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Europe shows U.S. the economic pain of net-zero madness
The Washington Times
By Rea S. Hederman Jr.
May 7, 2024
On
his first day in office, President Biden rejoined the Paris climate
accords. American farmers and unsuspecting consumers will soon pay the
hefty price of that decision, which saddles U.S. industry, agriculture
and transportation with stringent emissions reduction requirements aimed
at achieving unobtainable “net-zero” goals.
The
president doubled down by pursuing climate controls, trying to
accomplish President Barack Obama’s failed Green New Deal, with
executive orders targeting future domestic oil and natural gas supplies,
which will make chemical feedstocks more expensive to produce and
purchase, and the Securities Exchange Commission proposing
environmental, social and governance reports to track carbon emissions
from farm to fork.
Europe has experimented with these heavy-handed policies for decades, and we know how the story ends.
The
devastating consequences are neither secret nor up for debate. The
European Union pledged to reduce carbon-based emissions 55% below 1990
levels by 2030, which has required cap-and-trade schemes with fewer
tradable credits each year, convoluted carbon border adjustment
mechanisms, closing natural gas fields, curbing nitrogen fertilizer use,
and shuttering generational farms. To say the least, those policy
choices have made energy, electricity, land, farming, shipping,
maintenance and food more expensive across Europe — sometimes even
intentionally so.
After
Europe’s electric companies unsurprisingly passed these higher energy
production costs along to consumers, residential and industrial power
prices rose 131% and 59%, respectively, between January 2021 and January
2022. Germany’s manufacturing and chemical industries, hit hard by
rising cap-and-trade prices and taxes designed to cut emissions,
responded by spending $650 billion to move operations out of the EU.
Several EU countries have encouraged banks to withhold loans and funds
from farmers emitting too much greenhouse gas. The Netherlands plans to
use eminent domain to acquire and close working farms, all in the name
of climate control.
European farmers are fed up. Understandably.
Reports
say that farmers in France, “the EU’s biggest agricultural producer,
say they are not being paid enough and are choked by excessive
regulation on environmental protection.” Belgian farmers have mobilized
and “called out high administrative burdens … climate regulations and
other issues.” Tractor blockades have laid siege to Paris, blitzed
Berlin, and surrounded Brussels in protest.
The
Biden administration knows as much but does not care about the carnage.
Federal interventions and misguided mandates will be just as expensive
here as they have been in Europe, and U.S. farmers and consumers will be
seriously harmed financially.
To
better appreciate the costs soon to reach American farms and
unsuspecting households, the Buckeye Institute recently modeled what a
typical U.S. corn farm can expect to pay if forced to price in the
“social cost” of its operations’ carbon emissions. The short answer is
more. Much more.
Diesel
fuel for trucks, tractors and combines will become painfully expensive.
So will the propane for powering grain dryers and heating barns.
Nitrogen fertilizer will cost more, too. By our calculations, a carbon
pricing scheme will raise annual farm operating costs by a whopping 34%.
Here,
as in Europe, farmers will inevitably pass those higher costs along to
supermarkets, restaurants, and consumers trying to make ends meet. The
new rules will increase an average family of four’s household grocery
bill by $1,300 per year, a 15% spike. Some carbon-intensive foods such
as processed American cheese and beef could rise by as much as $9 per
pound each — making $20-plus cheeseburgers a mainstay of the Biden
administration’s net-zero policies.
Corrective
action can and must be taken at every level. Short of withdrawing from
the Paris climate accords again, congressional Republicans can and
should pursue meaningful bipartisan collaboration with Democrats from
energy-producing and agricultural states to resist new net-zero
regulations.
State
legislatures should ensure fair insurance and lending practices for
businesses and farms. And U.S. shareholders should follow the lead of 12
state agriculture commissioners in pushing back hard against banks and
corporate leaders making poor ESG-guided investment decisions that will
needlessly raise producer costs and consumer prices.
There
is little to be learned from the second kick of a mule, as the old
saying goes. European countries took the first proverbial kick from
net-zero mandates, and they have the economic bruises to show for it.
There is no reason for U.S. farmers and consumers to stand behind the
same mule.
Rea
S. Hederman Jr. is vice president of policy and executive director of
the Economic Research Center at the Buckeye Institute in Columbus, Ohio.
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