The agony of ecological denialism

The Objective, February 9, 2025

Europe has lived the last decades governed by a unanimous ecological consensus among political and intellectual leaders but fragile among the rest of citizens. It began to enter into crisis with the invasion of Ukraine and is now being so challenged that many interpret the rhetorical dribbles of the new European “Compass” as a first step towards a much more radical turn.

For years, the consensus has been consolidated by denying its costs, which has prevented a rational discussion of the pros and cons of the different options. It has also led us to set maximalist objectives that run counter to our comparative advantages, such as the ban on the sale of new cars with internal combustion engines, which should come into force in 2035.

Hiding costs has led to misguided and uncoordinated policies. From causing premature closures, such as those of nuclear power plants in Germany and Spain, to discouraging investments in grids and storage that would have reduced the costs of the energy transition.

The misrepresentation has focused on highlighting that renewable energies have low costs on average; but hiding the fact that, given their intermittency, they also suffer from highly variable costs. So much so that their marginal cost becomes infinite at certain times: try generating solar energy at night, or wind energy without wind.

To compensate for this intermittency, complementary solutions are needed, such as backup from other less volatile generation sources and storage, either in batteries or, today, in reversible reservoirs. But, instead of recognizing these limitations and addressing them, those responsible have resorted to all kinds of arguments to deny the costs that these limitations cause. Or else they have acknowledged the reality of the costs, but only in lip service, without giving them the leading role they deserve or extracting the logical consequences that these costs have for the development of regulatory policies.

In this way, they minimized the need for conventional thermal and nuclear backup technology while exaggerating the future contribution of new backup and storage technologies that are not yet economically viable, such as hydrogen and batteries. In parallel, as a last line of defense, they hid the costs of conventional and already available backup power plants, even when their use incurs high costs, not only economic but also strategic and even ecological. This is the case of dependence on fossil fuels, such as natural gas consumed and coal.

Similarly, when, after the invasion of Ukraine, the ensuing price hikes threatened to give voters a rude awakening, our rulers went out of their way to limit the pain this might cause us, trying to prevent us from reacting accordingly. To achieve this, they once again hid the real cost through subsidies and tax breaks, but without telling us that it was we ourselves who were paying for these false remedies with other taxes and surcharges.

With this massive dose of fiscal tranquilizers, they kept the consensus alive, but it has continued to weaken with the crisis in German industry, especially after Donald Trump's second victory. His bet on environmental pragmatism leaves European leaders alone on the international stage, and many citizens are beginning to wonder what the real cause of such loneliness is.

The turnaround that the European Commission has just made with its recent Competitiveness Compass is revealing. It is a timid and ambiguous turn, which does not even mention the role of back-up technologies (thermal and nuclear power plants); but its new priorities are clear and are even specified in a sure postponement and a probable elimination of the targets for electric vehicles.

It is a difficult maneuver, because it is always easier to get the truck in than to get it out of the garage. Especially such a huge truck, which is still driven by those who have filled it with rents and fallacies. The rentiers will resist losing their privileges and the preachers will have to make an effort to disbelieve their fallacies.

Spanish dreams

Spain is an exaggerated exponent of this cost denialism. As we have more natural advantages to generate renewable energy, we need more complementary investments in grids, backup and storage. Unfortunately, instead of confronting the tradeoffs and facilitating these investments, governments also prefer to deploy argumentative jokers so that, when push comes to shove, they behave as if these investments were not necessary.

For this reason, despite the ambitious objectives of the National Integrated Energy and Climate Plan (PNIEC) in terms of grids, backup and storage, its implementation is in fact committed to diversifying renewable capacity: it does so both between solar and wind technologies and between locations, in the hope of mitigating the risk of demand exceeding supply and blackouts occurring.

It is a costly gamble and so risky that it is beginning to prove to be reckless. Costly, because it does not eliminate that risk for certain times, and it is such a serious risk that we should not take it, so we need a reliable back-up. Moreover, it requires investment in new networks and in generation, which is encountering increasing bureaucracy and litigation. Above all, it is confronted with dubious profitability. On the one hand, investment has to be made in less efficient locations. On the other hand, in the absence of additional storage—which is planned in theory but has not become feasible in practice—as capacity and diversification increase, periods of overcapacity, during which the wholesale price of electricity is zero or negative, can be expected to proliferate, reducing the profitability of investments.

Faced with this eventuality, governments often resort to the wild card of fixed-price electricity contracts, which should ensure a stable return for the investor. But it is these same governments who discourage fixed-price contracts when, in the face of any serious crisis, they enact exceptional measures limiting price increases, so that many consumers opt for variable-price contracts. In doing so, they seek to benefit from low prices in the knowledge that, if prices rise, the government will come to their rescue, as it did after the invasion of Ukraine.

Against such an uncertain backdrop, it is not surprising that investment in wind power has slowed and is lagging behind schedule. If our reluctance to hold a rational discussion and make decisions based on costs and benefits has been greater than in the rest of the European Union, it is to be feared that we will persist longer in the error and take longer to change course, as evidenced by the obstinacy in closing nuclear plants. And perhaps regardless of who governs, in view, for example, of the energy nationalism just exhibited by the Xunta de Galicia.