Europe’s Climate Policies Serve As A Warning To The U.S.

By Michael Bastasch

Europe’s costly green energy policies should serve as a warning American policymakers trying to impose similar regulations at home, according to data from a new report.

The International Energy Agency found that European Union policies aimed at boosting green energy use are costing families and businesses billions of dollars a year in taxes and higher energy costs while receiving virtually no benefits from a greener economy.

“[R]etail prices are on the rise,” according to IEA. “Wholesale market opening has not favoured the retail market level … as the fall in wholesale prices has been largely compensated by higher green levies, taxes and network cost.”

“Consumers do not feel the benefits from switching suppliers,” IEA found. “Indeed, regulated prices and market power exercised by the historic incumbent persist in many member states.”

For years, European countries have been pushing policies to get people to use more green energy. Germany, for example, has embarked on a mission to get 80 percent of its power from green energy sources by 2050.

And the country is well on its way to doing so and, thanks to generous subsidies and price guarantees, Germany got 27.3 percent of its electricity from wind, hydroelectric, solar and biomass last year — the country even saw its carbon dioxide emissions fall from 2013 to 2014.

But all of this came at a great cost: $412 billion to be exact. German households and businesses have been forced to pay ever-increasing taxes and surcharges to force more green energy onto the grid – power prices are more than 50 percent higher than they were in 2006.

One of Germany’s largest newspapers, Der Spiegel, said electricity had become a “luxury good” in the country. The high cost of electricity does not take into account the businesses that have left the country and the number of households that have gone off the grid.

Germany, however, is not alone in feeling the pain of green living. IEA found that Europe spends $70 billion each year subsidizing green energy — that makes up 57 percent of the global subsidies to green energy.

“[I]ncreasing deployment of supported renewable technologies continues to push up electricity retail prices, as support is charged to end users through green surcharges or taxes,” IEA found. “Despite the overall decrease in EU wholesale electricity prices since 2008 … in 2013, EU electricity prices for industry remained 40% above the United States prices.”

In the U.S., federal and state lawmakers are also trying to push more green energy use as a way to fight global warming.

President Obama has spent billions promoting solar and wind energy, and his EPA is in the process of finalizing regulations that would limit carbon dioxide emissions from power plants — a rule that would make green energy relatively more attractive to investors.

State lawmakers have also introduced a slew of subsidies to spur solar and wind production while also mandating that utilities produce a certain amount of electricity from green energy sources. California Gov. Jerry Brown, for example, recently unveiled one of the country’s most aggressive green energy mandates — ordering the state get 50 percent of its power from green sources by 2050.

But Europe’s experience with green energy could serve as a warning for U.S. policymakers: tread carefully or get hit with rapidly increasing energy costs.

IEA also hints that coal power, which Obama wants to effectively wean the country off of, plays a vital role in energy security.

“While coal has a limited outlook under any ambitious climate policy, it has security benefits, given the abundance of the resources and diversified global coal markets,” IEA said.

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