Europe is becoming a green-energy basket case

April 21, 2013

FOR YEARS, European leaders have flaunted their unwavering commitment to fighting climate change — and chastised the United States for lagging behind. But last week brought yet more confirmation that the continent has become a green-energy basket case. Instead of a model for the world to emulate, Europe has become a model of what not to do.

The centerpiece of the European Union’s climate plan — indeed, the only major climate policy that acts across all member countries — is a slowly declining continent-wide cap on emissions. By allowing companies to buy, sell and bank permits to pollute under that cap, the program puts a price on European carbon dioxide emissions. Designed properly, the scheme should encourage companies and consumers to reduce the carbon-intensity of the goods they purchase and invest in cleaner alternatives.

But the Europeans didn’t design the policy properly. For a variety of reasons that E.U. officials should have anticipated, the market for carbon permits has all but collapsed. And in a Tuesday vote, the European Parliament rejected a slapdash rescue plan.

If the continent wants to rediscover its ambition on climate change, individual member states will probably have to do it on their own. But European governments have proved themselves to be incompetent central planners, counter-productive and wary of thinking pragmatically.

Germany is irrationally shutting its nuclear power plants — which produce lots of steady, reliable electricity and no carbon dioxide emissions — and promising that renewables will somehow pick up the slack. Perversely, that approach has led power companies to ramp up coal burning, the dirtiest fossil fuel, in a country that has also lavished its public money on the solar industry. Spain, too, has over-invested in expensive renewables. To its credit, France hasn’t decided to shutter its nuclear plants, but it is one of many countries that refuse to open up natural gas reserves, a resource that could help wean the continent off coal.

Britain is comparatively better, developing its own carbon-pricing program and permitting gas development. But that hasn’t kept Europe’s carbon emissions from notching up in the last few years — even as those of the United States have decreased.

Only a few years ago, it would have been outrageous to claim that the United States would ever be on a better emissions trajectory than Europe. Yet it is now burning less coal even as Europe burns more. That partially reflects the fact that the United States is only now taking steps mandating greater fuel efficiency for cars. But it is also the result of a practical embrace of natural gas and the continued use of nuclear power.

The United States consequently has the opportunity to turn itself into the world leader in fighting climate change, a role it has long shied from. To lock in its progress, U.S. policymakers must learn from Europe’s dysfunction. That means putting a price on carbon emissions that is simple, predictable, aggressive and comprehensive, and then getting out of the way.

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