Europe’s stratospheric energy prices and economic doldrums are forcing a basic rethink of energy policies. The FT reports:
[There is] a growing fear in Europe that rising energy prices now pose a threat to the industrial competitiveness of a region mired in recession. It has been driven home by a steady stream of announcements from European manufacturers about plans to build new production facilities in the US. [...]
Wind and solar power come at a premium; setting quotas for energy produced from these sources is going to drive prices up. This is what happens when you try and prop up technologies not ready to compete on their own merits. You become less competitive with regions that haven’t handicapped themselves.
The US, you’ll notice, has seen electricity prices drop over the past seven years, largely because of the shale energy revolution. Shale isn’t zero-carbon, but it does burn cleaner than coal, and it’s providing American consumers and industry with cheap energy.
Europe has shale reserves of its own, and leaders in Brussels are expected to make overtures today toward developing domestic energy sources. But as Poland is finding out, shale energy is not a tap to be turned on with a twist of the wrist. Countries need to set up the right regulatory environment to appeal to American drillers, who at the moment have all the expertise in fracking and horizontal well drilling. Europe’s geology might also make playing catch-up more difficult; the “wedding cake” layering of American rock makes it particularly well-suited to horizontal drilling.
We hear so much about how green energy is good for the economy. It’s interesting that the citadel of global greenery is thinking of throwing in the towel.