Doomberg Apart at the Seams - Will green energy myopia be the undoing of the European Union?

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“How wonderful that we have met with a paradox. Now we have some hope of making progress.” – Niels Bohr
A notable gathering of international political leaders occurred over the weekend at the Europa Viva 24 conference in Madrid, Spain. Coming just weeks before the European parliamentary elections—an event that has Brussels pre-emptively blaming Russian interference for the anticipated results—the gathering had the character of a typical high-stakes political rally. Fiery political speeches were made, rowdy ovations were given, and talk of a better future created excitement among the crowd. In other words, the standard trappings of the democratic process, working as it is meant to. Publications like The Guardian were not amused (emphasis added throughout):

“International far-right leaders, including France’s Marine Le Pen, Hungary’s Viktor Orbán, Italy’s Giorgia Meloni and Argentina’s Javier Milei, came together in Madrid to rail against socialism and ‘massive illegal migration’ three weeks before hard-right parties are expected to see a surge in support in June’s European elections.
Sunday’s ‘great patriotic convention,’ which was organised by Spain’s far-right Vox party, offered conservatives and far-right populists a chance to congregate and take aim at a variety of familiar targets, from the welfare state to ‘wokeness’ and the agendas of Brussels-based bureaucrats.”

Far-right member of the hard-right | Getty
Never one to avoid a fight, Milei triggered an international row when he first refused to meet with the King of Spain and then called Spanish Prime Minister Pedro Sanchez's wife “corrupt” during his speech. Sanchez, a member of the country’s ruling Socialist Party, reacted by recalling Spain’s ambassador to Argentina and demanding an apology. Given Milei’s views on socialism, we doubt one will be forthcoming.
All of this is occurring in the shadow of the shocking attempted assassination of Slovakia’s prime minister, Robert Fico, a populist leader considered too friendly to Russia by the European elite. This aggression was the first attempt on the life of a European head of state in two decades.
Objectively, Europe is a political powder keg.


A newsworthy assassination attempt | Getty
How did it come to this? While it might be comforting to propagate the interpretation with tiresome “left/right” name-calling, we believe there is a deeper, underreported tension that puts the European Union (EU) at risk of disintegrating: the so-called green energy agenda is fundamentally incompatible with democracy. There is no denying that a shift away from fossil fuels and nuclear energy necessitates deep cuts in standards of living, lower standards of living are unpopular, and democratic elections are popularity contests. Unable to achieve popular support for proactive energy martyrdom, the ruling class turns to force, which only drives down their popularity further.
Arising from this set of circumstances is populism—it’s right there in the name, after all—and no amount of data massaging, propagandizing, and mud-slinging can break the link between physics and economics. The sooner Europe gets its energy policy right, the quicker it can stabilize its various political crises.
Given the choice between democracy and the green energy agenda, which will Brussels choose? How far will European politics disintegrate before the reckoning is made? Will the EU survive, or will it splinter into states that listen to their people and those that do not? Let’s look at the most recent bursts of pressure.
We begin with the latest let-them-eat-cake diktat emanating from Brussels: a new mandate on homeowners to retrofit their dwellings for energy efficiency. While the concept of improving things like insulation value, window quality, and door seals is uncontroversial in the absolute, being instructed to do so by distant bureaucrats at great personal expense is (surprise!) rather unpopular. As the rule was winding through the byzantine law-making process in Europe, news of its forthcoming passage triggered understandable anger:

“The proposal — among the last outstanding pieces of legislation in the bloc's Fit for 55 climate package — sets out mandatory renovation targets aimed at fully decarbonizing the EU's building stock by 2050.
Those targets have caused an uproar in several EU countries; Europe has a lot of older building stock that doesn't meet modern standards and there are fears people will be forced to pay for expensive renovations during a cost of living crisis. Defenders of the proposal counter it will lead to long-term cost savings for homeowners.”

Retrofit ready? | Getty
A slightly modified version of the rule passed in mid-March. Barely two months later, the law of unintended consequences began flexing its muscle:

“Across Europe, banks are trying to figure out how to handle a growing risk lurking in residential mortgage portfolios: energy consumption.
In Germany, the bloc’s largest economy, it’s increasingly clear that many households are either unwilling or unable to devote funds to upgrading the energy efficiency of their homes. The German Bundesbank has already warned that failure to act may leave a substantial dent in property values, with knock-on effects for the wider economy. Deutsche Bank AG, meanwhile, says only a tiny fraction of its residential customers are currently eligible for green loans…
The big picture across Europe is that ‘there isn’t enough money’ to bring the housing stock in line with the bloc’s targeted environmental standards, said Carsten Brzeski, chief economist for ING Germany. ‘You can’t force homeowners to do renovations.’”

Not only is there not enough money to implement the R-value whims of Brussels in the housing sector, but it also looks like the EU has gotten ahead of its vacation-in-the-Alps skis in its progress to build out renewable sources of electricity at scale to support such demands. We turn to Bloomberg for the least surprising story of the month:

“Multiple countries are expanding clean energy such as offshore wind, but getting that power to market is impossible without a grid linkup or a consistent electrical frequency from one part of the network to another. Governments must come up with the funding to finance the necessary overhaul — and keep net zero programs on track.
Those plans require Europe to add at least 1.6 million kilometers (almost 1 million miles) of cables by midcentury, with almost a third of that in Germany, according to researcher BloombergNEF. Transmission towers and grid upgrades are a hard sell to populations grappling for help with day-to-day living, but politicians can no longer kick the can down the road.”

Never enough | Getty
Ultimately, European democracy may fall victim to the region’s obsession with climate change. The very meaning of “democracy” is already undergoing a steady semantic shift, and it will eventually be understood to mean “rule by the current political establishment parties.” (Have you noticed that the possessive pronoun “our” is now commonly placed in front of the word? The burgeoning subtext is clear: Rule by us, it’s our democracy, not yours.)
We close by returning to Spain, the scene of the opening motivation for this piece. Prime Minister Sanchez is not just known for the claimed dubious ethics of his wife, but is also a man who has studied the German energy crisis carefully—replete as it is with failure, economic contraction, and deindustrialization—and decided nonetheless to replicate it in his own country:
“Spain on Wednesday confirmed plans to close the country's nuclear plants by 2035 as it presented energy measures including extended deadlines for renewable projects and adjusted renewable auctions.
The management of radioactive waste and dismantling of the plants, whose shut down will begin in 2027, will cost about 20.2 billion euros ($22.4 billion) and will be paid for by a fund supported by the plants' operators, the government said.
The future of the country's nuclear plants, which generate about a fifth of Spain's electricity, was a hot issue during the recent electoral campaign, with the conservative opposition People's Party (PP) pledging to reverse the planned phase-out. More recently, one of the main business lobbies called for extending the use of these plants.”


Beachgoers in Spain and a nuclear power plant | Getty
At least nobody will say the EU didn’t go down without a fight.
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