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Energiewende versus energy hodgepodge

June 23, 2014
The XL pipeline’s south leg has been fixed, but the north leg is on hold — even while the EPA makes proposals that effectively promote natural gas. Meanwhile, Germany’s Energiewende (energy transition) program threatens the stability of energy prices. Who’s making the better call?
If it’s ever completed, the Keystone XL oil pipeline’s last leg will bypass existing routes to transport Canadian oil and gas, mostly from Alberta tar sands, to U.S. refineries in the Midwest and Texas. But contractors for builder and owner, TransCanada Corp., Calgary, did such poor construction on the XL south leg — cleverly rebranded the Gulf Coast Pipeline — that future work must follow new rules.

That’s because the U. S. Pipeline and Hazardous Materials Safety Administration (PHMSA), part of the Dept. of Transportation, recently slipped new conditions into an appendix of a State Dept. paper aimed at preventing more construction problems if the controversial XL north leg gets built. PHMSA found that a lot of pipe on the XL south leg had bad welds, damaged coatings, and dents from rocks in trenches improperly cleared. Now, TransCanada must adopt new standards to get better work out of its employees and subcontractors, plus hire a third-party monitor through PHMSA to track quality on future construction. Unfortunately, PHMSA isn’t known for its effective oversight.

No wonder 60% of Americans have a negative opinion of the oil and gas industry, according to Gallup. No matter: In a big win for natural gas, the Environmental Protection Agency will soon force states to trim carbon emissions 30% by 2030, mostly by reducing reliance on coal-fired power plants.

It seems U.S. policymakers have succumbed to the idea of “doubling down” on a doomed strategy because of previous investments. In fact, by 2020, the U.S. could become the world’s top oil producer and a net exporter of natural gas, at a time when reliance on nonrenewables is increasingly questionable.

Contrast these developments with the Energiewende (energy transition) program, Germany’s sweeping project to replace reliance on fossil-fuel and nuclear energy with use of solar, wind, hydropower, and biomass energy — backed by a smart grid and technologies to maximize energy conservation. The initiative faces its own set of challenges. Economists criticize its architects for overburdening the world’s fourth-biggest economy, as the program’s subsidies reached €16 billion last year. Plus, Energiewende unintentionally boosts reliance on coal plants, necessary to stabilize power on the grid with inconsistent supply from renewables and a concurrent drawback on nuclear. But these problems are temporary and overblown.

Energiewende policy reduces reliance on Russian fuels. It also lets German Parliament respond to market pressures and changing goals by adjusting subsidies. It currently helps homeowners, cooperatives, and farmers become citizen owners of wind and solar sources and participate in a democratized energy industry. Most importantly, thanks to Energiewende, a quarter of all energy in Germany now comes from renewables.

The U.S. program is far less cohesive and nimble, because it relies on states to manage their own energy mix. What’s worse, it affords fewer alternatives for recourse should the heavy emphasis on oil and gas prove unsound.

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