The change of direction that was partially flagged this week by the EU’s review of its energy policy from 2020 to 2030 has all the hallmarks of ineffective political compromise and none of the qualities of good leadership for Europe’s troubled industries. The underlying truth is that EU energy policy today is the same as last week, and going in the wrong direction.
Recognising the danger of more factories closing and more businesses setting up in cheaper energy parts of the world, the EU now talks of the need for competitiveness to be part of the consideration when making future energy policy. Still keen on being the greenest part of the world, the EU has also decided on setting EU level targets to increase the amount of renewable energy from 20% to 27% over the next decade, and to continue the drive to cut the output of carbon dioxide gas. This time they want to cut it by 40% on 1990 levels by 2030. How does this square with wanting energy priced more like that in the USA so we can compete?
We need to ask how this will happen, what consequences it will have, and how the EU plans to enforce the policy.
The big change is to shift from individual member state targets for CO2 reduction and renewable power to EU wide ones. The member state targets could be enforced by EU court action and fines. I guess the fact that Germany is unable to curb her CO2 output at the moment is making the EU nervous about enforcement action anyway. Once they shift to an EU target there does not appear to be any way they could prosecute an individual member state for failing to increase its renewables or for increasing its carbon dioxide output. Which countries will want to carry on with these initiatives to try and hit the EU targets?
The quest for more renewable power is also being questioned by another branch of the EU authorities, the competition authorities. The attack upon subsidies for solar and wind power could make it difficult or impossible to increase these forms at the rate needed to hit the EU target, given the importance of subsidy to current rates of investment in these expensive forms of electricity generation.
The EU is not changing the member state targets for the period up to 2020, so in theory all stays the same with the EU enjoying another six years of the pursuit of dear energy before changing course somewhat in 2o20. The member states remain under pressure to increase solar and wind output, and to carry on getting rid of older fossil fuel electricity plant even though it produces much cheaper power.
The ailing energy policy of the EU will become one of the major disasters of this superstate experiment, alongside the Exchange Rate Mechanism and Euro which has cursed so many countries with high unemployment. Industry is today highly automated. It needs cheap energy. Europe’s competitors abroad have not embarked on anything like the EU’s dear energy strategy, so they have a large advantage. The latest EU moves recognise the problem, but do nothing this decade to correct the error, and leave us uncertain about how it might start to be improved after 2020. Try harder EU.