This will be a godsend for those struggling with rocketing European energy prices and sustained inflation . Other European nations are doing the same, as well as more than a dozen U.S. states. But doling out millions of dollars without increased economic production will likely do more to ratchet up inflation than minimize it. The Federal Reserve admitted as much in July. It certainly won’t expedite the end of the energy crisis.
What “anti-inflation” payouts represent, then, are failed energy policies. European coal plants are being fired up after years offline. LNG terminal projects in Finland and Italy are being greenlit to speed up imports. Germany’s last three nuclear power plants, set to be decommissioned this year, are receiving a second life as politicians concede the errors of the zero-carbon narrative. In the last decade, German leaders heralded the shutdown of nuclear, subsidies for solar and wind, and imports of wood pellets from southern U.S. forests as “renewable” energy. They fired up dormant coal facilities to fill the gap while Russian natural gas became the primary means of energy.
It was a sweet deal upended only by the Russian invasion of Ukraine, which was followed by international condemnation and energy sanctions. With Nord Stream pipelines out of the picture (sabotaged by whom, we may never know), German politicians are left championing coal and absconding their distaste for nuclear energy.
German energy policy, known as Energiewende, was already acknowledged as a failure. Swapping domestic nuclear power for Vladimir Putin’s gas meant Germans could boast about the 35% renewable energy mix to global praise. But that Faustian bargain has left German leaders scrambling for energy alternatives from Western liberal democracies and Arab dictatorships to fill Russia’s void. Such a glaring failure should give pause to the green ambitions of America’s political class. Instead, the Democratic Party has chosen the same trodden path.
In passing the Inflation Reduction Act without a single GOP vote, Democrats offered their energy antidote: subsidies and taxes. This includes a 30% tax rebate on efficient home upgrades and solar batteries, a $7,500 tax credit for new electric cars, and higher taxes on oil producers, costs inevitably passed on to consumers. Democratic state attorneys general are filing lawsuits against oil and gas firms for their “deceptive” roles in contributing to climate change, using shady legal footing to attempt to extract large settlements. On President Joe Biden’s first day in office, he killed off the multibillion-dollar Keystone XL pipeline, which would have transported Canadian and American oil to Texas for export.
Last week, Rep. Rashida Tlaib (D-MI) prodded leading bank CEOs into committing to “stop funding new oil and gas products” to reach America’s climate goals. Each declined. The response of JPMorgan CEO Jamie Dimon was even more brazen: “Absolutely not, and that would be the road to hell for America.”
Our current climate policies are setting us up for more pain, depriving consumers of future stable and diverse energy supplies and leaving our allies high and dry. Making our energy more sustainable is a noble goal, one consumers care about. But considering the European dilemma, sacrificing domestic energy production a la Energiewende would, as Dimon put it, be the road to hell for America.
Our country can both be a climate leader and energy producer, but that requires boosting and diversifying energy sources rather than restricting them. It means unleashing American innovation and entrepreneurship to deliver solutions rather than platitudes. Our consumers deserve better, and so do those on the European continent.
Yael Ossowski is deputy director at the Consumer Choice Center, a global consumer advocacy group.