To play their part (in a morality play)
The European Union channels its internal interests Jimmy Carter (or, as the French would say, “Jimmy Carter”). Like reported by The hill“The European Union is encouraging its citizens to work from home, use public transport and turn off radiators in a bid to reduce the bloc’s dependence on Russian fuel. If EU residents adopt a prescribed list of energy-saving measures, together they can “save enough oil to fill 120 super tankers and enough natural gas to heat nearly 20 million homes”, according to a plan published by the European Commission and the International Energy Agency (IEA) on Thursday. Elevating the rhetoric further, but detached from historical reality, IEA Executive Director Fatih Birol told a virtual summit that “[w]We are, in my opinion, in the first world energy crisis. It looks like this crisis will be with us for a while to come. »
It makes no sense no matter what continent you live on.
Now, that might make sense as a contingency strategy to mitigate the short-term impact of a full embargo on Russian oil and gas, at least until other supply lines can be developed. But Europe absolutely does not.
Instead of appealing to some collective morality, the EU should have an economy-wide incentive to move away from oil, gas and other carbon-based fuels. This incentive would be set at a level that gives the right incentives to reduce the use of carbon fuels over the long term. In response, those who can easily change their fuel mix will do so, reducing oil and gas consumption at the lowest cost. Those who can innovate to become more energy efficient will do so, reducing their consumption at the lowest cost. In general, this will be the most economically efficient way to achieve a long-term goal of transitioning to a clean energy platform. And, in the short term, if there is a will to have even deeper cuts to punish Russia, just strengthen the incentive.
This is what Europeans need.
But here’s the really mysterious part: they already have one! The European Union Emission trading system (EU ETS) “is a cornerstone of EU policy to combat climate change and its key tool to reduce greenhouse gas emissions in a cost-effective way. It is the first major carbon market in the world and it remains the largest. The EU ETS is a cap and trade system, one of two economically sound approaches to reducing carbon emissions (the other being a carbon tax). This is, in principle, exactly the right way to handle the long term and is flexible enough to be modified for short term considerations.