Inquiring minds are wondering if Californians should have looked at Europe before passing their version of Cap-n-Trade. Europe is de-greening:
The recession cut the branch that Europe’s green industry was perched on. But above all, demand plummeted, bringing down with it the need for new productive capacity. Primary energy demand in the EU declined 3.4% from 2005 to 2010 – and won’t be returning to pre-crisis levels any time before 2020. According to the European Commission, the increase in total consumption from 2005 to 2030 will hardly come to 4%, a full 16% less than forecast in 2007.
Furthermore, it has grown harder for everyone to borrow – a phenomenon particularly detrimental to capital-intensive industries with high fixed and low variable costs, which is the case with new renewable energy sources. The credit crunch makes it harder to raise capital to build facilities, let alone do research and development
Almost every European country has recently cut back on subsidies. In Italy, the government cut spending on the photovoltaic sector by an average 20%. In Spain, people are now talking openly about a “solar bubble”, now that subsidy cuts come to as much as 45% in some cases and several major solar panel factories have had to close up shop. Even Germany has gradually scaled down funding: first by 3%, then this January by 13%, and by 21% from 2012. Britain has announced a 10% trim from 2013.
You have to ask yourself, “If the Green movement is really good for the economy, then why is it so expensive and requiring subsidies?
The answer…It’s not.
Wondering what China is doing?
Well Europe initially led in the green technology sector but its ascendancy is now on the wane. Chinese manufacturers came out with an aggressive market policy to slash production costs all the while boosting margins out of all proportion. This has moved green investment outside the confines of Europe. It is an easy equation…as plants have closed in Europe, panel production in China – fuelled by our subsidies – will have jumped 50% in 2010.
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