European Green Deal and Fossil Fuel Antitrust Exemption

I just wrote an article with that title. Published in my public Dropbox folder here.

The European Green Deal is the main policy of the new EU Commission. It wants to make Europe the first climate neutral continent.

And there is a sense of urgency. The Commissioner in charge compared the situation with a large asteroid headed for Earth and threatening to wipe out humanity in ten years.

Unfortunately, it may be illegal under antitrust law for the fossil fuel industry to help achieving that goal.

The fossil fuel industry should have a production schedule like that for Bitcoin. That is long term, predictable, and goes down fast. Once that is in place, it does not matter who burns the remaining production.

But even if they came to their senses and wanted to introduce hard limits on fossil fuel output, they would be in violation of antitrust law if they actually did something like that. Yes. They would be fined potentially billions of Euros for trying to help achieve the most important Commission policy goal.

Doing something about the climate emergency is illegal, at least if you are talking about coordinating the fossil fuel industry to get to a production schedule.

I don’t think the Commission should threaten industry with fines in that situation. They should encourage them to set up production schedules. For the very least, they should not stand in the way of an efficient and quick solution to the climate emergency problem.

Of course gasoline might get more expensive.

But it would also get safe. Would you insist on low gasoline prices if that gasoline gave you a potentially deadly virus, like the new coronavirus some people are worried about now? Is getting the climate emergency under control not worth higher fossil fuel prices?

No one ever died from not driving a car. But plenty of people die and will die from the climate emergency. The WHO now estimates 250,000 additional deaths per year between 2030 and 2050.

Fossil fuel has an unique quality that it shares with money. Its usefulness depends on it being produced in limited quantity. Money produced without limits is useless because of runaway inflation. Fossil fuel produced without limits is harmful because it leads to more CO2 emissions than the natural carbon sinks can handle.

You can overdose on money supply just as you can overdose on fossil fuel supply.

Antitrust law ignores that special quality. It is illegal to set up production schedules for fossil fuel. The interest in low prices trumps the interest in safe supply.

I think that should change.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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