Asset management group PGIM warns…
With the official OPEC meeting…
European industry officials and domestic consumers alike are upset with the high energy costs across the continent, even causing some to question the clean energy initiatives. Over the past few years Europe has spent tens of billions in its efforts to reduce carbon emissions; most of which has gone into clean energy sources such as wind and solar.
Fabien Roques, the head of the European power and carbon division at the energy consultancy firm IHS CERA, stated: “we embarked on a big transition to a low-carbon economy without taking into account the cost and without factoring in the competitive impact. I think there will be a critical review of some of these policies in the next few years.”
Many companies working in energy intensive industries, such as chemicals or steel, are either closing their plants down or looking to also invest in the US where energy prices are far lower.
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The New York Times reported that, “Voestalpine, an Austrian maker of high-quality steel for the auto industry, announced that it would build a plant in North America that would employ natural gas to reduce iron ore to a kind of raw iron that would then be used in the company's European blast furnaces.”
BASF, the German chemical company, has said that it will build a new plant in Louisiana in order to take advantage of the lower energy costs and remain competitive.
Harald Schwager, a member of the executive board at BASF, said: “we Europeans are currently paying up to four or five times more for natural gas than the Americans. Energy efficiency alone will not allow us to compensate for this. Of course, that means increased competition for all the European manufacturing sites.”
Europe’s expansion into low carbon sources of energy will enable it to meet its greenhouse gas targets for 2020, but at the same time it may be having a negative effect on the future economy.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com