The EU is facing a serious energy challenge. The cost of fuel and electricity is constantly rising, creating problems for the development of the European economy. The difference is that this particular energy crisis is not the first to occur but it is the first energy crisis during the green transition period. This fact shows that now the financial calculations are much stricter and the adjustment measures are more complex.
Energy crisis management and political and social unrest
The management of the energy crisis will necessarily take place within the framework of the agreed green transition. EU member countries are committed to reducing air pollution by 50% by 2030 using 1990 as the base year. Germany and the most economically developed countries in the European Union are leading the way politically. Energy costs in the EU are much higher than US energy costs, giving this energy crisis a chance for the US to leave the EU behind in the race for economic growth.
At the same time, the economies of the least developed EU member states will see their industries become less competitive in the long run. It should not be forgotten that the “yellow vest” movement started in France in reaction to an energy tax on gasoline that French President Emmanuel Macron tried to impose. The reaction was fierce, forcing the President of France not to impose this tax and at the same time to grant financial aid and allowances to quell the popular reaction.
The EU’s mistake that is hurting its economy
The green transition was imposed by political criteria, in the claim of the middle class of urban centers, without serious calculations. From the moment that such an ambitious goal was set to reduce gaseous pollutants and always based on the current system, the prices of pollutants have taken off. At the moment they exceed 60 euros per ton. They cost three times more than in 2019 and are projected to increase more. The EU’s mistake is that with the green transition that adopts and implements it believes that will force the most powerful on the planet to follow its policy.
The EU’s contribution to carbon dioxide emissions is well below 10% of global emissions. How will the EU enforce its policy globally which has not been adopted by the US, China and India? The imposition of a kind of tariff or duty favored by the Commission on imports of products from non-EU countries, which during the production process do not meet the standards for the gradual reduction of pollutants, will certainly be rejected by the US and China. These countries are also likely to impose taxes and duties on EU exports to them.
In this case the main industrial countries of the EU, Germany, France, Italy, will be under great pressure on their export industry, their economic growth and employment. The EU cannot compete economically and commercially with the US. The fact that her plans to tax the American digital giants who systematically evade tax in Europe were not implemented shows this fact. The EU is now aiming for a compromise with the US within the OECD on this issue.
In essence, the EU is committed to a system and a policy that is not adopted in any other powerful economy in the world. In this way the EU risks punishing (shooting) itself financially by giving a competitive advantage to the world’s major polluters. While China has an energy deficit and blackouts periodically in its industry, it is constantly building new coal-fired power plants, while increasing its imports of coal. China may have pledged not to finance the construction of coal-fired power plants abroad, but it did not do the same for China.
The US, for its part, refuses to raise taxes and create new economic burdens on gaseous pollutants. Unless the EU has decided that its population will have to go through some “energy winters” in order to move faster to the green transition than other countries, creating an even bigger competitive gap in industries between its member countries and in relation to the industries of the USA, China and India to use it as an argument in the future.
The European “energy winter”
The European energy “winter” will have serious economic, social, and political consequences. That is why the governments of the member countries of France, Italy, Greece, and other member countries are constantly announcing improvement measures to reduce price increases in the energy sector. The aim is to alleviate the energy burden on incomes of households and small and medium-sized businesses respectively, even if they cause a partial fiscal deterioration.
