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Climate and Competitiveness

As Europe’s debt crisis fades, another economic disaster seems to be looming – the price of energy. But are Europe’s highly ambitious climate policies – which seek to increase costs for “bad” energy sources – really destroying the continent’s industrial base, as critics claim?

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?

In fact, empirical evidence shows that in many cases, further reducing carbon-dioxide emissions might help to make industries more competitive. Exploring this potential could open up significant opportunities not only to combat climate change, but also to foster Europe’s long-term economic robustness.

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