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December 28, 2024 - 6:00pm
One must have a heart of stone not to weep at the continuous absurdity of European energy policies. The EU, although essentially an energy vassal, believes it can dictate to the rest of the world how hydrocarbons should be produced. Unfortunately for Brussels’ bureaucrats, the rest of the world is no longer playing along, as Qatar has warned that it will stop crucial gas shipments to the EU if member states strictly enforce new legislation. The legislation sets out to penalise companies which fail to meet targets on carbon emissions and workers’ rights.
But the bloc has entirely overestimated its own leverage while underestimating that of its opponents. By the most diligent calculations, the EU’s share of global oil production is under 0.4%. In terms of natural gas, this figure stands at just 2.3%. Regarding coal, the EU accounted for 309 million tons of the total 8,057 million tons produced worldwide in 2021, representing only 3.8% of global production. A cynic might say that it is easy for Brussels to demand due diligence in production processes because it does not produce anything themselves.
As the Financial Times reports, the measures for non-compliance are likely to deter business in Europe. “The law requires EU countries to introduce powers to impose fines for non-compliance with an upper limit of at least 5 per cent of the company’s annual global revenue,” the report states. Qatar’s energy minister said that this would be an unacceptable amount of profit to forfeit, and thus, state-owned QatarEnergy would stop importing to Europe.
Qatar, and other Gulf states, will naturally resist building an entirely new bureaucratic structure to satisfy Europe’s regulatory impulses. These new rules will not be imposed until 2027, and Europe, in permanent economic decline, might choose to delay any rules. However, by then the EU could strike a deal with the US for gas imports, but they will not have the authority to impose the same regulations on American companies.
An in-depth analysis by Energy Outlook Advisors argues that if Qatar were to completely stop exporting LNG to Europe, the impact on Qatar would be minimal, as its exports to Europe represent only about 7% of its total annual capacity. In the global LNG market, this scenario would create a game of musical chairs, with EU countries ultimately facing higher prices. The report also concludes that while the EU should be able to replace Qatari LNG by 2027, this depends on all planned US export terminals coming online as scheduled.
The industry has a history of delays, and significant hold-ups in the US, Mexico, and Canada could give Qatar an advantage in Europe. Without competition from Russia or Qatar, the European LNG market is essentially wide open for the US to take control of. Consequently, the US could end up dominating a gas market that was previously led by Russia.
Almost all EU countries are struggling with cost of living crises and the price of energy is higher than it was before the Ukraine war. In such a climate, it is wise to keep trading relations open and prices down. Europe could face another energy shock, but this time it would only have its own bureaucracy to blame.
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SubscribeIncompetence mixed with a generous dose of hubris. Gobsmacking.
Is anyone even reading these policies before they’re released to the media or is there some EU bureaucratic AI generating stuff and putting it in on the EU’s website. Regardless of how foreign nations and companies react to a brazen attempt to extend EU bureaucracy well beyond EU borders, what does this policy seek to objectively accomplish besides raising the price of energy? What other effect could it possibly have? If that’s the goal, wouldn’t it be a lot easier to just put a tax on energy and not bring foreign governments and foreign firms into the argument? Just absurdity. As an American, I’m often disappointed in my government, but at least I have the EU to consistently remind me of that old adage, yes, it can be worse.
The EU is, and always was, a mountain of bureaucracy imbued with an overwhelming sense of self importance.
Reality is about to impact on its inhabitants but regrettably not its rulers.
The UK voted to escape from that…but its rulers won’t let it. It will go down with that particular sinking ship…when it needn’t have.
And if you think the UK is immune from this kind of stupidity, given our socialist govt, I’ve got a bridge to sell you.
Honestly you peasants need to learn to respect your betters!
Strictly speaking, this is an attempt to rob other countries.