Wu Wei

RIP Ignalina Nuclear Power Plant

It seems I got so excited about the view of the fireworks on New Year's Eve that I never posted this.

Tonight at midnight, Ignalina NNP finally closes. 

From January 1998 to March 2003 (long before I started blogging), my work in Lithuania was mainly about persuading Lithuania to lose its self-appointed title as the country with most nuclear power and manage the energy sector without it.

Ignalina NPP has two Chernobyl type reactors, which Lithuania agreed to shut down at a later date, in exchange with financial help for safety improvements intended to be temporary.  During the period of my work, the government continually wriggled out of the deadlines.  Finally it made a bargain where the EU could pay for most of the decommissioning, and Lithuania would commit to definite dates for closure of each unit (2005  and 2009). 

Without this bargain, Lithuania would not have been able to join the EU.
The story of the negotiations is one which will have to wait for another day.

2005 came and the first unit went.  Nobody missed this unit much, as it was not needed, since electrical demand had shrunk after independence and Belarus had stopped paying for its imports of electricity. Nevertheless, still there were suggestions that the second unit should not be closed until it had been replaced by a new safe nuclear power plant.

Now Ignalina NPP is really going to close and there are few that will mourn it, even less people will panic about the lights going out, and nobody will be surprised that the price of electricity will go up, even if it won't double, like all the scare stories.

But has the government taken the intervening time to prepare for closure?  Not really.  They have not succeeded to get either funding or an agreement with neighbouring countries to share the cost of a new plant.  Consequently, electricity will come from a rehabilitated old gas fired power station, until someone does make a sensible decision.

The power sector experts in Lithuania do  not generally favour this solution, but since nuclear stations cost a lot, and take a lot of time to build, there's not much choice.

Traditionally the experts have worried about whether Russia will cut the gas off, if gas-fired electricity generation is chosen.  They should now not be worrying IF the gas will be cut off, but WHEN it will not be exported from Russia.  Russia's gas production is falling, and little new production is anticipated, so it simply doesn't have enough gas production to meet all its future domestic consumption and its contracted exports to Europe especially when all the new pipelines it wants are added.  Hence why it is making offers that the 'stans' can't refuse to take the gas off their hands and to control the routes by which it reaches Europe.

So Lithuania, look sharp before the lights go out next time.

However, it's not long since the Economist led with the same head line for Britain: "how long till the lights go out.

With very similar reasons.

Blog Action Day: Climate Change: Georgian journalists learn about energy efficiency

After nearly two years in Georgia, I can say that climate change does not register much over the horizon here.  Our work requires us to do marketing and publicity for energy efficiency, which also gets rather poor coverage in the press in Georgia.  So last weekend we offered a group of Georgian journalists the chance of 2 days in the tourist spot of Sighnaghi in Eastern Georgia, while having some training on the topic of energy efficiency and climate change. 

Previous attempts a year before had been a bit too technical for them.  So this time, the training was mainly carried out by two journalists, who could give tips on their craft as well help to find interesting angles for stories, whilst I explained some of the problems of energy use in Georgia.

We are required in our project to make sure that the training is open to both sexes and that wherever possible equal numbers of women and men are trained.  Normally we have to take photos to prove this.  This time we had 14 women and 1 man (who disappeared the second day).  This is pretty typical for journalists in Georgia. 

We also listened to what the journalists had to say:

What is news in Georgia?
There is no doubt that politics drowns out most of the other news in Georgia. The antics of the government and opposition are covered ad nauseum.  And news drowns out investigative journalism (we only know one journalist from a monthly publication), in depth journalism might imply criticism of the government and the loss of a job.  There are no columns devoted to new technology, or science "as these are not of interest to the people".  Descending into stereotypes, this may be because journalists tend to be recruited from the humanities, and tend to be women, with little science or engineering background.  It may also be because professions are recruited directly from the universities and there is little opportunity to move for example from business to journalism or from science or engineering to journalism.

Environmental issues are seen as a luxury for a poor country like Georgia, and no one realised that CO2 reduction could provide big investments for Georgia through JI and CDM. Nobody knew much about the Kyoto Protocol or the big Climate Change Conference coming up in Copenhagen in Georgia.

Energy Security
This has been the real issue in Georgian news.  After independence there were many difficulties with power supplies (not to mention civil war).  In 1995/6 when I visited Tbilisi and went out to eat, you could either see the menu but not the food when it came, or vice versa, as power supplies were regularly cut off throughout the day.  In those days, it was more important to get some energy at all, and saving it made no sense.  Industry could not get raw materials so was hardly working at all, so had no incentives to save or replace equipment.

Happily times have changed and one of the successes of Saakashvili has been to stabilise and build up the energy supply.  The economy is developing but with a bias towards high risk strategies: a construction boom based a property bubble, luxury hotels and shopping centres hardly affordable or needed by ordinary people; plus a dependence on transit: oil and gas, food imports and other goods going going further east. Who knows what the effect of the Turkey-Armenia rapprochement will be on transit routes in the region?

So what is energy efficiency?
Journalists did not distinguish between energy and energy efficiency.  Energy prices are considered high, till we pointed out that the prices were quite low compared with Europe (electricity is mainly hydro, gas comes from Azerbaijan now).  It is the consumption in Georgia that is high because ex-Soviet countries generally use three times more energy than western developed countries. Some other reasons are:  

• Soviet legacy equipment in factories is worn out and inefficient now, but was never designed with energy efficiency in mind
• Bank interest rates are very high (just beginning to come down below 20%) so loans are expensive
• Lack of knowledge of what is available on the market: not much on the internet on this topic in Russian and even less in Georgian
• A government whose policy of ultraliberalism (inherited from Bush advisers) has removed any regulation which set standards for construction or inhibited the free reign of wild capitalism (suiting some of the government businessmen masquerading as politicians)
• So no building codes requiring insulation and double glazing, or shading for summer.
• Heating even in modern buildings (like our office) is still often by individual room heaters, not central heating.
• Even people building their own new villas do not know about insulation, let alone where to buy it.

In Georgia households account for about half of all energy used in Georgia, unlike most countries, where it is around 20-30%.  District heating from a thermal power station was abandoned in the early 90s, leaving people to fend absolutely for themselves, burning wood, kerosene or even petrol inside their buildings.  New blocks of flats are still being built as "white shell" with the new owner supposed to provide himself with insulation, double glazing, central heating as well as finish the shell.  In contrast, Russia already has legislation similar to the EU on building energy performance.

In the countryside where the poor live, the situation is even worse.  Many villages are without electricity and even small towns lack gas networks.  So people survive with heating using illegal wood burnt in metal boxes on legs (I will not dignify them with the name of stoves), which are horrifyingly dangerous.

Climate change
Freak weather does not much affect Georgia.  Snow in October was unusual this year, but had the merit of keeping the Caucasus mountains inaccessible for Russians.  So climate change is not much of a news story either. 

What is to be done?
Generally the journalists thought it was the government's job to sort out this mess.  So we gave them the example of the grassroots activism of the 10:10 campaign in the UK. 

Single issue activism and greenery is not yet a force in Georgia.  Even parliamentary activism is low key.  Issues are just expressed in terms of whether Saakashvili's resignation will help or not, and on the streets, rather than in Parliament.  Developing rational choices between concrete actions and debating written policy proposals, is too tame for the fiery and emotional Georgians.

Not a very hopeful story.  But we are running a competition for the journalists in the hope that this will create incentives for them to write more on the topic.

I leave you with details of our latest project being developed for a loan:  60 tons of poultry manure a day has to be disposed of somewhere beyond a large poultry farm, as disposal is now getting beyond the scope of the farm.  With this manure and a biodigester, plus a modified diesel generator, it is possible for the farm to be self-sufficient in heat and electricity, sell gas to the local network or bottle it for selling in gas stations.  The manure residue turns into organic solid and liquid fertiliser which commands a higher price than ordinary chemical fertiliser.  This project also reduces methane emissions from the manure and CO2 emissions from electricity and heat generation so could get an income from CO2 reductions. 

A happier prospect?  Not quite.  The farm is busy developing battery hens and broilers just when UK supermarkets are boasting about their eggs laid by hens who have never seen a battery cage.

Busy

Sorry for the lack of posting, just too busy at work!!!  After a rather dull year so far, we are busy setting up to provide residential loans on energy efficiency in Georgia.  

After the success of our video on the energy audit of a sugar factory (don't I lead an exciting life?) we have moved on to using animation in our next videos, on home improvements to save energy.  

Today's drama was the cat.  Someone offered their moggy for a starring role sitting purring on a window sill in a warm house, but apparently it never made it on location, preferring a leap out of a car window.  The family will not be too happy tonight.

Yesterday's drama was in casting the actors.  The Georgians would like actors looking like Georgians. Our paymasters have told us they want a Russian version later.  Since Russians apparently associate Caucasian looking types with criminals, this has been causing us a problem requiring a lot of tact.

Our Irish marketing expert, looking for actors who could act, rather than models who look beautiful, wanted to have a local funny man, who, although he is very ugly, is quite famous.  This caused consternation as in Georgia he normally plays criminals.

Not energy efficient but good for sunbathing

This photo was found by one of my Georgian colleagues when he was looking for pictures of double glazing.

Aliyev doesn't get it

As reported by the Moscow Times here (hat tip to Sloph):

Azeri President Ilham Aliyev said Saturday that he wanted Russia to serve as a transit route for his country to begin selling gas to Europe, a proposal that could please Western policymakers who have been looking to diversify their energy supplies.

Maybe he was trying to please too many people at the same time. No way is gas transiting via Russia going to be an attractive alternative to Russian gas going via Russia, which is what the EU is looking for.

Unless of course Russia suddenly decides to implement the Energy Charter Treaty and/or allow third party access to the transit pipelines in accordance with EU directives. Doesn't sound like a scenario that would stop the EU trying to diversify.

End of communism means the end of O2 omissions?

In cafebabel here, you can find this interesting statement.

The Bulgarian electrical energy system is based on the communist model, which does not meet EU requirements: a state controlled market, lack of innovation, high O2 omissions and low energy efficiency (between two and eight times lower than the European average).

I wasn't sure exactly what to make of:

• a state controlled market (er, apart from the oxymoron,  isn't that what Sarkozy and the G20 are planning for the financial sector)
• high O2 omissions (omitting O2 would have been fatal for communism, but it was pretty good at emitting CO2 as well).

A good sales pitch from Ukraine

Kyivpost today recommends in its editorial:

Investing in Ukraine's gas pipeline is the best and cheapest option for Europe to secure Russian gas supplies

The January natural gas war between Ukraine and Russia was a badly needed wake-up call for European Union bureaucrats who have dragged their feet on energy diversification and who have long been wimpy with Russia.

The cutoff of natural gas supplies revealed how deeply dependent both Ukraine and Europe have become on a nation whose leaders are keen to use energy as a geopolitical tool of influence and blackmail. One of Russia's aims was to smear Ukraine, undermining its reputation in Europe as a functioning democracy and as a reliable transit route for Russian gas to Europe.

The Russians also hoped to build support for costly alternative pipeline projects bypassing Ukraine. But that's a tough sell.

Kremlin leaders are finding it hard to finance the $20 billion Nord Stream project across the Baltic Sea, and for good reason. It's a very expensive way to pump 30-55 billion cubic meters of gas.

Another Kremlin favorite is the $20 billion South Stream, which would go through the Black Sea into Bulgaria, also an expensive way to move 30 billion cubic meters of gas.

A third option to bypass Ukraine, touted mainly in the West, is the $13 billion Nabucco gas pipeline. But that's a stiff price tag to move 30 billion cubic meters.

But the better and cheaper option would be to invest up to $3 billion or so in strengthening Ukraine's pipeline system, which already pumps a whopping 120 billion cubic meters of gas each year. The nation's network could pump more, and do so more efficiently, with needed upgrades.

While Russian bad behavior has shown that Europe and everyone else should explore other energy options, Europeans should also back a consortium that would invest into Ukraine's state-owned pipeline. Ukrainian leaders should embrace this option as well. It would bolter the nation's free-market credentials and its economic importance. Europeans would then be deeply involved in the gas issue all the way to the Russian border. Ukraine's gas pipeline might also be a key to opening the door to future membership in the European Union.
In the next five to seven years, Ukraine's vast pipelines will remain dominant, yet vulnerable. Still, the existing network remains the best and cheapest way to pump Russian gas to Europe.

I can't vouch for the numbers, but the argument seems clear.  Though it's only a newspaper that is talking, not the government. 

But on what terms will this be offered? Will the EU (or the corporation it says it will set up for pipelines) enter into  a bidding war with Gazprom for use (and modernisation) of the Ukrainian network, or will it be outright privatisation? If so, given the current legislation in Ukraine preventing the gas transmission system's  privatisation or use through concessions (or other ways) we can predict some tough battles ahead, on the usual lines in the government.

And a bidding war under the current financial crisis will be interesting.  Does anyone have any money to bid?  And can Russia afford to lose?

Still Ukraine stands to gain if it can get the network modernised free and still retain ownership.  We live in interesting times. 

   

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The EU Neighbour "Reality" Problem (with afterthought)

Much has been written  about the "Eastern European Mentality" and its problems.  As I made clear  here, it's not a phrase I like, and mentality problems exist elsewhere as well.  It's a rather dated phrase now, since 2004 when the new Member States joined the EU.

Nevertheless I noticed that a new phrase is creeping into discussions in countries now designated as the European Neighbourhood, a phrase trying hard to compete with Russia's "the Near Abroad", though it extends rather further.

This lunchtime I had an interesting discussion with a colleague working in the Ministry of Finance in Georgia.  Since in my project I have nothing to do with ministries (the first time in 15 years) I was interested to see how Georgia compares.  Badly, they said, "all this talk about how measures which are absolutely standard in the EU will not work at all in the "Georgian reality"".  And no progress in concrete work to join the EU.  Just like Ukraine, I said, in 1994-7 and I found no better in 2007. 

Just what is this "reality".  First of all, it is not an objective analysis of the country, its problems and  what needs to change.  If it were, discussions on how to implement EU measures could continue.  After all, EU Directives are implemented in 27 different ways, so at least one of them should be suitable for Ukraine and maybe another for Georgia.  There are plenty to choose from, after all, and all the new Member States managed to find one suitable to their reality.

What it is, is a set of values and perceptions about "reality" in the country.  These values and perceptions are deemed to be shared by everyone, (or at least those without any political power) and the belief exists that these values and perceptions keep everyone in a straightjacket, making change impossible and thus avoiding any personal responsibility for change.

Secondly, it assumes that foreigners must "adapt to the Ukrainian (or Georgian) reality". In practice, this means they should recognise that nothing in Ukraine or Georgia can change, or at the very least, the EU must change itself to recognise what little can be done.  At this point (especially after working for 15 years on this sort of thing) one tends to ask "hello, who was it wanted to join the EU?  This is what you have to do, this is what everyone else has done, now get on with it. You don't want to join the EU after all?  It's your choice."

The EU does not always send this message clearly enough.  I speak from experience in working on oil stocks in Ukraine, where the Ukrainian "reality" apparently required to set up an agency for oil stocks first,  then worry about what it would do later (legislation, finance, ownership of the stocks even, don't they come in somewhere first? No, that's too difficult, let's just pretend it is in place and do it later, when people understand that). 

So it was interesting to see the phrase appearing in an excellent article entitled "Where East Meets West: European Gas and Ukrainian Reality" by Edward Chow and Jonathan Elkind, published by the Center for Strategic and International Studies in the The Washington Quarterly, hat tip to the EU Energy Policy Blog, a new blog for me. 

In this article, you can find what seems to me, a fair description of the Ukrainian reality, without any quotation marks, and what needs to be done in the energy sector.  It needed to be done 15 years ago, not much has changed.  And EU entry has got more complex and more demanding in the meantime.  There is no way it will get simplified to meet the Ukrainian or the Georgian "realities". 

More discussion in the next post.

Afterthought:

There must be countries where officials are so fed up with the current mess, that they could just say "we really want to join the EU, now tell us what to do and help us do it".  But this approach always founders when it comes to confronting the quite difficult decisions about change management at the political level.  Change management isn't something that ex-communist countries had any experience of, in the past.  And change is painful and difficult at the time, witness the Thatcher years in the UK. Change can't start till it's agreed there are problems and they must be solved not hidden.  That consensus doesn't seem to have evolved yet in some countries, more's the pity.

Failure of gas to Europe due to "Act of God" according to Gazprom

It seems that Russia does not accept any responsibility for its failure to supply gas  to Europe.

Mr Makis Papageorgiou CEO  said that DEPA (the Greek Gas Company) had received a letter from Gazprom which described the current situation as an Act of God, which gave the impression that Russia was not intending to compensate the company for the gas shortages.  Calling it an Act of God enables Russia claim that it is necessary to deal with the problem under the provisions of "Force Majeure" in the contract, and which mean it is harder to extract penalties for failure to deliver.  Force Majeure includes floods and other natural disasters as Acts of God but also covers outbreaks of war, riots etc. 

Of course it might be dangerous to identify this as an outbreak of war when it comes to legal niceties (though both sides in the dispute are happy to use this term as far as publicity is concerned).  Hence the resort to calling on God for someone to blame.

Despite the fact the Greeks and Russians share an Orthodox God, they also share a belief in capitalism, as shown by DEPA's  intention,  to sue in line with their contract with Gazprom.  It seems according to the contract, the Russian company should pay for its failure to supply the required volumes of natural gas, adding that DEPA could take legal action once supplies resume. He said that the compensation could amount to some EUR 1 billion.

And that's only Greece.  A few other countries might be queuing up to sue..... once the gas is flowing again. 

Information from Energy Tribune here

Is anyone keeping a list of the European countries who are seeking compensation from Gazprom? Current liabilities should be a large item in the accounts, if they are ever published.

German/Russian Consortium in charge of Ukraine's gas transmission system?

Why would anyone buy that idea, with Gazprom involved, especially with them holding a majority stake? How would German part involvement help? They are hardly those most affected.

Putin seems to be pushing this idea quite hard, (www.premier.gov.ru, January 8; Interfax, January 7, 8, 11; German ARD TV, January 11; Nezavisimaya Gazeta, January 13) but what do Europeans gain?  It's not Ukraine that is unreliable, but Russia and its political manipulation of Gazprom in a commercial dispute.

In fact the only reliable thing about Gazprom and Russia at the moment is their ability to predict a cold winter and engineer a gas dispute with Ukraine to coincide.

The answer may be to change the operation (but not necessarily the ownership) of Ukraine's gas transmission system, to make it more transparent and subject to European gas legislation, but that would only happen without the involvement of Gazprom.