch, something happens. While both Europe and California are facing the same problem with different causes the solution is the same: more power. California needs to improve its grid and its power generation and Europe needs to find a new source of gas with countries that are far more friendly to the bloc. Europe faces a humanitarian crisis and an economic meltdown without a new supply of gas. California faces an uncertain future. California represents 1/7th of the US Economy and is the world’s 9th largest economy. The implications of these energy issues are profound for us all.