Davos Devotees Deindustrialize Europe


Political, business and security leaders gather in Davos next week under the mantra of “rebuilding trust.” Key topics include security cooperation, artificial intelligence, energy security and job growth “for a New Era.” Undoubtedly there will also be calls to phase out fossil fuels and aspirations for a hydrogen-based green economy. Amid this grand planning for the industries of 2050, leaders likely will pay little attention to how government pressure to reach this utopian vision is destroying the industries that made Europe the envy of the world.

Political, business and security leaders gather in Davos next week under the mantra of “rebuilding trust.” Key topics include security cooperation, artificial intelligence, energy security and job growth “for a New Era.” Undoubtedly there will also be calls to phase out fossil fuels and aspirations for a hydrogen-based green economy. Amid this grand planning for the industries of 2050, leaders likely will pay little attention to how government pressure to reach this utopian vision is destroying the industries that made Europe the envy of the world.

Over the past two years, dozens of energy-intensive manufacturers of our most basic materials—chemicals, steel, ceramics, glass and fertilizers—have ceased or slowed production in Europe. As the leader of a U.S.-headquartered chemical company that once had more than 50% of its revenue and employees in Europe, I have witnessed this devolution firsthand.

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Over the past two years, dozens of energy-intensive manufacturers of our most basic materials—chemicals, steel, ceramics, glass and fertilizers—have ceased or slowed production in Europe. As the leader of a U.S.-headquartered chemical company that once had more than 50% of its revenue and employees in Europe, I have witnessed this devolution firsthand.

Europe’s deindustrialization began at the end of the Cold War as eliminating greenhouse gases became the organizing principle for many Continental governments. Bans on hydraulic fracturing, carbon pricing and limits on energy-intensive manufacturing drove down emissions, but they, in combination with the closing of nuclear power plants, also began to kill productive industries.

According to a recent report from the think tank Agora Energiewende, German greenhouse-gas emissions dropped 20% in 2023 to their lowest levels in 75 years primarily due to a collapse in energy-intensive manufacturing. Media reports largely overlook the scale of this catastrophe, but the political ramifications are beginning to show in the polls. Agricultural protests against emission crackdowns in the Netherlands helped populist Geert Wilders win a surprise election victory, and similar demonstrations in Germany killed a green budget proposal.

One of the results of capitalism is that it creates such abundance that people can take for granted all the resources and work that go into everyday products. You rarely think about the plants making the chemicals that go into everything from smartphones to fertilizers that enable the global food supply chain to feed more than eight billion people. Manufacturers of our most basic materials are out of sight and out of mind, just like the regulatory pushes crushing those industries in Europe. But as the Continent will discover in the years ahead, upstream deindustrialization will spread downstream over time into the agriculture, automotive, aerospace, electronics and construction sectors, as well as the thousands of small businesses that are the backbone of Europe.

Our forebears relied on forests for energy, whales for lighting, and animals for transportation. They didn’t have the luxury of believing that nations shouldn’t extract natural resources and convert them into useful materials. That Europe was once willing to do so led to the Enlightenment and then the Agricultural and Industrial revolutions. Through innovation, the Continent created the mass production of petroleum, chemicals, iron, steam power, fertilizer and textiles. Population growth exploded, and standards of living skyrocketed. These technological advancements, ideas and values spread worldwide and lifted humanity to unforeseen heights.

The deindustrializing politics of Europe essentially seek to reverse all this by organizing the economy around limiting byproduct waste from the products that enable the world to sustain itself. Low-cost, abundant energy is the lifeblood of profitable industrial manufacturing. The production of virtually everything requires it. Every time an industrial facility closes, high-paying jobs disappear and the middle class shrinks.

If Europe won’t make what the world needs, then production will go elsewhere. Very few business leaders of energy-intensive companies responsible for returning capital to shareholders would invest money in new European capacity under current conditions. Unprofitable existing European facilities will lose out to lower energy cost locales such as China and the Middle East. That isn’t ideological prognostication; it is cold financial reality.

To stop this Continental calamity, business and government leaders must redouble their focus on basic economics and science. It will mean European governments increasing their domestic extraction of fossil fuels and minerals, as well as the refinement of these elements into chemicals, steel and the products that power advanced economies.

It is environmentally and economically irresponsible for Europe to outsource its energy-intensive industry to countries with weaker regulation, employment laws and safety standards. To believe differently is naive, dangerous, and detrimental to the environment. Serious people understand this reality and must speak out. Voters already are.

Mr. Huntsman is chairman, president and CEO of Huntsman Corp., a publicly traded petrochemical manufacturer based in The Woodlands, Texas.



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