AMAC Exclusive – By Ben Solis
During a rally in Erie, Pennsylvania, last weekend, former President Donald Trump declared, “We are in a country that is consumed by the radical left Green New Deal. Yet everyone knows that the Green New Deal is fake and will lead to our country’s destruction.” Recent data and analysis from Europe, where Green New Deal policies are already in place, proves Trump correct.
One report released by the French government in May, authored by economists Selma Mahfouz and Jean Pisani-Ferry, is particularly striking.
Although Pisani-Ferry and Mahfouz are proponents of a radical “green transition,” their research nonetheless reaches the unavoidable conclusion that the European Union’s aggressive climate agenda – which serves as a blueprint for liberals’ Green New Deal policies in the U.S. – will result in further price increases and higher taxes. Combined, these economic forces are likely to cause a private capital shortage, a phenomenon unseen in the United States since the Great Depression era.
Throughout the 139-page report, Pisani-Ferry and Mahfouz compare the impact of the left’s desired “green transition” in the energy industry to the economic shock seen as a result of the dramatic spike in oil prices in the 1970s. This phenomenon set off an inflationary spiral that saw double-digit percentage price increases in the price of food as well as fuel.
The report concludes that solutions to the supposed climate crisis will have even worse economic ramifications today, as “climate action will increase inflationary risks due to the slowdown in productivity” (translated from the original French here and throughout).
The authors of the report also admit that government-imposed restrictions on investments in profitable fossil fuels enterprises (which the report calls “brown capital”) will limit access to funds throughout the economy, while also forcing markets to effectively subsidize unprofitable enterprises. The resulting capital scarcity will have ripple effects throughout the economy and grind productivity to a halt.
As a result of declining economic activity and decreasing investment, the report continues, governments will likely experience revenue shortages. Therefore, government will have to double its investment in “green” infrastructure – all financed by rapidly ballooning debt – for “several years.” Taxes and energy prices will also increase sharply, with costs being passed on directly to ordinary families.
According to the European Commission’s estimates, this added government investment in the E.U.’s energy sector would come out to between 260 and 380 billion Euros by 2030 – about 1.5 to 1.8 percent of the E.U.’s GDP.
One member of the European Parliament has called those costs “extreme madness,” pointing out that countries like France and Italy already have debt-to-GDP ratios of 112 percent and 144 percent, respectively.
For Pisani-Ferry, Mahfouz, and the rest of the global left, however, all these costs are worth bearing to avoid a looming climate apocalypse. In an exclusive interview with Politico last month, Pisani-Ferry even called on European Union members to relax budgetary constraints on spending (even as inflation remains a persistent problem) in order to ram through his desired policy changes.
But current data suggests that many in the West are already growing weary of the left’s much-touted “energy transition.” According to BloombergNEF, which specializes in “energy transition analysis,” 2022 saw the first ever decline in issuance of “green bonds.” Bloomberg reported “heightened skepticism” about the industry, along with declining financial returns.
One of the factors Bloomberg also cited for the decrease in investment was rising inflation – something which, as Pisani-Ferry and Mahfouz explained, is likely to only become worse as new green policies take effect.
Another key aspect of the left’s environmental agenda, the move from gas-powered to electric vehicles, is also facing serious challenges in Europe. Late last month, the police force for the city of Essex in the United Kingdom declared in a report that EVs pose a “strategic risk” for response units, further saying that no model could satisfy the standards needed for road policing.
The Essex Police report specifically pointed to a shortage of charging stations and long charge times – two other significant downsides of electric cars that Trump also pointed to in his Erie speech.
In a separate news story, a European insurance market specialist also told Italian news outlet Il Sole 24 ORE that, at this point, companies cannot offer insurance policies for an electric car as an emergency services vehicle.
All of these developments in Europe should be a warning for liberals in the United States, who are looking to follow the same path. But instead of being honest about the severe risks of a “green transition,” the Biden administration and its allies in Congress and the media have continued to pretend there are no trade-offs to fundamentally restructuring the U.S. economy.
In some ways, the United States may even find itself in a worse situation than Europe. America’s debt-to-GDP ratio recently crossed 120 percent, and is likely to climb even further in the years ahead. Other factors like the prevalence of car culture in the United States mean that changes like those favored by European liberals would cost Americans even more – thus exacerbating the downstream economic effects.
But without a change in leadership, it seems unlikely that liberals in the United States will heed these warnings and avert certain disaster.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
