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A Green Dream Deferred
Too Much of a Bad Thing

Europe’s green energy policies have sent its electricity prices sky-high and are thereby threatening the continent’s competitiveness on the world stage. Stanley Reed, writing for the NYTdiagnoses the root problem with the green road Europe has traversed:

The problem is that much of the rest of the world did not follow. Europe will very likely succeed in meeting or surpassing its original goal of a 20 percent reduction in emissions from 1990 levels by 2020, but these policies may have encouraged investment and employment to shift elsewhere. Recent European Commission studies have shown that Europe’s share of global foreign direct investment fell to 16.8 percent in 2012 from 30 percent in 2008. In roughly the same period, Europe lost 3.5 million manufacturing jobs.

His solution?

The key is for Europe to persuade countries like the United States and China to adopt similar policies. There may be more hope of that happening: Many businesses, including some oil companies, are preparing for a global policy shift that would be more in line with what Europe is pursuing.

Let’s review. The problem with Europe’s rising electricity prices are that prices in the rest of the world aren’t rising with them. To fix that, we should raise prices elsewhere. Problem solved!

Or maybe…instead of foisting the ill-conceived green energy policies that Europe is quickly coming to regret on the rest of the world, we could focus on strategies that promote both economic growth and better environmental stewardship. Such policies do exist. We’re getting better and better at producing more dollars of GDP per unit of energy input, and the accelerating pace of technological improvements promises even better returns down the road.

Moreover, the developed world’s impending transition to the information economy naturally dovetails with the idea of sustainable development. Manipulating information is a lot less energy intensive than making things; new business practices like telework allow companies to seek the best talent—where ever it may be found—while saving money on office space and, yes, cutting down emissions associated with commuting.

None of those options require massive government subsidization regimes. None raise electricity prices. Picking these low-hanging fruits is the best way to balance environment and economy, because doing so doesn’t require accomplishing one goal at the expense of the other.

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  • free_agent

    I’d love to know if there is any comparison available between what has happened in Europe with what would have happened if a uniform CO2 emissions tax had been applied. In principle, the tax would generate a given level of emissions reduction at the lowest possible cost. I wonder whether it would have helped in practice in this instance. Although I think that the actual outcome of such a tax would be shifting electricity production to nuclear, as that is the cheapest zero-emission choice.

    I think the deeper problem is that the Greens don’t just want to reduce emissions, they have a vision of how the energy system should work, and that vision has other constraints as well, in particular, eliminating nuclear power. If you take zero CO2 emissions and no nuclear power as constraints, there are no inexpensive sources of electricity.

    One interesting thing is to note that we speak of “Europe’s” policies, but the policies seem to be confined essentially to Germany. And when manufacturers find Germany unfriendly, they don’t relocate across the border elsewhere in Europe, they shift to other regions.

    • Andrew Allison

      Yes, it’s time to stop talking about “Europe’s” electricity problem. France, Belgium and Slovenia derive most of their electricity from nuclear power. Germany’s electricity pricing problem is a self-inflicted wound. The only sensible alternative to fossil fuel for electricity generation is nuclear. It’s expensive, but does eliminate CO2 (40% of US CO2 emissions result from electricity generation). Let’s also keep in mind that the switch natgas, with about half the emissions of coal, in the US doesn’t do much good if the coal is exported to be burned elsewhere.

  • gabrielsyme

    Europe’s choice of 1990 as a benchmark was self-serving and misleading. Guess what was still around in 1990? All the wasteful communist heavy industry in eastern Europe. The closure or upgrading of those plants gave Europe a massive head start on their 20% goal, allowing other nations (Spain) to significantly increase their emissions.

    I would like to know what Europe’s progress has been since 1995, or what western Europe’s progress has been. How does that compare to the US? How does it compare on a per-capita basis? But the sycophantic media continues to parrot numbers that are hugely misleading.

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