Cost Of Living Crisis Threatens EU Energy Transition

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Yves here. This post discusses a simmering issue that is coming to a boil: how politicians around the world have been committing themselves to meeting carbon reduction and/or green energy goals, but then go about them in a half-hearted or even contradictory manner because they don’t want to get voted out of office for having imposed too many costs on consumers.

This result comes about from a multitude of factors. First is the lack of any real sacrifice from the top, particularly from the pols themselves. And I don’t mean cheap gestures like more bicycle riding. Taxing private jets severely or even barring landing privileges if they have low seat density would be a starter. The second is the failure to even attempt to sell to voters why tackling climate change is necessary and why the particular measures being implemented are worthwhile. It’s not hard to see that these initiatives are largely uncoordinated one-offs that are the worst of all worlds: they do hurt certain populations without doing anywhere near enough in aggregate.

The third is engaging in the self-defeating policy in the UK and many EU countries of subsidizing energy use last winter in response to the loss of access to cheap Russian pipeline gas. The odds of a repeat this winter are pretty good.

By Irina Slav, a writer for with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

  • Rising living expenses in the EU are causing conflicts over climate change mitigation efforts, with members like Poland and Germany expressing concerns.
  • The European Parliament remains committed to increasing low-carbon energy targets despite growing opposition and economic challenges.
  • The EU’s push for local production of low-carbon tech faces competition from China, raising concerns about the feasibility and cost of achieving climate goals.

Consistently higher living expenses have deepened a rift among—and within—EU members about tackling climate change and moving away from oil, gas, and coal.

The development has been anything but surprising, as higher energy costs had millions of Europeans struggling to make ends meet. Yet Brussels remains adamant that the transition must happen as planned. Or almost.

This spring, the ruling coalition in Germany proposed a bill aiming to phase out gas heating systems and replace them with electrical ones that draw energy from sources such as wind and solar.

The proposal caused protests in parts of Germany as people refused to shoulder the cost of retrofitting houses and residential buildings with heat pump systems.

Eventually, the German parliament last week passed a watered-down version of the proposal in a bid to calm public nerves.

Meanwhile, earlier this year, Poland filed a lawsuit against the EU about some of Brussels’ climate policies, arguing that these would impose an unbearable burden on its citizens.

One of these policies was the planned ban on new internal combustion engine car sales from 2035, which the European Commission believes would be a major step towards moving to a low-carbon future.

“The contested regulation imposes excessive burdens connected with the transition towards zero-emission mobility on European citizens, especially those who are less well off, as well as on the European automotive companies sector,” Poland said.

The Central European country also railed against national emission reduction targets, saying these would undermine its energy security. Poland is overwhelmingly dependent on coal for its power generation.

Germany, for all its efforts to reduce its dependence on hydrocarbons, also recently increased its dependence on coal: utility RWE recently began dismantling a wind farm in order to expand a lignite coal mine after the government shut down Germany’s last three nuclear reactors.

France is also against some new climate policies pushed by Brussels, specifically rules concerning levels of exhaust pipe emissions, along with another seven member states. These include Poland again, Bulgaria, Hungary, Italy, Romania, the Czech Republic, and Slovakia.

“These new rules would divert the industry’s investments from achieving the net-zero transition pathway,” the eight said.

The main problem these member states have is that the cost of the transition to net zero is already beginning to be felt by their citizens. Since no rational government would risk its re-election chances by angering the majority of voters, they are now looking for ways to slow these climate policies down or do away with them altogether.

As Bloomberg put it in a recent report, “Polls show most European voters want action on climate change as heat waves, wild fires and floods make the impact of emissions ever clearer — but they’re reluctant to bear the cost of switching to less-polluting technology.”

Despite rising popular opposition, the European parliament this week voted to increase low-carbon energy targets, now aiming to generate over 42% of its electricity from wind, solar, and other low-carbon sources of energy.

To facilitate the buildup, the European parliament also approved faster permitting processes for new wind and solar installations.

The vote came amid warnings from wind and solar developers in the bloc that higher raw material and lending costs are jeopardizing their projects. Danish Orsted sounded the alarm earlier this year, although it focused on the UK, calling for more state subsidies.

Several solar developers in the EU, for their part, warned cheap Chinese panels were undermining their own profitability thanks to generous subsidies from Beijing and cheaper labor. The European Union has ambitions to manufacture 30 GW of solar power technology at home by 2030.

Today, in her State of the Union address, European Commission President Ursula von der Leyen doubled down on transition ambitions, slamming China for its “unfair trade practices,” which “affected our solar industry.”

She also highlighted the EU’s plans to go local in terms of transition supply chains, stating that “From wind to steel, from batteries to electric vehicles, our ambition is crystal clear: The future of our clean tech industry has to be made in Europe.”

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  1. Palm & Needle

    Good article. However, it only hints at what I think is a most crucial aspect:

    The energy transition is a major front in the global class war.

    Broadly, the historical path of the energy transition is now at a three-pronged fork:

    1. No transition, or half-hearted transition -> The doomsday scenarios of climate change play out.

    2. Successful energy transition, paid for by the working class -> the civil unrest caused by the increased cost-of-living burden will need to be repressed. This pathway only works with an accompanying transition to fascism.

    3. Successful energy transition, paid for by the carbon pigs (the wealthy) -> the resistance of the bourgeoisie, including state violence, can only be overcome by class-conscious mass movements leading to reform or revolution.

    I don’t see any fourth path available. (Does anyone?)

    At the moment, we are oscillating between paths 1 and 2. Since there is little class consciousness in the working class in Europe (and that which exists is often equivocated), and the vanguard of climate activism deliberately excludes the class component, the current state of affairs makes path 3 very unlikely.

    For those of us who oppose fascism and also want to have grandchildren, it is high time we start to root our discussions of climate change and the energy transition as a vital front in the class war.

    1. Joseph Chaisson

      Path 4 is transformative, but to date has faced “conceptual” acceptance by most reviewers. It is a very low cost gaseous fission technology that has essential nothing in common with conventional (solid fuel and molten salt) nuclear energy. Having worked in energy advocacy for many decades, mostly exploring new concepts like super hot rock geothermal, it has been quite frustrating to experience how challenging it has been to get this (uniquely important) technology taken seriously.

      And the latest revelation has been that producing safe, easily transportable and essentially free fuel for this technology can eliminate challenging and otherwise “no management solution” nuclear wastes..

      I remain (extremely) frustrated that our current innovative energy system – NGOs, government and private investors, has totally failed to adequately recognize and move this technology forward.

      1. Palm & Needle

        That doesn’t seem like a Path 4 to me.

        It’s a technological solution, but the crux is by what economic relations will it be implemented? It will require investment, industry, labor. Will it be paid for by taxing the working class, imposing austerity, imposing restrictions on consumption, outsourcing production overseas, leaving the “free market” to fix the labor market (Path 2) or will it be paid for by taxing wealth, profits, dividends, and reinvesting that in a planned manner on domestic productive forces that raise the standard of living of the working class (a potential Path 3)?

        The solution to climate change will be found in a new social contract; we already have all the required technologies.

      2. itsaclasswar

        Low cost technology and essentially free fuel are actually obstacles in practical terms.

        It’s like when Tesla proposed harnessing the power of the Earth’s magnetic field to the TPTB of that era, and was effectively laughed at. Allegedly he was told that if it were up to him, all they would be able to sell is antennas.

        1. Joseph Chaisson

          This technology will probably be more economic than continuing to operate some existing energy systems like convention al nuclear plants (that have very high fixed O&M). My current view is that its development will probably be funded primarily by NNSA (the weapons program part of DOE) given their quite recent discovery that it can very cheaply eliminate key weapons program wastes. As it turns out, this technology can eliminate the waste materials that Savannah River National Lab spent $8 billion on a failed factory to create MOX nuclear fuel out of weapons grade plutonium to meet a US/Russia treaty provision.

          I have been working on cutting edge, innovative energy technology for about 30 years and it is quite clear that we don’t “have all the required technologies”.

          Also, a South Korea consortium, including Hyundai (largest global manufacturer of marine diesel engines) has had discussions with the developer of this technology about applying this technology to marine propulsion – which would apparently be practical. This technology can also be used to re-power nuclear plant sites being decommissioned and can use spent fuel at the site to operate replacement units (Argonne National Lab has done work on this concept).

  2. thoughtful person

    If the powers that be in the wealthy USA and EU were truly serious about greenhouse gas reductions they would have matched and exceeded China’s state assistance of solar and wind. The climate changes ahead in the next few decades, let alone centuries, may make humans extinct. We should be seeing a WW2 level of effort with the same massive state spending currently directed toward the military applied to reducing, not just emissions, but the actual levels in the atmosphere.

    If we judge them by their actions and not by their words, one has to conclude a massive die off is in the plans. Aka the jackpot, is the goal.

    1. digi_owl

      Another thing would be to move away from sprawl, and towards something more akin to the massive apartment block built during the Soviet Union. We are talking massive buildings that incorporate basic services for shopping etc.

  3. Mikel

    The people are also looking at all that increased military spending and proposed increased military spending.

    I don’t have any words but those that will get me banned for people with 3 or 4 houses telling someone living in an apartment that they have to sacrifice.

  4. Mikel

    And then I jump over to links and I see the following story (that also affected the EU since these are global events):

    “USA Today is now hiring a Beyoncé reporter after posting a Taylor Swift job” Bloomberg

    “…Gannett Co. has posted a second role to “chronicle the music, fashion, cultural and economic influence of Beyoncé” for USA Today and The Tennessean…”

    “…Perhaps the biggest perk: The reporters will need to travel internationally as they follow the stars…”

    What did they not mention as an aspect to cover? The environmental impact of the tours.

    Just another little thing that irks people about how this is all playing out.

    Also in the news today is how the EU is bent all out of shape for China subsidizing EV manufacture. They swear up and down about how allegedly “green” EV productiom is supposed to be and at various conferences have spoken about the need to subsidize “green” initiatives.
    It’s a global clown show.
    People feel like they are being embezzled by clowns. Although the clowns are more like the Joker, Pennywise, and John Wayne Gacy.

    1. digi_owl

      Because spectacle is as important to the “green” PMC as their mid winter strawberry smoothie and daily artisan latte. All enjoyed while they are zipping between office and home on their e-scooter, because they are oh so environmentally conscious.

  5. TomDority

    Cost of Living is reason why Energy Transition is not going forward Globally.
    In the US people complain of an affordability crisis in housing.
    After legislating everything in support of and, encouragement to the speculative (non productive) side of financing asset price inflation in the human required needs list (food, shelter, medicine) – it is in my mind, no wonder at all that the lender inspired and legislated financial huffery and puffery has created a cost of living crisis – to only blame the recent energy or inflation – or to blame labor for demanding more is diversion from the finance capitalism’s burdens imposed upon the commons. This interest rate hikes thing is not to quell inflation but to force compliance (through peonage) of the worlds countries to a leadership by finance capital.
    So really, it is not how much one earns but, how much one must expend to stay alive. The more outgoing to support the overhead of finance capital is less one has to spend on energy transition.

    1. Palm & Needle

      Cost of Living is reason why Energy Transition is not going forward Globally.

      In China, the energy transition is going forward. They even meet targets years ahead of schedule.

      But alas, in the West we are not allowed to look at China as an example of civilizational progress.

  6. Ignacio

    Governance by targets. That is a big problem in the EU (and Germany it seems). It makes you look good and handsome by setting desirable targets like lowering CO2 emissions. As a politician you might have even done the “hard job” of looking at the distribution of emissions by sector and even downloaded the spreadsheets and taken a look at them. OK, do we put the same target for every sector? Sounds reasonable and everyone gets implicated in the target. OK, now let’s get down to the “details” of each sector. Let’s say emissions by buildings…residential buildings… this is 10% of total emissions. OK, OK setting a 20% reduction here in 4 years sounds reasonable? We have 42 million households here in Germany let us say we make 8,4 millions go net 0 by introducing self consumption solar and substituting NG broilers with electricity consuming heat exchangers… then you go with the large numbers again, what is the average kWh consumption per household? Ok for that we need X millions of such heat exchangers and Y millions of solar modules with Z hundreds of thousands of inverters plus electric protections, km of cable, hot water accumulators etc… Can our industry supply that? The expert replies: may be if you lower the target to 15% and set it for two years later. And this will create tons of employment, go for it!. Yeah but we are short on installers, refrigeration engineers, maintenance types… Don’t worry we will add some money for education! Yeah but this will take about two years to have all that trained people. Manufacturing all that stuff will also increase CO2 emissions by the industries… OK, OK, but that goes in a different sector. Don’t worry about it we will address it later. What about the costs? Well, let’s say 20.000€ average/household x 6,3 million this makes about 120 billion €. That little indeed? Let’s go for it: the target will be 15% in 4 years. Yeah sir/madam who will be paying for it? Don’t worry someone will figure out that later. There are other problems sir/madam, we don’t really know if there is space enough in households to do that, and if many of them get enough sun, and if the current electricity network can sustain the new traffic and if we can find enough installers willing to do it on the cheap, and… STOP talking about problems! Someone will figure all of it out. let’s go to write a draft.

    1. digi_owl

      Seems like a MBA thing, like targeting a x percent profit increase pr quarter.

      And if a sitting government announce a far of target and is still in power when it comes round, they can the opposition for interfering. And if they lose power and the opposition fail to deliver, perhaps because it was impossible to begin with, it can be used against them in the next election.

    2. Kouros

      Same story goes for any target indicator I work with in health care. No causal factors considered and how those need to be addressed in order to achieve the desired targets. It is all produced a la GW Bush, directly from the gut…

  7. Kfish

    The Davos set fly around eating steak and fois gras to tell the rest of us that we need to stay home and eat lentils. No-one outside their little circle is buying the BS. It’s not that complicated.

    During WW2 the British royal family had their own ration cards, and made a big showing of using them plus the produce from the various palace gardens. The idiots currently ruling us are supposed to be masters of PR and the public image, why can’t they work this one out?

    The other problem is that some of the new ‘green measures’ are just plain stupid. Here in Australia, one state has banned new natural gas appliances. So the same natural gas will instead be burned, turned into electricity and then used to heat a stovetop after suffering two sets of conversion losses and transmission losses as well. Good job, guys.

  8. David Jacobsen

    Be aware the danger to our environment is from excessive atmospheric warming of the world (globe). Climate has been in change for millennium. Too much carbon dioxide is released thinning the ozone layer and over- heating the planet. Carbon dioxide escapes from fizzy water bottles. C02 escapes from fossil fuels. The sensible method to mitigate the effects of coal burn is to utilise carbon capture and storage technology. The sensible way to mitigate C02 release is to protect and increase rainforests and initiate concentrated tree planting projects. The stupid knee-jerk reactive way to destroy immediate, medium and long term energy self-sufficiency is to stop coal production outright. Righteous or otherwise politically motivated actors are better occupied saving the planet for future generations by decommission of nuclear power stations used for energy consumption. By association, raw materials mined to produce nuclear weapons should be left in the ground. Countries that hold nuclear weapons should be pressured to decommission and should not get away with warning other countries away from nuclear power and weapon development, while the very same countries, Israel very much included, bristle with their own nuclear threat to all out global war.


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