From Watts Up With That?

In an illuminating piece by Tilak Doshi on Forbes, the economic trajectory of Europe under the weight of its environmental policies is critically analyzed. Doshi paints a stark picture of what he describes as a self-inflicted wound to Europe’s industrial base, driven by stringent regulations and a shift away from reliable energy sources.

“Voltaire famously said that ‘common sense is not so common.’ Nowhere is this adage more relevant than in the field of energy policies in the European Union. These policies are most vigorously pursued in Germany—Europe’s industrial powerhouse—since it adopted the Energiewende legislation in 2010. The ‘green’ regulations and mandates adopted are simultaneously hostile to fossil fuels and nuclear energy. Energiewende (German for ‘energy turnaround’) refers to the ongoing energy transition to an imagined future of low carbon, environmentally sound, reliable, and affordable energy supply”​​.

https://www.forbes.com/sites/tilakdoshi/2024/05/09/as-europe-deindustrializes-can-economic-suicide-be-avoided/?sh=2c2c6f663dfa

Doshi’s analysis starts with Germany, the hub of Europe’s industrial might, which has seen a significant decline in its industrial production since 2017. This decline is attributed to the Energiewende, a policy initiative aimed at transitioning to renewable energy sources but which has resulted in high energy costs and reduced competitiveness in the global market.

“Germany’s industrial production peaked in November of 2017, and by the end of last year had fallen to a level last seen in 2006 outside of the global financial recession and Covid-19 years. Its industrial sector contracted by almost 14% in the 6 years ending December 2023.
…
Energy-intensive trade-oriented industries, involving both among small and medium-sized firms as well as behemoths like BASF, have been worst hit, as high energy prices make vast swathes of Germany’s manufacturing sector uncompetitive. The self-inflicted economic meltdown in the pursuit of ‘net zero’ policy goals goes beyond Germany. Industrial capacity is being decimated across Europe”​​.https://www.forbes.com/sites/tilakdoshi/2024/05/09/as-europe-deindustrializes-can-economic-suicide-be-avoided/?sh=2c2c6f663dfa

Furthermore, Doshi points out that these economic policies have not just been problematic for industry, but also have broader socio-political repercussions. A growing discontent among European citizens is manifesting, particularly among those most impacted like farmers and small business owners, who are increasingly protesting against what they perceive as burdensome and unrealistic regulatory frameworks.

“Since the summer of 2023, Europe’s Green Deal has been on regulatory pause, as EU governments face a ‘greenlash’ against environmental policies. In the face of energy and cost of living crises, farmers, consumers and trade groups are starting to resent the burdensome costs of sprawling environmental regulations across the continent. Nowhere is this sense of grievance more apparent than in the great European farmer’s revolt, as farmers’ protests escalated across the continent since they first started in the Netherlands in October 2019″​​.

Doshi does not stand alone in his criticism. He cites other commentators who suggest a rethinking of energy policies could be on the horizon in Europe, influenced perhaps by economic necessity rather than environmental idealism.

“The heavy costs of suppressing the use of fossil fuels while promoting intermittent, weather-dependent renewable energy technologies over the past decade has been disguised and diffused by hidden costs and fiscal transfers to powerful constituencies. But over time, ‘net zero’ climate policies have become increasingly unbearable for ordinary people as they reach beyond the power sector to cover agriculture, transport, homes, and buildings”​​.

https://www.forbes.com/sites/tilakdoshi/2024/05/09/as-europe-deindustrializes-can-economic-suicide-be-avoided/?sh=2c2c6f663dfa

This reflection on Europe’s industrial and economic decline under the weight of green policies serves as a cautionary tale about the unintended consequences of well-meaning but poorly implemented government policies. The rigorous enforcement of these policies, without adequate consideration for economic realities and the basic energy needs of a developed economy, may well lead to what Doshi refers to as economic suicide. His article urges a balance—a recalibration of environmental goals with the practical needs of economic stability and growth, reflecting a sentiment that perhaps, the pendulum of environmental policy has swung too far.