Currently, the EU spends a third of its entire budget on climate policy. Just last year, the price tag for buying things like solar panels, wind turbines, transmission lines, electric cars and chargers was €367 billion — this amount alone could fund Europe’s need for defense spending.
The EU’s extremely high energy prices also drain the continent’s growth rate, leaving less money for all other priorities. Currently, the cost is already beyond another 1 percent of GDP, and toward 2050, it will escalate to about 10.5 percent of GDP, or some €3.3 trillion annually.
Of course, climate campaigners will counter that Europe is now all that’s standing against unmitigated climate disaster. But this is far from true. While climate change is a man-made problem, it pales in comparison to most of the pressing challenges Europe is now facing.
Moreover, the EU has already cut its emissions a lot. Further cuts will have zero impact on temperatures over the coming decades. Even spending hundreds of trillions of euros on net zero by 2050, the impact will be unmeasurable. Just run the U.N.’s climate model with EU emissions going to zero, and the change in global temperature is zero today and an imperceptible 0.017 degrees Celsius by mid-century.
The world won’t thank the EU for its self-sacrificial net-zero approach. It will, however, hold up the continent as a dangerous example of what to avoid. Nobody will follow a self-defeating, self-punishing policy.
I’m not suggesting we throw out climate policy altogether. But for a much lower cost, the EU could embrace a much smarter policy. Climate economists have long known the solution to climate change isn’t self-immolation but innovation: Drive down the future price of low-carbon energy through R&D spending to eventually outcompete fossil fuels, and everyone will switch over — not just rich, well-meaning Europe, but China, India and Africa too. And it would cost just one-twentieth of the resources currently being poorly spent.
Europe is now at a crossroads. It can continue to keep net-zero policies as its central pillar — amounting to ruinous virtue signaling while the rest of the world passes it by. Or it can end this singular obsession and implement a smart climate policy, spending €27 billion on green innovation, leaving far beyond €300 billion to be spent better elsewhere.
This would not only have a much greater chance of fixing climate change, it would also free precious European resources to drive innovation, boost defense and — through much lower energy prices — reinvigorate a high-growth continent to once again meet the challenges of the future.