Europe's Climate Policy Forces Industry Into Retreat; Even Its Critics Are Folding

    The war with Iran clearly is the black swan event that everyone expected to happen without of course knowing exactly what it would be. Now we do. 

   Amazingly, although the world is about to change utterly, conversely, current powers are showing us day after day that they will NOT change thereby accelerating their downfall. 

   The emergence of cheap drones against which the US has for now little more than expensive anti-missile systems reminds us the Huns with their horse riding techniques defeating the Roman army on foot, with speed and flexibility in the 5th Century CE.  

   Likewise the outdated strategy of the Israel Army against Hezbollah with columns of tanks falling into traps and being destroyed by cheap and extremely efficient manpads looks 50 years out of time.   

   But the most outrageous example is certainly that of Europe as explained below by Thomas Kolbe which while staring at the abyss energy-wise is doubling down on its industrial and civilizational destroying policies. 

   While the world, i.e. more specifically the Global Supply Chain on which its prosperity was built over the last 70 years is falling apart, Europe finds nothing better to do than waging war against... CO2. Eventually, the continent will find itself with no army, no industry and a crumbling social order with absolutely nothing to show for its efforts. Paris, London and most other European cities will become later-day Venices, beautiful but completely emptied of their economic vitality and of course prosperity. The worst is that the wound will be completely self-inflicted. 

   What a lesson of history! We can now understand far more vividly how and why Rome was reduced to ruins, and Venice to its open-air museum status. They in fact never ceased being themselves. Rome, the center of a long gone empire and Venice of an extinct trade network while the world around them was being transformed.    

Europe's Climate Policy Forces Industry Into Retreat; Even Its Critics Are Folding

by Thomas Kolbe

In the media business, five months is an eternity. And it does indeed seem like an eternity has passed since Christian Kullmann, CEO of the German chemical giant Evonik, sharply criticized European climate policy at the end of October.

At the time, Kullmann gave an interview to Süddeutsche Zeitung, in which he called—if not for the outright abolition—then at least for a significant weakening of the EU-wide CO₂ emissions trading system, given the dramatic state of the economy.

Kullmann rightly pointed out that there is probably no stricter CO₂ regime anywhere in the world than in the EU. And since the climate, as we know, has no borders, he argued it makes little sense to disadvantage domestic cutting-edge technology in this way. He explicitly referred to the costly CO₂ trading system, which drained a staggering €21.4 billion from the German economy last year alone—under the banner of climate policy through this relatively new mechanism.

Five months after these remarkable statements—briefly breaking the long-standing silence of German industrial leaders—the question must be asked whether there is anywhere else in the world a comparable project to the EU’s CO₂ regime. With the United States abandoning its policy of artificial energy scarcity, its war on conventional energy production, and heavy-handed regulation of its own industrial base, the EU now stands alone in its ideological campaign against economic rationality. No one else seems willing to join the chorus of Europe’s climate apocalypticism.

This European isolationism may elsewhere be perceived as a form of late-stage counter-colonization—a return flow of capital from remorseful Europeans willing to accept self-imposed sacrifice to help other regions get back on their feet. Around the world, this selflessly naive “degrowth suicide” is welcomed, as it delivers not only so-called climate support from European funds but, more importantly, accelerated industrial investment from European companies—served on a silver platter by eco-socialist policymakers. A civilizational ingredient that, it seems, Europe itself now believes it can do without.

In China, one has learned to remain quiet when a geopolitical rival makes mistake after mistake—as is currently the case with European climate policy. Energy-intensive firms like Evonik are penalized by CO₂ pricing with an artificial competitive disadvantage. Once embedded in political and administrative structures, this amounts to a genuine stimulus program for foreign industrial locations.

At the same time, China—like the increasingly deregulated United States under President Donald Trump—is developing a powerful vacuum effect in global capital markets. The world is benefiting from German engineering and European capital.

This dynamic is particularly evident in the chemical industry. As a highly energy-intensive sector, it has suffered one of the hardest blows from European climate policy, alongside the automotive industry. Kullmann’s warning about the erosion of economic foundations was more than justified—but it came far too late and remained, for a time, a lone voice in the wilderness.

Since 2018, Germany’s chemical industry has lost roughly a quarter of its production capacity. The sector is operating at an average capacity utilization of just 70%, a level that reflects a sectoral depression not seen in Germany since the end of World War II.

Yet the worse the economic situation becomes, the more firmly German policymakers cling to their belief in the green transformation. Corporate silence is secured by a massive subsidy machine, just as the sympathetic media sector provides the shrill soundtrack to the broader economic decline.

Tactically astute from a media standpoint, Brussels—under pressure from European industry—has agreed to ease some pressure from the CO₂ cost burden. The European Commission is expected to temporarily freeze the volume of circulating certificates within the market stability reserve in order to stabilize prices.

For Evonik CEO Kullmann, the outcome presented by Brussels appears acceptable. His once sharp criticism of the CO₂ mechanism has mysteriously vanished into the media ether. The change of heart clearly follows the promise of further subsidies.

A destructive mechanism has emerged between large corporations and an eco-socialist political leadership. At the media level, corporate executives and political actors stage a kind of ping-pong game that simulates critical debate and conflicting interests at the highest levels of decision-making.

Evidently, there is no willingness to even slow down the ongoing transfer of wealth—from the productive sectors of society to politically favored extractive sectors such as the green economy—even amid prolonged economic stagnation. The economic and social consequences of this policy are, for now, being conveniently ignored in both Brussels and Berlin.