Europe’s Climate Policy Forces Industry Into Retreat; Even Its Critics Are Folding

Submitted by Thomas Kolbe

In the media business, five months is an eternity. And it does indeed seem like an eternity has passed since Christian Kullmann, CEO of the German chemical giant Evonik, sharply criticized European climate policy at the end of October.

At the time, Kullmann gave an interview to Süddeutsche Zeitung, in which he called—if not for the outright abolition—then at least for a significant weakening of the EU-wide CO₂ emissions trading system, given the dramatic state of the economy.

Kullmann rightly pointed out that there is probably no stricter CO₂ regime anywhere in the world than in the EU. And since the climate, as we know, has no borders, he argued it makes little sense to disadvantage domestic cutting-edge technology in this way. He explicitly referred to the costly CO₂ trading system, which drained a staggering €21.4 billion from the German economy last year alone—under the banner of climate policy through this relatively new mechanism.

Five months after these remarkable statements—briefly breaking the long-standing silence of German industrial leaders—the question must be asked whether there is anywhere else in the world a comparable project to the EU’s CO₂ regime. With the United States abandoning its policy of artificial energy scarcity, its war on conventional energy production, and heavy-handed regulation of its own industrial base, the EU now stands alone in its ideological campaign against economic rationality. No one else seems willing to join the chorus of Europe’s climate apocalypticism.

This European isolationism may elsewhere be perceived as a form of late-stage counter-colonization—a return flow of capital from remorseful Europeans willing to accept self-imposed sacrifice to help other regions get back on their feet. Around the world, this selflessly naive “degrowth suicide” is welcomed, as it delivers not only so-called climate support from European funds but, more importantly, accelerated industrial investment from European companies—served on a silver platter by eco-socialist policymakers. A civilizational ingredient that, it seems, Europe itself now believes it can do without.

In China, one has learned to remain quiet when a geopolitical rival makes mistake after mistake—as is currently the case with European climate policy. Energy-intensive firms like Evonik are penalized by CO₂ pricing with an artificial competitive disadvantage. Once embedded in political and administrative structures, this amounts to a genuine stimulus program for foreign industrial locations.

At the same time, China—like the increasingly deregulated United States under President Donald Trump—is developing a powerful vacuum effect in global capital markets. The world is benefiting from German engineering and European capital.

This dynamic is particularly evident in the chemical industry. As a highly energy-intensive sector, it has suffered one of the hardest blows from European climate policy, alongside the automotive industry. Kullmann’s warning about the erosion of economic foundations was more than justified—but it came far too late and remained, for a time, a lone voice in the wilderness.

Since 2018, Germany’s chemical industry has lost roughly a quarter of its production capacity. The sector is operating at an average capacity utilization of just 70%, a level that reflects a sectoral depression not seen in Germany since the end of World War II.

Yet the worse the economic situation becomes, the more firmly German policymakers cling to their belief in the green transformation. Corporate silence is secured by a massive subsidy machine, just as the sympathetic media sector provides the shrill soundtrack to the broader economic decline.

Tactically astute from a media standpoint, Brussels—under pressure from European industry—has agreed to ease some pressure from the CO₂ cost burden. The European Commission is expected to temporarily freeze the volume of circulating certificates within the market stability reserve in order to stabilize prices.

For Evonik CEO Kullmann, the outcome presented by Brussels appears acceptable. His once sharp criticism of the CO₂ mechanism has mysteriously vanished into the media ether. The change of heart clearly follows the promise of further subsidies.

A destructive mechanism has emerged between large corporations and an eco-socialist political leadership. At the media level, corporate executives and political actors stage a kind of ping-pong game that simulates critical debate and conflicting interests at the highest levels of decision-making.

Evidently, there is no willingness to even slow down the ongoing transfer of wealth—from the productive sectors of society to politically favored extractive sectors such as the green economy—even amid prolonged economic stagnation. The economic and social consequences of this policy are, for now, being conveniently ignored in both Brussels and Berlin.

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About the author: Thomas Kolbe is a German graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination