Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy

European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions.  

Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy.

Europe has succeeded in slashing carbon emissions more than any other region—by 30% from 2005 levels, compared with a 17% drop for the U.S. But along the way, the rush to renewables has helped drive up electricity prices in much of the continent.

Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates, according to a basket of 28 major economies analyzed by the International Energy Agency. Italy isn’t far behind. Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China. Energy prices have also grown more volatile as the share of renewables increased.