The governments of 196 countries agreed on an extremely ambitious nature conservation agreement in Montreal on Monday. In order to stop the global destruction of nature, a total of 30 percent of the land and sea area is to be placed under “effective protection” by 2030. This is the largest commitment to habitat protection ever made by the international community. Timo Landenberger took a closer look at this ambitious plan.
In a relatively short time, the EU Commission has become a major player in the bond market. Whereas it had raised just €69 billion on the capital market between 2009 and 2019, it has now advanced to completely new dimensions and is the fifth-largest issuer in Europe. For the first half of 2023 alone, the EU Commission is announcing bonds worth €80 billion, reports Christof Roche.
EU ministers reached an agreement on the European gas price cap on Monday after months of wrangling. The German government did not find the agreement easy: It is still not convinced of this instrument and wants its approval to be understood as a sign of “solidarity” (Robert Habeck). Read about the agreement in the News, where Manuel Berkel provides insight.
Suddenly, things happened very quickly at the World Conference on Nature (COP15) in Montreal: After the negotiating parties were unable to make much progress on crucial issues for almost two weeks, the Chinese Council Presidency unceremoniously put a draft on the table that generated a surprising amount of support. One night session later, the hammer fell on Monday morning and a new, global agreement to protect ecological diversity was adopted.
In order to stop and reverse the global destruction of nature, a total of 30 percent of land and marine areas are to be placed under “effective protection” by 2030. The rights of indigenous peoples, who play a central role in global biodiversity, are explicitly recognized and strengthened.
That is more than many would have expected only hours earlier because some of the positions were far apart. Environment Commissioner Virginijus Sinkevičius speaks of a “historic document”. The agreement is ambitious, balanced and could become a “real game changer” in the fight against biodiversity loss.
To implement the global targets, countries are to develop national strategy plans by 2024. Mechanisms for monitoring and comparative measurement of progress are also planned. Some countries fear that the administrative burden of collecting the data will be almost unmanageable and are therefore expecting to be supported in implementing the targets. However, European municipalities are already warning about the expected wave of bureaucracy.
Cultivation should continue to be possible in the protected areas. The EU was not successful in its demand to place part of these areas “under particularly strict protection” (as envisaged in the EU biodiversity strategy).
In addition, the agreement provides for renaturation measures to be carried out on 30 percent of the “degraded areas”. This corresponds to the EU’s plans in the Renaturation Act. However, the states had unsuccessfully campaigned for clear area specifications of three billion hectares on land and at sea. Environmentalists also criticize the lack of a uniform definition of “degraded”.
The major issue of financing was at least partially resolved. The agreement identifies an environmental funding gap of $700 billion and provides for the mobilization of $200 billion and the elimination of environmentally harmful subsidies amounting to $500 billion per year. So far, these exceed environmental funding many times over, which is grotesque, says WWF biodiversity expert Florian Tietze, who speaks of a “patchy but ultimately surprisingly good framework”.
80 percent of the most biodiverse ecosystems are located in countries of the global South. To provide financial support for these countries, the industrialized countries are to make available $20 billion annually by 2025 and $30 billion annually by 2030. This is roughly three times the amount pledged to date.
However, a number of developing countries had called for at least $100 billion annually, as well as the establishment of a new fund to manage the requested amount. Existing instruments, such as the Global Environment Facility, were too complex, they said. It could take years for the requested funds to be approved. But it would take even longer to set up a new fund, Environment Commissioner Sinkevičius countered. The issue could not be conclusively clarified and was adjourned.
What is clear, however, is this: The private sector is also to be aligned with biodiversity. The agreement stipulates that large and internationally active companies and financial institutions in particular must record, disclose and evaluate the impact of their activities on biodiversity. Reporting obligations, as demanded by almost 400 corporations to create a level playing field, are not included.
The agreement also addresses environmental pollution. In particular, plastic waste and nutrient inputs are to be reduced, and the environmental risk from pesticide use halved. Targets for organic farming, as demanded by the EU, have not made it into the agreement – a particularly sore point for environmentalists. After all, 70 percent of the loss of ecological diversity is attributable to the agricultural sector, according to WWF.
The planned halving of harmful pesticides is remarkable. Numerous countries, including India, had strongly opposed it, fearing massive losses in food production yields. For the same reason, the EU Agricultural Council wants to postpone the planned pesticide regulation in Europe. The goal could therefore also have a signal effect in the direction of Brussels, according to German Minister for the Environment, Nature Conservation, Nuclear Safety, and Consumer Protection Steffi Lemke, who is satisfied with the agreement. The final declaration radiates great determination.
However, its conclusion caused a stir in Montreal on Monday morning. China’s environment minister and COP president Huang Runqiu declared the agreement adopted, just minutes after the representative of the Democratic Republic of Congo expressed his clear rejection. Congo condemned the action, and other African states joined in.
The European Commission is realigning its capital market presence from the start of next year. “We will switch to a uniform funding strategy in 2023: In the future, there will no longer be bonds separated by individual programs, but only EU bonds,” Siegfried Ruhl, Hors Classe Adviser for the Brussels authority’s capital markets department, told Europe.Table. In the past, the Commission had issued the bonds under different programs such as NextGenerationEU (NGEU) or SURE. Green bonds, on the other hand, will continue to have their own labeling and thus distinction from conventional EU bonds. “It is important for investors in green bonds to be able to transparently track which sustainable projects their money has gone into. It also remains our commitment to finance 30 percent of NGEU through green bond issuance.”
The EU Commission has now become the fifth largest issuer in Europe with the multi-year programs NGEU (€806.9 billion), SURE (€100 billion) and financial assistance to Ukraine “We have raised almost €120 billion this year. Of this, €100 billion was for NGEU, another €8.7 billion for SURE, as well as €7.2 billion for Ukraine and €2.2 billion for follow-up financing for the EFSM, financial assistance that dates back to the times of the euro crisis,” explains Ruhl. In the first half of next year, €80 billion has been earmarked, of which around €70 billion for NGEU and €10 billion for Ukraine. No more bonds will be issued for SURE, as the program expires in December 2022. According to Ruhl, €98.4 billion of the specified €100 billion have been used.
The commission can rely on a strong domestic investor base to sell its bonds. “Sixty-five percent of investors are based in the EU – and if you add the UK, it’s 90 percent,” Ruhl points out. Ten percent of investors came from outside Europe, of which nearly six percent were Asian investors. According to Ruhl, the heavily EU-focused investor base dates back to when the commission was a comparatively small issuer. In the period from 2009 to 2019, the Commission issued just €69 billion, he said.
Ruhl, who came to the commission from the European Stability Mechanism (ESM) to prepare the funding department for the new challenges, recalls, “We started in December 2020, and in June 2021 we issued the first bond under NGEU. That’s when we raised €20 billion in one fell swoop, which was the largest bond ever issued to institutional investors.” The fact that the Commission was able to pull this off in the record time of just six months with a team of only about 25 members was only possible because it had top talent on its side from the European Investment Bank, the ESM and the member states. “We could never have done it without the external help.”
According to Ruhl, there were further issuance records thereafter, with the first green bond in October 2021 being “the largest green bond ever issued worldwide at €12 billion – with an order book of more than €135 billion.” He blames the high demand not only on the EU’s creditworthiness – the bonds have a top AAA rating – but also on the general market environment through the end of 2021. This year, he said, the market has generally become more difficult due to high inflation rates, higher interest rates and the end of the ECB’s net purchases. This has resulted in fewer oversubscriptions and higher issuance premiums. “However, we are still in a very good position. Our last issue for SURE this December was just under five times oversubscribed and a smaller bond for Ukraine was 20 times oversubscribed.”
According to Ruhl, the EU wants to broaden the investor base for EU bonds in the coming years with the new funding strategy. “The EU is still perceived by many in the market as a classic supranational issuer in the SSA segment. We want to change that and bring EU bonds closer to the government bond segment with the help of the new funding strategy.” According to Ruhl, the bonds issued so far under NGEU already cover the entire curve from three to 30 years. There is also a bill program of three- and six-month securities for liquidity management. Bonds and bills are already being issued in some cases through auctions in addition to syndication by selected banks, as is prevalent with sovereign states.
“We held the first auction in September 2021 for NGEU bonds, which was completely new to the market.” The commission then gradually expanded sales through auctions, he said. For the first half of 2023, eight auctions and seven syndicate windows have been advised, according to Ruhl. “We will also implement a concept in the course of 2023 to further increase the already good liquidity on the secondary market with the help of our primary dealers,” the market expert said. The Commission’s goal is to strengthen the market for sustainable bonds in particular, as well as for securities geared toward financing social issues. “With the SURE program, which combated unemployment as a result of the pandemic, the EU has already taken the leading role worldwide in social bonds,” Ruhl elaborates. The Commission has also been the biggest player globally in green bonds in terms of issuance volume this year, he adds.
In the next one to two years, the authority aims to achieve the leading position also with regard to outstanding green bonds. The Commission’s strategy aims to “further consolidate the leading position of the European capital market, which discovered the green bond market very early”.
By 2030, 40 percent of the energy generated in the EU is to be renewable – not 45 percent, as the European Commission had proposed when it presented the increase in targets under the REPowerEU plan in May. Europe currently gets just over 22 percent of its energy from renewables. “The European Commission was much more ambitious, but everybody had to compromise, including the European Commission,” Kadri Simson, the EU’s Energy Commissioner, told reporters in Brussels.
Only nine member states had supported raising the renewable energy target to 45 percent, including Germany, Denmark and Luxembourg. A majority of member states, including France, the Netherlands and Ireland, preferred to stick with the 40 percent target proposed by the Czech presidency last June.
The member states have also agreed to establish special “go-to areas” for renewable energies with shortened and simplified approval procedures in areas with lower environmental risks. This decision follows the agreement just passed by the European Parliament, where the European Commission had also voiced its opinion because of the associated relaxation of environmental rules.
EU energy ministers also agreed on a methane regulation to combat leakage, which is also less ambitious than the plans presented by the European Commission. The Commission warned that the EU would lag behind its partners in controlling methane emissions.
“The general approach risks us falling behind many of our energy partners in controlling methane emissions,” EU Energy Commissioner Kadri Simson warned ministers. She urged EU countries to show flexibility in upcoming negotiations with the European Parliament. De facto, this agreement paves the way for the trilogue, in which the ITRE and ENVI committees are to vote on the proposal in February 2023.
Last year, the European Commission proposed legislation to require oil and gas companies in the EU to find and repair leaking infrastructure from which methane can escape. The inspections would take place every three months and begin six months after the regulation takes effect.
However, EU countries want to postpone the first inspection to 12 months and then set different – in some cases less frequent – schedules for different types of infrastructure. For example, liquefied natural gas terminals, which have become strategically important to Germany, would be reviewed every six months, valve stations every 12 months and trunk pipelines every two years.
The regulation also requires methane emissions from EU energy imports to be tracked. Germany successfully added a provision asking the European Commission to consider the impact of extending the regulation to countries exporting to the EU as part of the next revision of the law. “This is very important for climate protection, because the issue of leakage also exists for imports,” said Sven Giegold, the German state secretary who attended the ministerial meeting.
The agreement reached on methane addresses its main problem: leaks. The challenge, then, is to locate them, determine their magnitude, and thus take action to respond to them. For this reason, the agreement was closed around the so-called MRV processes for “monitoring, reporting and verifying”.
In its document, the Council recalls that methane, the main component of the gas, is responsible for about one-third of global greenhouse gas emissions. This makes it the most climate-damaging gas after carbon dioxide: Methane has a warming capacity more than 80 times greater than CO2 in the first 20 years after it enters the atmosphere.
The US Department of Energy announced last Tuesday that the first positive-energy nuclear fusion using inertial fusion technology has been performed in California. The National Ignition Facility (NIF) in California bombarded hydrogen plasma with high-power lasers to achieve the feat. It is a historic event because until now nuclear fusion has always required more energy than it has produced.
In 2021, US startup Commonwealth Fusion Systems (CFS), using a different technology – called tokamak – had raised the largest private funding round ever in nuclear fusion: $1.8 billion. CFS was founded just four years ago and aims to deliver the world’s first net-positive energy fusion device by 2025.
By comparison, the ITER project, an international consortium based in southern France, was launched in 2007 with a budget that has since quadrupled (from €5 to €20 billion). It was established a decade earlier than CFS and has now announced a five-year delay and an additional cost of €1 billion. The first plasma production is not planned until 2030. ITER aims for a balanced ratio of energy produced to energy consumed, while NIF and CFS aim for a factor of two or even more.
From comparing these projects, three lessons can be learned about how we need to organize our research and public investment: Agility is the key to picking up the latest technological developments. Under no circumstances should we lock ourselves into overly rigid plans, and we must allow for a great deal of porosity between the academic world and the corporate world. Finally, in nuclear energy as elsewhere, we must always aim for the next generation of technology.
CFS has managed to get the most out of the latest technologies. In particular, by using artificial intelligence and deep learning, CFS has managed to obtain an extremely complex hot plasma. The Boston team was able to conduct their research much faster using digital twins for their simulations. They took technological risks by using new architectures and materials, such as high-temperature superconductors. For example, they succeeded in creating a 20 Tesla magnetic field; the strongest ever created on Earth. ITER, on the other hand, relies on low-temperature superconductors.
It is imperative that we look to leapfrog innovation to solve key problems. Especially as we consider the future of nuclear energy and pour many billions of public money into EPR power plants, which people in the UK, France and Finland are currently trying in vain to get up and running. In the case of nuclear energy, the key problems are our dependence on Russian uranium, the risk of a radioactive accident, and the storage of nuclear waste.
Nuclear fusion works with fuels other than uranium; for example, deuterium, a hydrogen isotope that occurs in water and is therefore inexhaustible. This produces radioactive products that are less long-lived than the near-eternal final waste from today’s power plants. Most importantly, it is not a “controlled” chain reaction, which is not always as controllable as was seen at Chernobyl or Fukushima, but an unstable process that comes to a halt when an anomaly occurs. These characteristics could underwrite Germany’s reconciliation with nuclear energy.
The US breakthrough is a big step for mankind and a small step (backwards) for our continent. Europe’s lagging behind in nuclear fusion is a scandal and a real shame, even though France has been a pioneer for a long time. The USA is catching up.
NIF and CFS show that they are able to mobilize the best of their ecosystem: Universities, private investors, and public agencies. Together, they focus on essential but selective funding of breakthrough innovations with clear targets, rather than “classic” industrial policy, with bureaucratic instruments like IPCEIs or massive subsidies.
While European policymakers were still arguing about the “green taxonomy” and whether nuclear energy is clean, US players were working to make energy greener. We warned about these new potential technological breakthroughs from the US a year ago. But both the EU Commission and national governments have not been dissuaded by existing energy players or administrations. They simply fail to make breakthroughs quickly and without the bureaucratic scrutiny of IPCEIs and Horizon Europe programs. The result: too many money chasers and not the best teams.
While Europe is in the midst of an energy crisis and the war in Ukraine is a convenient alibi to cover up the lack of strategic anticipation, we are committing the same mistake with nuclear fusion. For this very reason, it should be an absolute priority area.
Once again, we in Europe are about to miss the train of technological progress. It’s time to demand accountability, create real impact in research and development, and radically change the bureaucratic monsters we have created. Otherwise, European twilight will become a reality.
The governments of 196 countries agreed on an extremely ambitious nature conservation agreement in Montreal on Monday. In order to stop the global destruction of nature, a total of 30 percent of the land and sea area is to be placed under “effective protection” by 2030. This is the largest commitment to habitat protection ever made by the international community. Timo Landenberger took a closer look at this ambitious plan.
In a relatively short time, the EU Commission has become a major player in the bond market. Whereas it had raised just €69 billion on the capital market between 2009 and 2019, it has now advanced to completely new dimensions and is the fifth-largest issuer in Europe. For the first half of 2023 alone, the EU Commission is announcing bonds worth €80 billion, reports Christof Roche.
EU ministers reached an agreement on the European gas price cap on Monday after months of wrangling. The German government did not find the agreement easy: It is still not convinced of this instrument and wants its approval to be understood as a sign of “solidarity” (Robert Habeck). Read about the agreement in the News, where Manuel Berkel provides insight.
Suddenly, things happened very quickly at the World Conference on Nature (COP15) in Montreal: After the negotiating parties were unable to make much progress on crucial issues for almost two weeks, the Chinese Council Presidency unceremoniously put a draft on the table that generated a surprising amount of support. One night session later, the hammer fell on Monday morning and a new, global agreement to protect ecological diversity was adopted.
In order to stop and reverse the global destruction of nature, a total of 30 percent of land and marine areas are to be placed under “effective protection” by 2030. The rights of indigenous peoples, who play a central role in global biodiversity, are explicitly recognized and strengthened.
That is more than many would have expected only hours earlier because some of the positions were far apart. Environment Commissioner Virginijus Sinkevičius speaks of a “historic document”. The agreement is ambitious, balanced and could become a “real game changer” in the fight against biodiversity loss.
To implement the global targets, countries are to develop national strategy plans by 2024. Mechanisms for monitoring and comparative measurement of progress are also planned. Some countries fear that the administrative burden of collecting the data will be almost unmanageable and are therefore expecting to be supported in implementing the targets. However, European municipalities are already warning about the expected wave of bureaucracy.
Cultivation should continue to be possible in the protected areas. The EU was not successful in its demand to place part of these areas “under particularly strict protection” (as envisaged in the EU biodiversity strategy).
In addition, the agreement provides for renaturation measures to be carried out on 30 percent of the “degraded areas”. This corresponds to the EU’s plans in the Renaturation Act. However, the states had unsuccessfully campaigned for clear area specifications of three billion hectares on land and at sea. Environmentalists also criticize the lack of a uniform definition of “degraded”.
The major issue of financing was at least partially resolved. The agreement identifies an environmental funding gap of $700 billion and provides for the mobilization of $200 billion and the elimination of environmentally harmful subsidies amounting to $500 billion per year. So far, these exceed environmental funding many times over, which is grotesque, says WWF biodiversity expert Florian Tietze, who speaks of a “patchy but ultimately surprisingly good framework”.
80 percent of the most biodiverse ecosystems are located in countries of the global South. To provide financial support for these countries, the industrialized countries are to make available $20 billion annually by 2025 and $30 billion annually by 2030. This is roughly three times the amount pledged to date.
However, a number of developing countries had called for at least $100 billion annually, as well as the establishment of a new fund to manage the requested amount. Existing instruments, such as the Global Environment Facility, were too complex, they said. It could take years for the requested funds to be approved. But it would take even longer to set up a new fund, Environment Commissioner Sinkevičius countered. The issue could not be conclusively clarified and was adjourned.
What is clear, however, is this: The private sector is also to be aligned with biodiversity. The agreement stipulates that large and internationally active companies and financial institutions in particular must record, disclose and evaluate the impact of their activities on biodiversity. Reporting obligations, as demanded by almost 400 corporations to create a level playing field, are not included.
The agreement also addresses environmental pollution. In particular, plastic waste and nutrient inputs are to be reduced, and the environmental risk from pesticide use halved. Targets for organic farming, as demanded by the EU, have not made it into the agreement – a particularly sore point for environmentalists. After all, 70 percent of the loss of ecological diversity is attributable to the agricultural sector, according to WWF.
The planned halving of harmful pesticides is remarkable. Numerous countries, including India, had strongly opposed it, fearing massive losses in food production yields. For the same reason, the EU Agricultural Council wants to postpone the planned pesticide regulation in Europe. The goal could therefore also have a signal effect in the direction of Brussels, according to German Minister for the Environment, Nature Conservation, Nuclear Safety, and Consumer Protection Steffi Lemke, who is satisfied with the agreement. The final declaration radiates great determination.
However, its conclusion caused a stir in Montreal on Monday morning. China’s environment minister and COP president Huang Runqiu declared the agreement adopted, just minutes after the representative of the Democratic Republic of Congo expressed his clear rejection. Congo condemned the action, and other African states joined in.
The European Commission is realigning its capital market presence from the start of next year. “We will switch to a uniform funding strategy in 2023: In the future, there will no longer be bonds separated by individual programs, but only EU bonds,” Siegfried Ruhl, Hors Classe Adviser for the Brussels authority’s capital markets department, told Europe.Table. In the past, the Commission had issued the bonds under different programs such as NextGenerationEU (NGEU) or SURE. Green bonds, on the other hand, will continue to have their own labeling and thus distinction from conventional EU bonds. “It is important for investors in green bonds to be able to transparently track which sustainable projects their money has gone into. It also remains our commitment to finance 30 percent of NGEU through green bond issuance.”
The EU Commission has now become the fifth largest issuer in Europe with the multi-year programs NGEU (€806.9 billion), SURE (€100 billion) and financial assistance to Ukraine “We have raised almost €120 billion this year. Of this, €100 billion was for NGEU, another €8.7 billion for SURE, as well as €7.2 billion for Ukraine and €2.2 billion for follow-up financing for the EFSM, financial assistance that dates back to the times of the euro crisis,” explains Ruhl. In the first half of next year, €80 billion has been earmarked, of which around €70 billion for NGEU and €10 billion for Ukraine. No more bonds will be issued for SURE, as the program expires in December 2022. According to Ruhl, €98.4 billion of the specified €100 billion have been used.
The commission can rely on a strong domestic investor base to sell its bonds. “Sixty-five percent of investors are based in the EU – and if you add the UK, it’s 90 percent,” Ruhl points out. Ten percent of investors came from outside Europe, of which nearly six percent were Asian investors. According to Ruhl, the heavily EU-focused investor base dates back to when the commission was a comparatively small issuer. In the period from 2009 to 2019, the Commission issued just €69 billion, he said.
Ruhl, who came to the commission from the European Stability Mechanism (ESM) to prepare the funding department for the new challenges, recalls, “We started in December 2020, and in June 2021 we issued the first bond under NGEU. That’s when we raised €20 billion in one fell swoop, which was the largest bond ever issued to institutional investors.” The fact that the Commission was able to pull this off in the record time of just six months with a team of only about 25 members was only possible because it had top talent on its side from the European Investment Bank, the ESM and the member states. “We could never have done it without the external help.”
According to Ruhl, there were further issuance records thereafter, with the first green bond in October 2021 being “the largest green bond ever issued worldwide at €12 billion – with an order book of more than €135 billion.” He blames the high demand not only on the EU’s creditworthiness – the bonds have a top AAA rating – but also on the general market environment through the end of 2021. This year, he said, the market has generally become more difficult due to high inflation rates, higher interest rates and the end of the ECB’s net purchases. This has resulted in fewer oversubscriptions and higher issuance premiums. “However, we are still in a very good position. Our last issue for SURE this December was just under five times oversubscribed and a smaller bond for Ukraine was 20 times oversubscribed.”
According to Ruhl, the EU wants to broaden the investor base for EU bonds in the coming years with the new funding strategy. “The EU is still perceived by many in the market as a classic supranational issuer in the SSA segment. We want to change that and bring EU bonds closer to the government bond segment with the help of the new funding strategy.” According to Ruhl, the bonds issued so far under NGEU already cover the entire curve from three to 30 years. There is also a bill program of three- and six-month securities for liquidity management. Bonds and bills are already being issued in some cases through auctions in addition to syndication by selected banks, as is prevalent with sovereign states.
“We held the first auction in September 2021 for NGEU bonds, which was completely new to the market.” The commission then gradually expanded sales through auctions, he said. For the first half of 2023, eight auctions and seven syndicate windows have been advised, according to Ruhl. “We will also implement a concept in the course of 2023 to further increase the already good liquidity on the secondary market with the help of our primary dealers,” the market expert said. The Commission’s goal is to strengthen the market for sustainable bonds in particular, as well as for securities geared toward financing social issues. “With the SURE program, which combated unemployment as a result of the pandemic, the EU has already taken the leading role worldwide in social bonds,” Ruhl elaborates. The Commission has also been the biggest player globally in green bonds in terms of issuance volume this year, he adds.
In the next one to two years, the authority aims to achieve the leading position also with regard to outstanding green bonds. The Commission’s strategy aims to “further consolidate the leading position of the European capital market, which discovered the green bond market very early”.
By 2030, 40 percent of the energy generated in the EU is to be renewable – not 45 percent, as the European Commission had proposed when it presented the increase in targets under the REPowerEU plan in May. Europe currently gets just over 22 percent of its energy from renewables. “The European Commission was much more ambitious, but everybody had to compromise, including the European Commission,” Kadri Simson, the EU’s Energy Commissioner, told reporters in Brussels.
Only nine member states had supported raising the renewable energy target to 45 percent, including Germany, Denmark and Luxembourg. A majority of member states, including France, the Netherlands and Ireland, preferred to stick with the 40 percent target proposed by the Czech presidency last June.
The member states have also agreed to establish special “go-to areas” for renewable energies with shortened and simplified approval procedures in areas with lower environmental risks. This decision follows the agreement just passed by the European Parliament, where the European Commission had also voiced its opinion because of the associated relaxation of environmental rules.
EU energy ministers also agreed on a methane regulation to combat leakage, which is also less ambitious than the plans presented by the European Commission. The Commission warned that the EU would lag behind its partners in controlling methane emissions.
“The general approach risks us falling behind many of our energy partners in controlling methane emissions,” EU Energy Commissioner Kadri Simson warned ministers. She urged EU countries to show flexibility in upcoming negotiations with the European Parliament. De facto, this agreement paves the way for the trilogue, in which the ITRE and ENVI committees are to vote on the proposal in February 2023.
Last year, the European Commission proposed legislation to require oil and gas companies in the EU to find and repair leaking infrastructure from which methane can escape. The inspections would take place every three months and begin six months after the regulation takes effect.
However, EU countries want to postpone the first inspection to 12 months and then set different – in some cases less frequent – schedules for different types of infrastructure. For example, liquefied natural gas terminals, which have become strategically important to Germany, would be reviewed every six months, valve stations every 12 months and trunk pipelines every two years.
The regulation also requires methane emissions from EU energy imports to be tracked. Germany successfully added a provision asking the European Commission to consider the impact of extending the regulation to countries exporting to the EU as part of the next revision of the law. “This is very important for climate protection, because the issue of leakage also exists for imports,” said Sven Giegold, the German state secretary who attended the ministerial meeting.
The agreement reached on methane addresses its main problem: leaks. The challenge, then, is to locate them, determine their magnitude, and thus take action to respond to them. For this reason, the agreement was closed around the so-called MRV processes for “monitoring, reporting and verifying”.
In its document, the Council recalls that methane, the main component of the gas, is responsible for about one-third of global greenhouse gas emissions. This makes it the most climate-damaging gas after carbon dioxide: Methane has a warming capacity more than 80 times greater than CO2 in the first 20 years after it enters the atmosphere.
The US Department of Energy announced last Tuesday that the first positive-energy nuclear fusion using inertial fusion technology has been performed in California. The National Ignition Facility (NIF) in California bombarded hydrogen plasma with high-power lasers to achieve the feat. It is a historic event because until now nuclear fusion has always required more energy than it has produced.
In 2021, US startup Commonwealth Fusion Systems (CFS), using a different technology – called tokamak – had raised the largest private funding round ever in nuclear fusion: $1.8 billion. CFS was founded just four years ago and aims to deliver the world’s first net-positive energy fusion device by 2025.
By comparison, the ITER project, an international consortium based in southern France, was launched in 2007 with a budget that has since quadrupled (from €5 to €20 billion). It was established a decade earlier than CFS and has now announced a five-year delay and an additional cost of €1 billion. The first plasma production is not planned until 2030. ITER aims for a balanced ratio of energy produced to energy consumed, while NIF and CFS aim for a factor of two or even more.
From comparing these projects, three lessons can be learned about how we need to organize our research and public investment: Agility is the key to picking up the latest technological developments. Under no circumstances should we lock ourselves into overly rigid plans, and we must allow for a great deal of porosity between the academic world and the corporate world. Finally, in nuclear energy as elsewhere, we must always aim for the next generation of technology.
CFS has managed to get the most out of the latest technologies. In particular, by using artificial intelligence and deep learning, CFS has managed to obtain an extremely complex hot plasma. The Boston team was able to conduct their research much faster using digital twins for their simulations. They took technological risks by using new architectures and materials, such as high-temperature superconductors. For example, they succeeded in creating a 20 Tesla magnetic field; the strongest ever created on Earth. ITER, on the other hand, relies on low-temperature superconductors.
It is imperative that we look to leapfrog innovation to solve key problems. Especially as we consider the future of nuclear energy and pour many billions of public money into EPR power plants, which people in the UK, France and Finland are currently trying in vain to get up and running. In the case of nuclear energy, the key problems are our dependence on Russian uranium, the risk of a radioactive accident, and the storage of nuclear waste.
Nuclear fusion works with fuels other than uranium; for example, deuterium, a hydrogen isotope that occurs in water and is therefore inexhaustible. This produces radioactive products that are less long-lived than the near-eternal final waste from today’s power plants. Most importantly, it is not a “controlled” chain reaction, which is not always as controllable as was seen at Chernobyl or Fukushima, but an unstable process that comes to a halt when an anomaly occurs. These characteristics could underwrite Germany’s reconciliation with nuclear energy.
The US breakthrough is a big step for mankind and a small step (backwards) for our continent. Europe’s lagging behind in nuclear fusion is a scandal and a real shame, even though France has been a pioneer for a long time. The USA is catching up.
NIF and CFS show that they are able to mobilize the best of their ecosystem: Universities, private investors, and public agencies. Together, they focus on essential but selective funding of breakthrough innovations with clear targets, rather than “classic” industrial policy, with bureaucratic instruments like IPCEIs or massive subsidies.
While European policymakers were still arguing about the “green taxonomy” and whether nuclear energy is clean, US players were working to make energy greener. We warned about these new potential technological breakthroughs from the US a year ago. But both the EU Commission and national governments have not been dissuaded by existing energy players or administrations. They simply fail to make breakthroughs quickly and without the bureaucratic scrutiny of IPCEIs and Horizon Europe programs. The result: too many money chasers and not the best teams.
While Europe is in the midst of an energy crisis and the war in Ukraine is a convenient alibi to cover up the lack of strategic anticipation, we are committing the same mistake with nuclear fusion. For this very reason, it should be an absolute priority area.
Once again, we in Europe are about to miss the train of technological progress. It’s time to demand accountability, create real impact in research and development, and radically change the bureaucratic monsters we have created. Otherwise, European twilight will become a reality.
