Is Europe a “green energy” basket case?

It is important to look at energy policy from all angles. Jude Clemente provides his views on the Forbes website about his criticism of the approaches being taken in Europe. What do you think?

 

Europe’s Energy and Electricity Policies are a Bad Model

It’s quite telling that COP21 took place in Paris. Western leaders, environmental groups, and international institutions are convinced that Europe is the model for the rest of the world to install more renewable energy and efficiency. Entered into force in 2005, Europe has been a mainstay of the failed Kyoto Protocol, the first agreement for country-by-country reductions in greenhouse gas emissions. And the European Union Energy Roadmap 2050 wants the EU to cut its emissions 80% below 1990 levels by 2050, setting milestones for reductions of the order of 40% by 2030 and 60% by 2040.

But, the truth is much different. Europe is a “green energy” basket case with surging prices, fleeing industry, falling economic and population growth, growing dependence on Russian energy, and rising “fuel poverty,” where even the Middle Class often can’t afford the most basic energy services. “Soaring energy costs make Europeans poor.”

To illustrate, Denmark and Germany are the proud wind capitals of Europe, but they also have the highest home electricity prices on Earth, 42 and 40 cents per kWh, respectively, against just 12.5 cents in the U.S. Germany has embarked on a $1.4 trillion energy transition (“Energiewende”) that has resulted in recent Der Spiegel headlines like: “Germany’s Energy Poverty: How Electricity Became a Luxury Good.”

Naturally intermittent and more expensive, wind and solar power have surged under Germany’s very expensive energy plan, and the goal remains to get as much as 60% of power from renewables in 2035, versus 28% today. Undeniably non-sensically, Germany has been paying over $26 billion per year for electricity that has a wholesale market value of just $5 billion.

Yet, the influential Bloomberg, one of the biggest renewable energy promoters and investors in the world, still declared in August: “On Clean Energy, the U.S. Should Be More German.” As a side note, I’ve noticed that Manhattanites can afford ridiculously high costs for pretty much….everything.

Forbes

Source: JTC

Endlessly ignored by those promoting renewables and/or those directly invested in the business itself, higher cost electricity (and energy) is horrible for our health. That’s because, since electricity is so indispensable, meaning that it “cannot not be used,” higher cost power drastically erodes our disposable income, which is the very basis of our health – while also disproportionately hurting the poor most. As a percentage of income, poor families pay 5-9 times more for electricity than rich families do.

Predictably silently, higher cost electricity in Europe is killing tens of thousands of people a year, ”Excess Winter Deaths,” where older residents on fixed budgets in particular are forced to turn their heat down to avoid overly expensive utility bills. For example, there were 44,000 Excess Winter Deaths in England and Wales in 2014-2015 (see here). Critically, although we keep hearing about the dangers of a warmer world, “cold kills 20 times more people than heat.”

Europe’s industry is being ravaged by exorbitant energy costs: “Brussels fears European ‘industrial massacre’ sparked by energy costs.” The once-vaunted UK steel industry, for instance, has been decimated by higher cost electricity (see here), and annual production is down 15% to 12 million tonnes since 2007, now just yielding 1.5% of what mighty China does.

In contrast, The American Chemistry Council finds that low cost shale natural gas has given the U.S. a “profound and sustained competitive advantage” in chemicals, plastics, and related industries. And The International Energy Agency concludes that higher cost energy will hamper Europe for “at least 20 years.”

Any of us that have taken even just one basic Economics class must stop those in the sacred-cow business of promoting renewable energy from constantly ignoring these higher costs that devastate. After 12 years in the energy/environment arena, I learned real quick that altruism is typically an illusion. “Climate change” is now a $1.5 trillion industry (see here).

4 thoughts on “Is Europe a “green energy” basket case?

  1. Few comments on the article:

    High electricity costs are not the main driver of fuel poverty just because heating in Europe is based on electricity to a very less extent (France has higher use of electricity for heating but context is different there than in De and Dk).
    Fuel/energy poverty is not a massive problem in De and even less in Dk where electricity costs are the highest.
    Otherwise fuel/energy poverty is much serious in the UK where electricity prices are lower than in De and Dk and in the Central and Eastern EU where electricity prices are the lowest among the EU. The latter proves that general poverty is the major driver of fuel poverty as well.

    As concerning companies, it is true that high electricity prices affect energy intensive industries, together with climate policies.
    However, not sure that steel industry in the UK in only affected by electricity prices which are much lower than in De and Dk, but also by the global competition with industry from emerging countries such as China and India where the overall costs incl those of labor and energy are much lower.
    But there is also a side effect in those countries which is rflected by high GHG emissions related to that cheap energy and high pollution as immediate effect. A good example is related to the closure of Beijing city few weeks ago.
    Additionally, Germans and Danish return the difference in electricity prices to cleaner industries and in this way the secure the energy transition as well as the supremacy of their know-how on clean global markets. They also have less visible support for energy intensive industries but more notably they support these industries to increse their energy efficiency and therefore compensate the higher electriicty costs by process improvements.

    I don’t want to say that everything is bright in the EU, De or Dk, but let’s agree that they are more willing to change and they are better prepare for a clean future.
    Those will cheap electricity may be better on short and medium term but they may have a problem on long run.
    Last but not the least we should be honest and say what we want: to consume cheap now whatever will be, or to pay the price of offering still living conditions to future generation. Moreover, some smart guys are making a buck from investing into clean energy so to me the De and Dk don’t appear at whole as loosers but winners and ‘good guys’ at the same time.

  2. Sadly this is typical of the treatment that complex energy and climate change matters get in the US media – a narrowed-down opinion piece that passes as fact-based news reporting. Retail electric costs are indeed higher in the EU than in many (though not all) parts of the US. But this has been the case for decades and has more to do with broader energy security/indigenous energy resources and cross-border market design issues than carbon emission targets. Same for the state of the UK steel industry (i.e., other central, long-term factors at play than carbon). Energy use in Europe is far lower on a per capita basis due to house size and energy efficiency, so average household energy expenditure is on par with American consumers. Meanwhile, wholesale electric prices are trending lower in Europe. While this has not translated into substantially reduced electric costs, this is more a function of market design to distribute costs of a low-carbon energy transition which offers significant mid- and long-term savings.

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