Europe Climate Bailout Scheme Shows They Think We're The Clowns

By Marita Noon
Sunday, December 18, 2011

The Economist Magazine has historically been a supporter of climate-change interventions such as cap and trade and carbon-emission reductions. Yet, they reported on the UN climate change talks in Durban as being more about “saving the circus” than “saving the planet.” But, just what is the “circus;” who are the performers; and how did they get into the ring? And, was it ever about “saving the planet?”

My previous column postulated on China’s role in the climate change “circus.” I suggested that their apparent change of heart on the issue was really just a change of strategy.

Like The Economist, another leading European publication, The Financial Times (FT) has also been a believer in man-made climate change. FT carried extensive coverage of the 2011 UN climate change talks—even producing a twelve-page supplement: Climate Change Review, Durban 2011. Here in the US, the climate change talks in Durban were barely mentioned.

Within FT’s reporting they state that the European Union (EU) “is pushing hardest among developed countries for a new global deal” and is “the greenest voice among wealthy countries at the talks.” Is the EU uniquely insightful, or like China, is their role in the ring also more about economic strategy?

When it is widely known that any Kyoto-style deal will be costly to the countries’ involved and make energy more expensive for the countries’ citizens, why would the EU stand out as the staunchest supporter? Canada has dropped out of the Kyoto accord “in order to save billions of dollars in potential non-compliance fees.” The US never signed on. Developing industrial countries, such as China and India, have repeatedly refused to participate because “rapid development is lifting millions out of poverty.”

Perhaps, herein, lies “the circus”—with the EU as the star performer.

The countries that have resisted, or rejected, binding greenhouse gas reduction agreements are generally countries with abundant natural resources: the US, China, India, Russia, and Canada. Australia, another country rich in resources, is still performing in “the circus.” The EU, on the other hand, has limited resources—leaving them to depend on nuclear power, natural gas from Russia, and oil imported from the North Sea and Middle East. The quest for oil was one of the factors that prompted World War II—both Germany and Japan had it in their sights.

For the EU to be energy independent, they must develop “renewables”—specifically wind and solar power. Wind and solar resources do generate energy, but they are more expensive than the traditional fuels that other regions have in abundance. Renewable energy costs put the EU at a competitive disadvantage in the global marketplace, perhaps, making it advantageous for the EU to support a scheme that artificially raises the cost of traditional fuels in competing nations. Hence, support for emission reductions that hurt other economies more than the EU, could make the EU the primary driver for climate-change interventions.

Could the EU’s lack of abundant natural resources have contributed to its current economic crisis? Italy provides an illustration of this hypothesis.

Italy is one of the EU members in need of a financial bailout.

At the introduction of the euro, Italy had a €25 billion trade surplus. Today, they have a €35 billion trade deficit. However, if its oil consumption is removed from the mix, Italy actually has a trade surplus. Therefore, if Italy could, somehow, reduce its dependence on oil imports, the country’s account balance would improve due to lower import volumes.

Renewables offer Europe “domestic” energy, albeit more expensive energy, and therefore provide Europe with energy needed for manufacturing and industry. However, more expensive electricity puts Europe at a competitive disadvantage with other markets—especially the United States.

Enter the premise of man-made global warming and climate-change interventions. American environmentalists embraced the potential energy reductions.

It almost worked. Had the US signed on to the Kyoto protocol and/or passed cap and trade, for example, our energy costs would be considerably higher than current rates due to forced implementation of renewable energy—rather than allowing the free market to pick winners. Instead, the jig is up.

Even the environmentalists acknowledge that they need a new approach. Yet, Europe clings to a global plan for emission reductions through the UN and instituted a Ponzi-like cap-and-trade program that would have enriched Eurocrats. It has discouraged scientific rigor and fueled the man-made global warming scheme, by encouraging and recognizing those who assisted in garnering favorable publicity for the fear, uncertainty, and doubt of man-made climate change. Maybe it has never been about saving the planet.

This premise leaves Europe in an economic tailspin, without hope of easy recovery, and grieves global governance supporters who believe that the playing field needs to be leveled.

President Obama’s energy policies—such as his support of cap and trade, resistance to developing America’s oil-and-gas resources, and backing of more expensive renewables, while shuttering affordable coal resources—make us the clown. In November 2012, Americans will decide if we, as a country, will go the route of Europe, or if we will have economic growth fueled, like Canada, by an abundant and affordable supply of energy.

Will we vote to save the circus, or save America?