Global News Reflects Changing Energy Environment

As analysts in the United States continue to speculate about what the recent results of the presidential election will mean for the future of domestic energy policy, news from around the world reflects the growing uncertainty over how best to balance the demand for energy with climate change concerns.

In Paris, for example, the French government has decided to abandon a carbon tax after labor unions complained the tax would hurt the city’s economy. The Paris carbon tax intended to shut down the use of remaining coal-fired power plants by 2023 at the latest. Although some in the French government are still committed to some version of a carbon tax, any potential revenue from the tax has already been removed from next year’s budget. At the moment, only four nations – Chile, Finland, Ireland, Sweden – maintain a total tax on carbon. Australia, the largest economy ever to place a tax on carbon, repealed its measure in 2014 after heavy criticism from manufacturing groups and other consumers.

Despite repealing its own carbon measure two years ago, Australia remains in focus for those examining the practical effects of reducing fossil fuel use. Recently, the Australian Energy Market Operator (AEMO), the official government body responsible for ensuring the nation’s energy demands are met, offered some guidance on how the drawdown of coal use in Australia could affect the nation’s energy customers. The news was not good.

In a written report, AEMO issued a serious warning that premature closings of coal-fired power plants could cause widespread blackouts. The body also warned that ramping up renewable resources such as solar and wind power would not make up for the grid’s lost capacity. AEMO’s best estimate is that, under current plans, South Australia could experience grid issues as early as 2019, with New South Wales and Victoria in the crosshairs of potential grid blackouts starting in 2025. AEMO projects the potential for blackouts to be highest in these areas between 3:00 PM and 8:00 PM when energy demand is high, but when generation from wind and rooftop solar resources could be low. All of that could mean bad news for Australia’s manufacturing sector, as well as for households.

Meanwhile, in Germany, despite an incredibly expensive effort to decarbonize, the nation continues to struggle with its practical carbon emission goals. A recent report, for example, explains that carbon emissions in Germany are not decreasing in general. Furthermore, the massive deployment of renewables in Germany has not been effective at decreasing emissions. Despite supplying almost a third of German electricity, the nation’s renewable energy assets have caused barely a dent in carbon emissions from the nation’s electricity sector as a whole. The reason is simple: renewables in Germany have been used to meet new demand and replace nuclear, not to supplant fossil fuel use.

While it is difficult to know exactly what policy lessons U.S. policy makers can learn from France, Australia, and Germany, one general lesson does seem clear. Energy systems, particularly in larger nations, are dynamic systems that require very careful attention when it comes to balancing supply and demand. Large scale changes that overlook the practical requirements for generating electricity are likely to have negative consequences for the grid and bad outcomes for energy consumers.

Hopefully, as U.S. policy makers evaluate the shifting landscape of domestic energy policy, they will look to examples of nations who have wisely reversed course on aggressive energy policy measures or whose best-laid plans failed to achieve the desired effect. There is much to learn from energy policy that takes place outside of our nation’s borders.