- What Does Russia’s War on Ukraine Mean for the International Order?
- Europe’s Westphalian Triumph
- China’s Global Influence Game
- Thinking Beyond the Taiwan Strait
- Europe Should Be More Worried About Energy Security
In March, the U.S. and European Union pledged to “build the clean energy economies of the future and address shared economic and national security challenges.” But for the European Union, it seems that the security part of this balance has been shunted to the side.
The EU’s overarching goal is to achieve net zero greenhouse gas emissions by 2050—it’s the core of the European Commission’s European Green Deal. In many (but not all) corners of Europe, a single-minded focus on reducing emissions has taken on a fervor that has obscured the very real risk the Green Deal poses to Europe’s long-term security. In December 2020, the EU agreed to an interim goal of slashing emissions by 55% by 2030. But this accelerated push toward net zero means moving away from secure energy supplies—both Europe’s own energy sources and those that can be provided by the United States (namely, abundant natural gas). Instead, Europe is increasingly interested in installing more renewable sources like solar farms and wind turbines—industries dominated by China, which in turn makes Europe less safe as their dependency on China grows.
Too Much Wishful Thinking
The cognitive dissonance with which the Green Deal operates—fighting climate change by sacrificing security—is stunning. Perhaps some European leaders have already forgotten the bitter lessons recently learnt from decades of intentionally growing dependent on cheap Russian energy; security considerations cannot be divorced from economic ones—nor, in this case, environmental ones.
Ironically, the premise upon which the EU’s Green Deal is built is riddled with compartmentalization and wishful thinking. For starters, even if the EU achieves its impossible goal of becoming net neutral in 2050 (and I have serious doubts about that), the decrease is likely to only have a marginal effect on the world’s climate. This is a reality which the EU has admitted in the past: One EU vice president has noted, “To deal with climate change Europe can only do so much, because Europe generates only around 9% of emissions.” China is by far the largest producer of emissions globally—in 2021, it produced as much carbon dioxide as the U.S., European Union, India and Japan combined. That will not change anytime soon, because while the U.S. and Europe bend over backward to cut emissions, those of China and India continue to explode.
You might say, every little bit counts when seeking to reduce the earth’s temperatures. Fine, but at what cost? The components to produce renewable energy themselves take substantial amounts of upfront energy to produce, ship and install. The costs of the EU’s plans are staggering: McKinsey & Company estimates costs of €28 trillion ($30.7 trillion) over the next 30 years to become carbon neutral by 2050. That is five times the entire U.S. budget for FY2023. Even individual components will require large investments. Take energy storage, which some analysts believe will need to be tripled just to meet goals set out for 2030. The head of the European Association for the Storage of Energy explained last year, “That means installing about 14 gigawatts (GW) of storage annually for the next eight years—up from the roughly 1 GW of additional capacity put in place in 2021.”
A Growing Dependence on China
Even placing these structural flaws aside, there are significant issues of security which Europe’s green transition failed to consider. The reality is that China dominates the green energy sector—for instance, it produces more than 80% of the world’s solar panels, and seven of the top 10 wind turbine manufacturers are Chinese companies. It is also a critical supplier of raw materials and importantly rare earth metals that are essential for many green technologies like batteries. And those are materials the EU desperately wants: A 2021 paper from the European Council on Foreign Relations notes:
For Europe, dependence on China will further increase as demand for green technologies increases. For example, the Joint Research Centre estimated that the EU’s annual critical raw material demand for wind turbines will increase between 2 and 15 times over the next three decades. Overall, the European Commission expects Europe’s demand for raw materials to double by 2050.
Part of the EU’s Green Deal is a plan agreed in March for all cars sold in the bloc after 2035 to be “carbon neutral.” The EU hopes this plan will be satisfied through a significant increase in the percentage of electric vehicles on Europe’s roads. But these cars will run on batteries that will likely be made in China and will rely heavily on rare earth minerals mined or processed in China. This will serve to increase Europe’s energy dependency. Those electric car inputs will be created using energy from the Chinese grid, which is far dirtier than Western energy grids due to its heavy reliance on coal. Last year, China approved the equivalent of two new coal-fired power plants per week.
Furthermore, Europe is assuming that in 2035, its electric vehicles will be assembled in Europe by European companies and not in China by Chinese companies. Chinese car manufacturers have begun a push to expand into the European market, and while an uphill battle, Chinese companies powered by state supports and stolen intellectual property should not be underestimated. Indeed, it was China that collapsed Germany’s solar industry a dozen years ago.
In part due to a late awareness of the risks associated with growing dependence on China (but likely driven as much by the policy mess that is the U.S. Inflation Reduction Act), the European Commission announced its Critical Raw Materials Act in March. This seeks to lessen the EU’s reliance on outside actors for crucial raw materials by establishing benchmarks such as 10% of domestic consumption for critical raw material extraction and 40% of domestic consumption for critical raw material processing by 2030 happening within the EU. These targets are voluntary, however, making them far less likely to be met, alongside other major obstacles to the programs stated goal.
The EU was spooked by the financial windfall that the IRA offered companies investing in green technologies, worried that it would not only suck up new investment, but also entice European companies to set up shop in the U.S. The EU has countered with subsidies of its own to boost green investment, setting up a subsidy arms race between China, Europe and the U.S. when it comes to green technology.
Regardless of its plan for a green future, Europe will not be able to depend solely on renewables to meet its energy needs. Indeed, for the foreseeable future, the EU will remain heavily reliant on fossil fuels. In 2021, 20% of the EU’s electricity was generated by burning natural gas and 14% from coal, while nuclear energy accounted for the largest share at 25%, with hydroelectric power generation and wind power (both 13%) and solar (6%) trailing behind. Russia’s invasion of Ukraine exposed Europe’s suicidal reliance on Russian energy and has supercharged efforts to build out liquified natural gas import terminals across the continent and increased the flow of Norwegian energy into the EU market.
Europe’s ties to Russian energy remain complicated. The EU has been successful in reducing its overall reliance on Russian gas. Consider that by the end of 2021, Russia accounted for 41.2% of the EU’s gas imports. By November 2022, it only accounted for 12.9%. Cutting that final connection to Russian energy, however, has proven difficult. This is especially true of Russian LNG—imports of which actually increased 30% last year. Part of Europe’s energy conundrum is its love-hate relationship with nuclear energy. Many countries, especially in Eastern Europe, are investing in nuclear power (Poland is working with the U.S. to build its first nuclear power plant). Germany, on the contrary, shut down its last remaining nuclear power plant in April. Many European nations view nuclear as an invaluable component of their future energy mix; however, a small but still powerful minority oppose nuclear power principally over concerns of a possible Fukushima-type nuclear disaster. The desire to move away from Russian energy, combined with the EU’s green goals, led to the EU Parliament designating nuclear as a sustainable investment last July, clearing the way for further capital investment as uncertainty over its future in the union lingers.
With this backdrop of Europe’s unsettled relationships with various energy sources, an additional aspect of the European Green Deal is the unleashing of political forces that have yet to be fully felt or appreciated. A major example of this has been sustained farmer-led protests in the Netherlands, an agricultural powerhouse which plans to limit nitrogen emissions by cutting fertilizer use and livestock numbers. These plans fall most heavily on smaller farmers who are unable to absorb the costs of the new rules. The green goals also impact taxpayers, who are funding, for instance, the €25 billion Dutch livestock buyback program. In short, the EU’s most productive agricultural nation is being clipped due to emissions targets and rulings imposed by the European Union. Green policies are in some instances driving up food prices too.
I imagine we will see the EU’s push to turn the aspirations of the Green Deal into reality cause similar eruptions of public anger in the future. The high cost of energy in Europe—especially in those nations whose governments cannot afford to subsidize this spike—is another source of political instability on the continent. The uneven application of the Green Deal, the most recent example being carveouts won by Germany for the EU’s rules on zero emissions cars, could be another.
Many within the corridors of power will continue to doggedly pursue the EU’s Green Deal—accompanied by myriad follow-on pieces of legislation, regulatory issuances and judicial decisions. High energy prices, the costs and timeline of the Green Deal’s implementation and pushback from voters will likely create pockets of instability. Additionally, Europe’s drive toward renewables will increase countries’ exposure to China with no guarantee that plans to reduce these growing security vulnerabilities will be met with success. Buckle up: Ripples from the Green Deal are only starting to reach Europe’s shores.