Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy

Political consensus is cracking, industry is hobbled and high-profile projects are being postponed thanks to some of the highest electricity prices in the developed world

By Tom Fairless and Max Colchester of The WSJ. Excerpts:

"European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions.  

Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy."

"Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates"

"Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China."

"“We are hemorrhaging industry,” said Dieter Helm, an economic policy professor at Oxford University who has advised U.K. governments on energy policy. 

British chemical company Ineos said in October it would close two plants in western Germany because of high energy costs."

"a good chunk of the increase is thanks to the shift to renewables, say business executives and some economists."

"While sunlight and wind are free, harnessing them entails significant infrastructure investments, including in battery storage for when the sun isn’t shining or the wind blowing, and vast redundant capacity. These additional costs, obscured by subsidies and carbon taxes, mean energy prices in places like Germany and the U.K. are likely to remain higher than other countries for years to come, some economists say. The stubbornly high prices, Helm said, suggest it’s the overall system cost driving prices."

"a “clean power” system in the U.K. would only start saving bill payers money from 2044. It’s a similar story in Germany."

"High-profile net-zero projects are being postponed or scrapped, notably those involving green hydrogen, which the EU placed at the heart of its green plans as a possible fuel for heavy industry and means of energy storage."

"Europe  . . . raced to replace fossil fuels with solar, wind and biomass by taxing carbon heavily, subsidizing renewables and closing scores of fossil-fuel power plants."

"Britain . . . became the first large industrialized country to shut all of its coal-fired power plants. It has also banned new offshore oil-and-gas drilling."

"European consumers and businesses are . . . at the mercy of electricity prices linked to the cost of imported fossil fuels while also shouldering big upfront costs to overhaul grids to handle the intermittent renewable power." 

"British . . . electricity costs . . . are 80% higher than the U.S."

"In earlier energy transitions . . . countries continued to use the outgoing fuel while adding the new fuel on top."

"If European factories close as a result of high energy costs, their production is likely to be replaced by imports from places like China, where the carbon footprint for those products is far higher"

"Parts of the green transition have proved unexpectedly costly. When Scotland’s biggest offshore wind farm opened in 2023, it was feted as a symbol of Britain’s push into a new era of cheap low-emissions energy. But today, British taxpayers spend tens of millions of pounds a year for the Seagreen wind farm to not produce electricity. 

Why? If the wind farm was left constantly on, it would send big pulses of energy from northern Scotland to southern England that would fry the U.K.’s aging grid."