Questions raised by the energy transition in Europe

The European Commission has decided that Europe should make a rapid energy transition, with a reduction in CO 2 emissions of 50-55% by 2030. What are the problems with this choice? (1) Investment in the energy transition will have to be increased very significantly. The European Commission cites an increase in these investments of EUR 260 billion per year. This sounds like a lot, but we should not forget that the EU-27 has a large external surplus, and therefore a large surplus of unused savings; (2) A rapid energy transition will lead to significant capital destruction, as this capital is no longer usable, in sectors affected by the reduction in CO 2 emissions: energy and automotive sectors in particular. This capital destruction will weaken companies financially and lead to a loss of GDP; (3) The jobs lost, associated with this destroyed capital, are intermediate jobs (mainly in industry), which will exacerbate the problem of a labour market polarisation and a decline in social mobility; (4) Are the investments required for the energy transition profitable enough to attract private sector capital? As long as interest rates are low, the answer is yes for investments in infrastructure (wind, solar); but not for other types of investment: insulation of old housing, electrical batteries. In this second case, part of the investments must be made by the government, and not by the private sector. It should also be noted that the higher the CO 2 price, the higher the private return on these investments will be . So what are the most serious problems posed by a rapid energy transition? Probably the destruction of capital and of intermediate jobs and the low return on some of the required investments.