author: Tyler Durden
Written by Mohamed Moutii, American Institute for economical Research (AIER)
Over the last decade, Europe has played a leading function in shaping global climate policy, which underlines the introduction of European Green Deal in 2019 — Ursula von der Leyen referred to him as "a minute of man on the Moon". The initiative aims to make Europe the world's first continent climate neutral by 2050, while supporting innovation and strengthening its industrial base.
However, a fewer years later the results are profoundly disappointing. alternatively of achieving its objectives, Green Deal is increasingly associated with higher energy costs, weakened competitiveness and increasing political opposition. It's deepened. breakdowns In the EU, global relations have been strained and pressured on households and businesses — raising serious doubts about its feasibility and long-term economical impact.
How green ideology undermines Europe’s economy
Stagnation Europe's economy points to a deeper structural problem in the energy and climate strategy — closely linked to the direction set by the European Green Deal. Since the launch, competitiveness has declined rapidly, and its core is the rapidly rising energy costs. Electricity prices in Europe are presently Two to 3 times higher than in the United States and China, and taxes constitute Almost a quarter full costs.
This results mostly from political choices. Binding objectives The EU — net neutrality by 2050 and emissions simplification by 55 percent by 2030 — limits energy supply, even though Europe responds for only six percent of global emissions. Simultaneously gradual atomic withdrawal, gas reduction and reliance on renewable sources have weakened energy safety and increased price volatility. For manufacture — where energy can be even 30 % of full production costs — this, combined with carbon price, has become a key constraint, forcing companies to reduce production, carry or close, which accelerates deindustrialisation across the continent.
The automotive manufacture clearly illustrates these pressures: representing more than 7 percent of EU GDP and almost 14 million seats work, this sector is under force from the ban on combustion engines of 2035, which forces a fast transition to electrical vehicles despite unresolved technological challenges and marketplace constraints. As warned by CEO Mercedes-Benz, Ola Källenius, this policy threatens to bring the sector "to the wall at full speed". The consequences for the sector are already visible: declining production, expanding restructuring and crucial occupation losses — 86,000 seats work from 2020 and until 2035 is at hazard up to 350,000 others — while tightening the regulation to reduce profits by 7 to 8 percent by 2030, which pushes the sector towards losses and weakens European automotive leadership.
Agriculture has besides become 1 of the most prominent Green Deal victims. Stricter rules on emissions, land use, pesticides and fertilisers rise costs and increase crop volatility, most of which affects tiny farmers and accelerates the consolidation of large agricultural enterprises. Objectives specified as Limiting the usage of pesticides 50 percent and the extension of organic farming carry significant drop in production, endangering both agrarian life and food security. alternatively of enabling farmers to innovate and improve productivity, these policies restrict production — fuel widespread protests and weaken both competitiveness and sustainable development.
Together, pressures are not isolated, reflecting a wider economical burden. The European Commission estimates that transformation will require at least EUR 260 billion additional investments per year and full costs reaching up to 12 percent of EU GDP — a burden that is increasingly hard to keep for the European economy.
The problem of central Green Deal planning
The economical tension now translates into a political response. In fresh years, opposition to the European Green Deal rapidly increased across the continent — from farmers and industrial groups for voters and political parties. EU elections in 2024 confirmed what has already been clear: the erstwhile dominant green consensus is falling apart. In consequence Brussels began quietly undo key policy elements — weakening regulation, introducing legal gaps, or even avoiding the very word "Green Deal". What was portrayed as a historical transformation is now falling apart.
This objection reflects a deeper defeat. Although EU assigned $680 billion between 2021 and 1927 — over a 3rd of its budget — Green Deal only brought Moderate environmental improvements, at the same time imposing a serious economical burden on households and companies presently facing higher energy prices, taxes and regulatory pressure.
The problem is not just execution — the problem is structural. Green Deal is based on centralised planningto manage a complex energy transition, although decision-makers do not have adequate information or incentives to do so effectively. The main drawback is to reject technological neutrality. Leading manufacturers support A mix of electric, hybrid, hydrogen and e-fuel fuels to freely compete and let effective solutions to be developed, while Brussels forces 1 way — effectively deciding which technologies will last and marginalize manufacture expertise.
In specified a system, the effects are predictable: inappropriate allocation, distorted competition and costly failures. These distortions reenforce Europe's restrictive regulatory environment, where interior barriers to the EU Single marketplace are 44 % tariff for goods and 110 % for services, which further reduces efficiency and innovation.
Germany clearly illustrates these dynamics. He has long been considered the leader of the green transformation of Europe, her Energywende — The expansion of renewable energy sources while atomic decommissioning has cost around $800 billion, and yet it only yielded average results and made the German manufacture pay even 5 times more for electricity than American competitors. Much of the advancement in renewable energy sources has been undermined by the closure of zero-emission atomic power plants. Estimates propose that maintaining atomic power could accomplish 73% reduction at half the cost, which highlights the limitations of ideologically driven policies.
Comparison with the United States is informative. In the USA emissions have fallen, although the economy has doubled since 1990 — mainly by marketplace forces, especially the transition for cheaper natural gas and the improvement of renewable energy sources. This combination reduced emissions without imposing comparable costs. Europe, on the another hand, is taking a more rigid, political approach that has raised prices and weakened growth.
The deeper lesson of Green Deal is that climate policy cannot win if it abandons the principles that have made Europe prosperous: free enterprise, open markets, private innovation and a limited government. Energy transformation cannot be designed through centralised planning, subsidies and political mandates. Innovation emerges from competition, experimentation, and marketplace signals — not from governments that dictate technological results.
Translated by Google Translator
source:https://www.zerohedge.com/
