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Keep the lights on!

The temporary shutdown of the Doel 3 and Tihange 2 nuclear reactors has once again stirred the debate about the security of energy supply and the effects of Belgium’s current energy policy on industry.

With Doel 3 and Tihange 2 temporarily offline, Belgium is importing electricity from neighboring countries at maximum capacity, which is bound to have an impact on domestic prices in the short term. More importantly, however, this situation raises questions about Belgium’s preparedness for the nuclear phase-out. How does Belgium plan to keep the lights on when all of its nuclear power stations are decommissioned by 2025? A recent study by the Federal Plan Bureau shows that a one-hour blackout would have an estimated economic impact of nearly €120 million. With 94% or €112.7 million of the burden falling on companies, even the briefest interruption of supply has to be avoided.

While Belgium decided on its own to wean itself from nuclear power, the country of course also operates in a wider geopolitical context. The recent Ukraine crisis has made apparent that Europe’s energy supply, in the form of Russian gas, can be partially cut off with, almost literally, a flick of a switch.

One possible solution is offered by shale gas. In the US, the exploitation of so-called ‘unconventional gas’ has not only decreased the reliance on imported energy but has also resulted in dramatically lower energy prices (natural gas is now three times more expensive in Europe than in the US), a competitive advantage for industry. But a US-style shale revolution in Europe might yet prove to be wishful thinking. Several European countries have been looking at their own shale potential. With recent reports of failed experiments in Poland due to the country’s geology, however, a quick and easy transposition of US technologies in Europe seems to be off the table.

A number of other roadblocks further prevent the exploitation of shale gas in Europe. For one, public opinion is strongly opposed to it in most countries. Also, areas with shale potential are much more densely populated than in the US and there is a lack of necessary infrastructure. Even if all these hurdles are overcome, this doesn’t mean that shale gas would have the same impact on energy prices in Europe as it has in the US. A study by Poyry shows that electricity prices might only fall by 3 to 8% between 2020-2050.

AmCham Belgium has taken up energy, both the issue of cost and security of supply, in its annual Priorities for a Prosperous Belgium