There is hardly a policy field in which ambition and reality collide as violently as in Europe’s climate policy. For years, the European Union has regarded itself as a pioneer in the fight against climate change. At summits, leaders speak of “historic responsibility,” “green leadership,” and a “new social contract.”´The goal is ambitious: by 2050, the EU intends to generate no additional CO₂ emissions, and by 2040 it aims to cut greenhouse gases by 90 percent compared with 1990 levels.
But politics guided more by pathos than by rationality risks failing on contact with reality. Europe currently produces only about six to seven percent of global emissions, while China accounts for roughly 31 percent, India for seven percent, and the United States for 14 percent. Even an immediate achievement of full climate neutrality across the European continent would exert only a minimal influence on global temperature trajectories. An effect that would scarcely register within the broader distribution of worldwide emissions.
The Example That No One Follows
Yet Brussels continues to cling to the idea that example inspires imitation. The plan is simple: if Europe leads, others will follow. Reality, however, paints a different picture. The People’s Republic of China continues to build new coal-fired power plants every year to feed its energy appetite. The United States relies on financial incentives rather than prohibitions through its Inflation Reduction Act – a pragmatic rather approach. Europe, meanwhile, is driving up its own energy costs at a pace that threatens its industrial foundation. The consequences are already visible. According to the EU Agency for the Cooperation of Energy Regulators (ACER), electricity for energy-intensive industries now costs up to three times as much as in the United States. For sectors such as chemicals, steel, and glass production, this has become a matter of survival.
Industry Votes with Its Feet
In 2023, the German chemical giant BASF announced that it would redirect new investments primarily to China, citing cheaper energy and more predictable regulations. It was not an isolated case. Germany’s automotive industry, once a symbol of technological sovereignty, is also moving production across the Atlantic. BMW is investing $1.7 billion in its South Carolina plant to produce electric SUVs. Volkswagen is building its new battery facility in Canada, while suppliers such as ZF Friedrichshafen and Bosch are expanding operations in the United States, where energy is cheaper, permits are faster, and subsidies more generous. Officially, these companies speak of “new markets” or “strategic diversification.” In truth, it is a flight from Europe’s rising costs. Washington attracts investment through tax incentives. Brussels responds with certificates, levies, and regulations. A continent that once powered the world’s industrial engine is slowly becoming a bystander to its own de-industrialization.
Climate Policy
Europe has indeed attempted in the past not only to reduce global warming, but also to use its green agenda as a geopolitical lever—an approach that is by no means unusual in international strategy. Yet that idea has failed. Lacking real instruments of power, Brussels now seeks to lead not through strategic leverage but through moral incentives. China, by contrast, understood how to seize this opportunity and turn it to its own advantage and acts accordingly. It has learned to exploit Europe’s self-imposed constraints with remarkable precision. While Brussels restricts its own industries through ever-rising CO₂ costs, Beijing floods global markets with solar panels, batteries, and wind turbines at dumping prices, securing for itself the value chains of the so-called “green future.” Paradoxically, Europe’s climate policy has evolved into a de facto subsidy program for Chinese state-owned enterprises.
The Emissions-Trading Paradox
The EU Emissions Trading System (ETS) is considered the cornerstone of Europe’s climate architecture. In theory, it is an elegant mechanism. Those who emit less CO₂ benefit. Those who emit more must pay. In practice, however, it only works if other major economies adopt similar systems. As long as strategic competitors maintain cheaper energy without a comparable carbon price, European industries – especially Germany’s – will simply relocate to where conditions are more favorable. The belief that moral rigor alone can trigger a global movement may be noble, but it is naive. Nations do not act out of admiration. They act out of interest.
Costly Virtue
Adding to this is Europe’s practice of “climate aid.” Each year, billions of euros flow from EU funds to developing and emerging economies to support green projects. According to the OECD, such transfers amounted to more than €23 billion in 2023. The intention is laudable, but many of these programs dissipate without measurable impact.
And what if the plan fails? If the world’s major emitters ignore Europe’s moral appeals? Then the EU becomes a geopolitical laboratory that disarms itself while other powers expand their industrial might. The consequences would be profound. As the United States and China compete for technological dominance, the old continent would risk becoming a dependent market rather than a producer. Politically, Brussels would lose leverage, for dependence undermines autonomy. Energy reliance already shapes foreign policy decisions from relations with Russia to partnerships with Qatar.
The Social Fuse
In the shadow of the EU’s risky energy path looms a social fracture. When energy, mobility, and housing become unaffordable for large parts of the population, the gap widens between those who can afford the ecological transition and those who feel abandoned by politics. What began as an ecological transformation could turn into a social powder keg. A catalyst for extremist movements on both the left and the right. If the European project falters over this contradiction, the first casualty will not be the climate but the continent’s political stability.
At the same time, Europe would erode its own security weight. Military deterrence, economic strength, and technological leadership all rest on access to affordable energy and a robust industrial base.
Between Morality and Power
The European Union stands at a crossroads. It can cling to green wishful thinking and risk the erosion of its industrial core or it can reconcile responsibility with realism. Climate change is undoubtedly a real and urgent threat. There is no doubt about that. But to confront it with a rhetoric of moral inevitability is a path toward failure. Innovation grounded in realism should be the key to the coming century. Great powers rarely collapse because of external enemies. More often, they fail because of internal conditions. The EU would indeed be well advised not to abandon its goals entirely. We owe that to future generations. But it must pursue them with clear eyes. Without hubris, and with a greater sense of realism.
For if the old continent continues to believe it can single-handedly save the planet while its factories fall silent or move abroad, it will soon discover that the world keeps turning—just without it.