The EU’s energy policies threaten our prosperity

By
BrusselsReport.eu
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By John Dejaeger, former managing director of BASF Antwerp and chairman of Pro Flandria.

The European Union’s energy policy threatens to end in disaster. We can draw this conclusion based on current energy and electricity prices, which are much higher than prices on other continents. This reduces our competitiveness, shrinks our economy and threatens our prosperity.

And this despite the fact that everyone knows that global prosperity and growth are based on sufficient energy at reasonable and competitive prices. Moreover, this policy does not serve environmental objectives either.

Chinese coal

What is happening under the impetus of the European Commission is rather hypocritical. Due to our high energy prices, we are increasingly importing cheaper products that are produced elsewhere with a higher environmental burden. In this way, part of our industrial production is disappearing, we are reducing employment and the impact on the environment is disastrous.

For example, we import large quantities of products from China, where electricity is still largely generated by coal-fired power stations. CO2 emissions may be falling in Europe, but we are only responsible for 6 per cent of total emissions.

The rest of the world is not following our lead.

The focus on the electrification of the vehicle fleet is one-sided. Only the CO2 emissions of the car itself are taken into account, without evaluating the entire production chain. The CEO of BMW recently pointed out that the current rules will halve the car industry in Europe. We are the only region in the world that wants to ban combustion engines. The rest of the world is not following our lead.

A serious price tag

In addition to CO2, there are other greenhouse gases such as methane that have an impact on climate change. Focusing too narrowly on CO2 may leave simpler and cheaper solutions unexploited. In Europe, temperatures are rising more sharply than elsewhere, driven by increasing southerly winds. Further research is also needed in this area.

Certainly, the sun shines for free and the wind blows for free. But renewable energy based on wind and sun does come with a serious price tag. Sooner or later, subsidies will have to be paid for by the consumer. The wind blows irregularly and the sun does not always shine with the same intensity. This means that backup capacity is needed, for example in the form of natural gas-fired power stations. We also need to invest in new high-voltage grids.

Sooner or later, subsidies will have to be paid for by consumers.

Until a few years ago, that natural gas came mainly from Russia via pipelines and was extracted in Slochteren in the Netherlands. Today, natural gas is mainly imported in liquid form via LNG ships at a much higher cost. Much of the natural gas comes from the United States, where large quantities of shale gas are extracted. The extraction of shale gas is prohibited in the EU, but imports are allowed. America is now completely energy independent, while Europe is dependent on expensive imports.

Nuclear power stations

As if that were not enough, environmentally friendly natural gas – which is also an important raw material for the chemical industry – is subject to additional taxation via the European ETS system because of its limited CO2 emissions, in comparison with coal and oil. The production of hydrogen, which does not emit CO2, is very expensive and will never be an alternative to natural gas. To make matters worse, Belgium planned to close down fully depreciated and cost-effective nuclear power plants that do not emit CO2. It is now now forced to u-turn on this, unfortunately at a serious additional cost.

In the United Kingdom, it has since been recognised that fossil fuels will still be needed for decades to come and that the country’s own energy supply with gas and oil from the North Sea remains essential for competitiveness.

Adverse trade balance

Due to high energy prices, the most efficient chemical plants in Antwerp are operating at low capacity and cheaper chemical products are being imported en masse from the US and Asia. This has reversed the flow of goods, with more overseas imports and fewer exports. The question is how long this unfavourable trade balance and dire economic situation can be offset by budget deficits and rising national debt.

Remaining locked into an ideological agenda is a denial of reality.

Sticking to the Green Deal regulations, the net zero rules by 2050 and the 90 per cent reduction by 2040 is a bad idea. Remaining locked into an ideological agenda is to deny reality, the experience gained and the negative results. A strong EU recognises that it urgently needs to change tack and that its Industrial Deal must be underpinned not only by words but above all by deeds. Recognising this is a sign of progressive insight and flexibility, not weakness.

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