Europe in a hole

“If you find yourself in a hole, stop digging” is one of my favourite pearls of wisdom, which I happen to collect enthusiastically, especially those that state the blatantly obvious in a funny way.

I was surprised to learn there is no consensus on the origin of the saying. Some attribute it to actor Will Rogers, others cite a 1911 Washington Post piece that mentions it, and according to Wikipedia, it is but the first law of holes, of which there are two. The second law of holes apparently states that "When you stop digging, you are still in a hole."

Most of us would probably note here that even if you’re still in a hole, once you stop digging you could start looking for ways to get out of the hole. Most of us, however, are not in European politics, where it appears to be trendy to keep digging. It also appears to be trendy to dig faster the deeper the hole becomes.

Consider the recent vote by the European Parliament to boost the target for low-carbon energy as portion of the energy mix to 42.5% from a previous target of 30%. The target means that by 2030, 42.5% of the electricity in the European Union must come from wind and solar as well as nuclear and hydro. And that means that EU members must really get down to business putting up wind turbines and covering fields with solar panels…

At a time when both industries are crying bankruptcy.

The wind power industry was first. In January this year, sector players warned of high raw material costs that were making their projects challenging. In June, Orsted sounded the high-cost alarm for UK projects and asked for more money from the government.

In August, Siemens Gamesa warned it stood to lose billions from its wind power business due to technical problems, meaning turbine faults, and rising costs. Then Vattenfall cancelled a massive offshore project in the UK saying it no longer made commercial sense.

What did the EU do in response to all of this? Well, it voted on quicker permitting procedures and is currently considering a probe into Chinese wind turbines. Because proud Europe does not want China’s cheap, subsidised turbines, thank you very much. We can subsidise our own, however much it costs.

Which neatly brings me to the other half of the climate crusaders’ favourite pair of shovels that have done so much work on that hole: solar.

On Friday, Reuters published a bombshell report citing European solar industry executives as being sceptical of the EU’s competitive position in that market. And that’s putting it mildly, unlike those executives.

"You cannot manufacture in Europe," said one executive, who admittedly works for a Chinese solar panel major so he’s probably being unfair or something. "Europe isn't profitable," that bad man also said.

But here’s another one, from a Spanish company: "There must be an incentive for the end customer to buy European products," Christopher Atassi from Gonvarri Solar Steel said. "Without demand for European products, it is difficult to plan investments."

So that other executive with the Chinese firm is not alone in thinking solar in Europe has a profitability problem. Odd, right? But not as odd as what the EU has been doing in the solar space.