<nyt_headline version=”1.0” type=” “>Europe Faces a Crisis in Energy Costs
Europe is lurching through an energy crisis that in many respects parallels its seemingly unending economic crisis. Across Europe, consumer groups, governments and manufacturers are asking how their future energy needs can be met affordably and responsibly.
In some ways, Europe is a victim of its own success. It has made remarkable progress in switching to a future beyond oil and natural gas. For instance, last year, a hefty 23 percent of European power demand was met by electricity generated by renewable sources like wind and solar, compared with just 13 percent in 2002. This shift was “driven primarily by generous support policies for renewables,” said Susanne Hounsell, an analyst at the energy research firm IHS CERA in Paris.
But achievements like that have also brought problems. Most green electricity sources cannot compete with coal and natural gas on their own and require subsidies that are passed on to industry and consumers. The more power they generate, the higher those costs. Direct charges for renewables add about 18 percent to German household electric bills, with indirect costs putting on more.
In Britain, climate charges add 19 percent to the electricity prices that large manufacturers pay, according to Jeremy Nicholson, director of the Energy Intensive Users Group, which represents heavy industry. That helps make industrial processes that are heavy users of electricity, like aluminum smelting or steel making, endangered species in Britain.
Europe’s energy policies were conceived in a very different era, the early to mid-2000s and even before, when economic growth was robust and there seemed to be lots of leeway to add a few euros onto the cost of electricity, if that might help combat climate change.
In Europe today, to take only a couple of examples, steel production is down about 30 percent since before the financial crisis, and new car sales hit their lowest level last year since 1995. It is hard not to conclude that economic activity like manufacturing is decamping and moving to places like Asia