Has coal found an unlikely friend in Europe’s green policies? According to an analysis in the FT, the people who want to lead the world in clean energy may make their continent a sinkhole for the dirtiest energy resource around. The rationale for investment in renewable energy has always relied on the assumption that fossil fuel prices will continue to rise inexorably. The revolution in shale, however, has pushed gas prices down to record lows. Lower energy prices overall might create quite the irony:
The EU’s pro-renewable policies will act as a magnet for any coal producer forced from their home markets by shale gas development. Faced with expensive generation of renewables, European utilities will switch to polluting coal to reduce costs. The danger for the EU then is that, if it maintains existing climate change policies, it will become the global dumping ground for coal.
An EU failure to reform its energy policies, however, would have implications far beyond the coal threat. Europe is already sinking to a lower level on the geostrategic food chain; abstention from the shale revolution will hasten the sinking to a plunge, making the continent the only significant economic bloc without any energy resources of consequence. The FT piece also notes that an energy-independent U.S. may expect Europe to shoulder more of the security burden for its oil interests in the Middle East.
This is a big moment for Europe. Many of its assumptions have been upended by shale, and its climate and energy policies are in total disarray. One would hope that Europe’s greens have the prudence and flexibility necessary to adapt to the changing energy scene, but the possibility looms that they will double-down on their present failed policies. Given that green groups have often had a quixotic view of their own importance, it’s possible that many of them will eschew more pragmatic goals in favor of a narrative that sets them up as the planet’s last chance for salvation.
If that happens, Europe could be in big trouble. The continent’s policy makers need to adjust to the world around them and make the requisite changes. Fast.