Cheap Energy Makes America More Competitive Europe is losing ground. Many energy intensive industries want to relocate to the USA

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By Paolo von Schirach

September 30, 2013

WASHINGTON – Does cheap energy make a difference when it comes to economic competitiveness? You bet it does. The Financial Times, (Eon chief warns Europe on energy gap with US, September 30, 2013), quotes Johannes Teyssen, CEO of  EON, a German energy company, saying that: “there is a  competitive advantage for America that we cannot prevent, at least for some time…It is a dream for politicians to suggest otherwise“. America’s energy edge is in part the fruit of geology (plenty of shale gas); and of Yankee ingenuity, (nobody thought it was possible to extract gas from shale and make money).

Germany’s electricity is too expensive

The funny thing here is that policy makers in Germany, using subsidies and other incentives, pushed hard to get more energy from solar, this way trying to be both modern and “green”. Well, this policy has driven up the cost of electricity, and so Germany’s energy intensive industries are looking for opportunities to relocate to the US because the shale gas boom has made American electricity very inexpensive. Meanwhile, “green” Europe does not have enough of its expensive renewable energy; and so it has to rely more on old-fashioned, dirty, high emission coal, this way increasing green house gases emissions.

Being “green” is not so good for the economy

The paradox here is that supposedly immoral America, the country where business people would do the worst things in pursuit of immediate gain, is actually reducing carbon emissions. Yes, abundant US shale gas has displaced coal, and this means more cleaner burning gas-fired power plants. “Green” Europe, the Continent where concerned citizens really think a lot about global warming, is actually increasing CO2 emissions because of misguided energy policies that subsidized expensive renewable energy, this way displacing natural gas.

 

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