The green-energy future has arrived – in Europe – and it is not a pretty sight. Even more than in the U.S., many European politicians claimed that it was possible to go “green” without disastrous costs – but that lie has now come home. Natural gas and electricity prices have been surging as supply is being artificially restricted. The winds in the North Sea stopped blowing two weeks ago, the wind turbines stilled, and U.K. energy prices surged “to 11 times normal levels.”
The irony is that several years ago, vast deposits of natural gas were found in Britain (an estimated 51 years’ worth using today’s technology). But instead of rejoicing in the windfall, the Brits banned fracking – at a time when the gas they get from their North Sea wells is declining. The argument was made that the loss of gas power could be made up with wind and solar. Of course, solar only generates power during sunny days, and wind farms require the right weather conditions for optimal output. Economical ways to “store” excess solar and wind energy when it is generated are lacking. The result is that with the drop in wind power, Britain was forced to restart some of its coal stations.
Britain’s problems were self-inflicted by listening uncritically to the greens. Historically, Britain was blessed with plenty of coal to fuel its power stations. And then cheap and clean natural gas from the North Sea was found. As the North Sea fields were depleted, LNG was imported, many wind turbines were erected, and power interconnectors to Europe were built to balance fluctuating supplies.
The Russians are increasing their gas supplies to the Europeans through existing pipelines, LNG exports, and soon through the new Nord Stream 2 pipeline. All of this boosts the price and supply stranglehold Russia will have on Europe, including Britain, which is increasingly dependent on power from Europe. (Note: One of the five power interconnectors with Europe failed a week ago during the lack of wind crisis.) The sensible action would be for Britain to reembrace nuclear and allow environmentally sound fracking as done in the U.S. – but this would require the public and political class to free themselves from the environmental extremists.
The steep surge in power prices and the increasing unreliability of supply has caused – and will cause even more – rises in price levels and the shutdown of many companies, thus adding to the unemployment woes. Low-income and poor people, of course, suffer more from inflation than the rich. If gasoline prices increase two or three times, it can be very painful for a low-income worker with a long commute but pocket change for a wealthy person. In addition to the price increases, the British are now suffering food shortages because of power problems. The environmental extremists will often demand a greater subsidy to the low-income and poor to offset the higher food and energy costs, which will result in higher taxes and/or more inflation – but they have never been known as people who could think one step ahead, let alone three.
The Chinese have stated their intentions to greatly expand their solar and windmill production capabilities for foreign markets. The irony is that the Chinese are building even more low-cost coal-fired power plants to expand their ability to produce more wind and solar for the rest of the world. So, the situation is as follows. Europe shuts down its efficient fossil-fuel energy plants and shifts over to higher-cost, less reliable, and less flexible renewables made by the Chinese using coal-fired power. How does this mitigate global warming? And how does it reduce poverty and increase the real incomes of Europeans?
Those in the Chinese leadership probably laugh at the Europeans and feel they have achieved some revenge for the European 19th-century interventions into China. The British had been buying Chinese tea, but the Chinese were not buying anything of equal value, so the Brits began selling opium to the Chinese– causing a high rate of addiction among the Chinese population. The British then demanded certain trade and other concessions from the weak Chinese government of the time, followed by concessions to the French, Russians, and Americans. The Chinese resentment of foreigners grew, cumulating in the “Boxer Rebellion” (1899-1901). The Western powers won the struggle, which helped fuel chaos and civil wars in China and the Japanese invasions in the late 1930s. By the time of the Chinese communist takeover in 1949, China was an impoverished country — great humiliation from a country that centuries earlier had been richer than Europe.
Now that China has rebuilt much of its economic strength and the West has been weakened by self-induced suicidal woke green policies, in part covertly underwritten by the Russians, the Chinese quite understandably are engaged in payback. The United States has not been, up to now, as policy destructive as the Europeans. Still, the Biden Administration has now put the country into the same downward spiral, with its attacks on the fossil fuel industry, which had been one of the main reasons for American prosperity.
If you want to know what the unbridled “green future” will look like, watch Europe with soaring energy costs, blackouts, food shortages, and increasing unemployment and poverty.
• Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.