Euro-energy policy means less energy for all

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After their August recess, House Democrats will resume sweating over an increase in fuel auto efficiency standards -- a measure House Speaker Nancy Pelosi adamantly supports as a means for lowering carbon emissions. Greener-than-thou Pelosi referred to Europe's Kyoto Protocol commitments as a "giant step forward" at this year's G-8 summit in Germany, and has often praised German Chancellor Angela Merkel for her climate policy leadership.

Indeed, carbon-bashing was Germany's ticket to chairing the G8 conference in May and winning the EU presidency. Slashing emissions -- or at least proposing to do so -- has been good politics for several European leaders. But has it been a good policy for Europefi

Powerful rhetoric about the glory of collective action to address global warming cannot conceal the fact that European countries vary in their levels of economic development. That difference matters because environmental mitigation is a value-added good. As a country's wealth increases, its citizens recognize that a better environment enhances the quality of life. Accordingly, the population starts investing a larger portion of its greater resources into developing cleaner technologies.

But the European Union's carbon-emission restrictions will not only hinder the economic growth of the countries that joined in 2004 and 2007 but also indirectly condemn candidate countries Croatia and Macedonia, together with potential candidates Albania, Serbia, Montenegro, and Bosnia and Herzegovina, to less wealth, more pollution and more vulnerability to climate change.

Take Europe's recent weather as an example. As wealthy Britain struggled with severe floods, power shortages occurred rarely and were resolved quickly. By contrast, after the much poorer Balkans were afflicted by record heat and rampant forest fires, extensive power breakdowns occurred in Montenegro, Macedonia and Kosovo. Failure of Albania's hydroelectric power stations, which supply 90 percent of the country's electricity, caused power cuts of up to 15 hours. Power shortages are projected to persist in the region until new generating capacity starts operating in 2012.

And the European Commission has made the situation worse: Earlier this year it mandated Bulgaria to close two units of the Kozloduy nuclear power plant despite safety upgrades and positive assessments from the International Atomic Energy Agency. Bulgaria, previously an energy exporter covering 40 percent of the regional electricity deficit, is turning into an insignificant exporter or even a net importer. As a result, five Balkan countries considered imposing restrictions on the largest energy consumers during the first three months of 2007, and Albania, where electricity demand is growing at almost three times the European average, suffered several 20-hour power cuts.

In fact, "Earth first, our well-being next" policies, advanced by older European Union members with higher living standards and more service-oriented economies, are making the region not more green but less.

But for Kozloduy, 29 million more tons carbon dioxide would have been emitted annually. Now more low-energy lignite coal will be burnt in Bulgarian thermal power plants, and greenhouse-gas emissions will increase. The corresponding sanctions, established by the European Commission, will provide an incentive for the coal-fired plants to underuse their capacity or pay large fines until expensive filters are installed. Having those filters in place will encourage operating the coal-guzzlers for longer to recuperate the investment -- hardly the most efficient outcome when nuclear power is readily available.

Electricity prices in Bulgaria have jumped by 17.3 percent for small businesses, and by more than 20 percent for large ones since January.

At a regional energy conference in March, the representative of the European Commission in Bulgaria, Michael Humphreys, said that Kozloduy's reactivation was politically impossible, since it would require individual ratifications by each EU member state. Apparently, eurocrats consider bureaucratic procedures to be more important than the energy future of the Balkans.

Many Bulgarians are already drawing parallels between Brussels-administered measures and communist-era central-planning, where "we don't know how to repeal the policy" excuses were the norm. The 10 countries that recently joined the European Union are not content with EU climate change policy, either. Czech President Vaclav Klaus has called environmentalism "the biggest threat to freedom, democracy, the market economy and prosperity at the beginning of the 21st century." Hungary, the Czech Republic, Slovakia, Estonia and Latvia recently initiated legal action against the EU's carbon-emission quotas.

By obliging those countries that still cannot afford environmentalism to act as if they did, the European Commission is hurting everyone: older, newer and prospective members. Economically damaging policies, implemented in pursuit of a globally insignificant impact in the future, will cause lackluster growth in the EU-10, Bulgaria and Romania.

That will stimulate migration to wealthier EU members and fuel nationalistic resentments there. European politicians should stop pretending that governments can mandate economies to be "pro-growth and pro-green" without major technological breakthroughs. Instead, the European Union should focus on pro-growth policies, because wealthier populations have both the mindset and the resources to care more about Mother Nature. Nancy Pelosi should think twice before extolling Europe's climate policy.

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