Climate and Competitiveness

BERLIN – As Europe’s debt crisis fades, another economic disaster seems to be looming – the price of energy. Since the early 2000’s, average electricity prices for Europe’s industries have more or less doubled, and European companies now pay twice as much for gas as their US competitors do. Are Europe’s highly ambitious climate policies – which seek to increase costs for “bad” energy sources – destroying the continent’s industrial base?

At first glance, the numbers seem to support the doomsayers. How can such a huge price gap not have an impact on competitiveness? But if high energy prices lead to declining exports, how is it that Germany, which boasts some of the world’s most ambitious climate policies, has doubled its exports since 2000?