Europe Is Being Deindustrialized With a Purpose

10 min readJan 13, 2023
Photo by Felix Mittermeier on Unsplash

The sun is shining, birds are singing and natural gas demand destruction goes on unabated in the EU. One might ask here: why have TTF gas prices fallen below 70 Eur/MWh (1) actually to even lower levels than in Asia? Mainstream media tries to spin the story that this is largely due to mild weather, energy saving and a rise in US LNG deliveries — and this is where thinking usually stops. According to Irina Slav writing for though:

The first red flags appeared last year: much of the gas consumption decline in Germany that was praised by politicians actually came from demand destruction among industrial users because of prohibitive prices. In other words, gas demand in much of Europe last year fell because it was destroyed and not so much because everyone suddenly became conscientious with their gas use. But demand destruction is not good for the economy. It means shutdowns of factories and layoffs.

In other words: Europe is deindustrializing as expected, and simply shed 20% of it’s gas consumption as a result. Mission accomplished.

Low demand begets low prices. Should the price of Natural Gas fall further still though, it would quickly deter LNG ships to pursue more lucrative business opportunities — i.e.: deliver their gas to Asia instead, where they can sell it for a higher price. That would (will?) leave the EU with even less gas supply. Norwegians alone will surly not able to fill in the gap, especially so that their ‘production’ is actually on a high plateau and about to peak soon (then decline).

Prices are unlikely to fall below the 60–70 EUR/MWh range for a protracted period. LNG will be always 3–5 times more expensive than pipeline gas, and lacking the later option in adequate quantities, the EU will always have to pay a premium if it wants more gas. ‘Take it or leave it’ is the name of the game here.

EU natural gas prices. Although significantly cheaper than last summer, nat gas still costs five times (!) more than in 2019–2020. Image source: Trading Economics

Europe’s woes are far from being over though. 2023 will see Europeans waving goodbye to a further 30 billion cubic meters of demand, as there will be little to no Russian gas to refill storage (as it was the case in 2022):

Yet this year, according to analysts, Europe would need to import even more LNG to secure its winter supply because there would be a lot less Russian pipeline gas than there was last year. One might hope for another warm winter but relying on hopes is hardly a sound energy security strategy.

The International Energy Agency has already warned the EU is facing a supply gap of 30 billion cu m of gas, even with all the demand destruction and deliberate demand cuts. And this gap might prove tricky to fill with China’s LNG appetite returning, too, as the country reopens, even with doubts about the success of this reopening still abounding.

Lacking natural gas to power its heavy industries, Europe is now slowly turning into an assembly plant for whatever meager consumption left here. (Forget exports: EU labor is still too expensive — for now.) Almost every part for EU made cars, washing machines, lawn mowers etc. will soon come from abroad and the only ‘added value’ provided by European workers will be a good hard push on the button of an electric screwdriver… powered by wind and solar, of course. No emissions, no smokestacks — just green lawn in front of shiny steel and glass assembly halls. The green politician’s dream coming true.

There is a fly in this beautifully clean soup however. Actually quite a big one, with a big nasty hairy butt. It is called: Decoupling. From. China. If there is bogeyman hiding in your average German industrial leader’s closet, then this is it:

Executives from firms including chemicals giant BASF (BASFn.DE), Deutsche Bank (DBKGn.DE) and industrial group Siemens (SIEGn.DE) pushed back on the government’s plans [on decoupling from China] in a call with Economy Minister Robert Habeck in September, Reuters reported, citing sources. The companies declined to comment at the time.

No wonder: China is Europe’s biggest trading partner, as well as the source of many components and raw materials used in manufacturing and all kinds of other products.

The project of stymieing Asian imports must go on nevertheless; as they say: “there is more than one way to skin a cat”. Take carbon tax on imports for example. If we can’t burn stuff (because we no longer have it) no one else should, or at least they shall pay a hefty price for doing so. According to a new EU policy, any foreign country who wishes to sell cheap, but carbon intensive stuff (like steel) to the EU should purchase certificates from now on to pay the difference in carbon pricing between the EU and the country of origin. This would make previously cheap but polluting imports just as expensive as clean green (and now increasingly unavailable) European products.

Here comes China into the picture: it has vast mineral resources, cheap (but dirty) energy from coal, cheap(er) labor and lax regulation when it comes to polluting remote areas and dumping hazardous waste in the open. Using ‘green policies’ is thus can be seen as a perfect (and an unquestionably popular) way to get rid of the competition from the East. Sorry Europeans, so much for assembling (and shopping for) cheap stuff…

Nothing can stand in the way of deindustrializing (ahem, ‘decarbonizing’) the EU.

Now stir in Buy Clean actions — preferring US made steel (2) over more carbon intensive EU steel (let alone Chinese steel (3)). The circle comes full: spelling an effective end to both coal based industries in Europe and imports from Asia in one fell swoop. And just to make sure that Europe will completely be deindustrialized: Russian steel imports, representing 80% of the total (together with the now destroyed Ukrainian supply), were also sanctioned earlier last year.

However, nine large companies, including European steel rerollers and traders, sent a joint letter to the EC Sept. 27 underlining the risk “of sanctioning input materials for the rerolling business model in Europe.” According to the letter, any import ban on semi-finished steel products, such as slabs, billets, and blooms from Russia would have consequences for the industry, such as unemployment and price spikes, as there were no other real options for substituting the supply with alternative producers. More than 80% of the EU’s steel semi-finished steel products come from Russia and Ukraine, according to the letter.

As you might have guessed, this will hurt the EU much more than those damn Rooskies (again), as Russia has already found a new way to utilize its surplus steel. They will use it to build one of the biggest mechanized military in the world, with completely new divisions of tanks, artillery and all the rest. Instead of weakening the West’s archenemy, the complete opposite has been achieved.

Finally, I guess I don’t need to ask the question who wins the most on this bout of clean green regulations then, and who gets to sell more of its steel — now labelled green — at a premium. Not Europe for sure. The US, maybe? I don’t know, just asking…

Will the climate be saved as a result at least then? Well, quite to the contrary: the EU will be burning even more low grade coal for years to come to compensate the loss of nuclear and cheap (less polluting) natural gas, and to generate the electricity needed to fend off the effects of coming summer heat waves — caused by burning too much coal over the past couple of centuries. Brilliant.

Photo by Chris LeBoutillier on Unsplash

Folks, we are shifting deck chairs on a ship, which has been painted green and whose lighting is now powered by solar panels; disregarding the fact that it is still sailing on black fumes, full steam ahead towards a sea of icebergs. This iteration of the world economy has been built entirely on cheap, abundant but polluting and climate wrecking fossil fuels, to which renewables and nuclear are mere additions, not replacements.

The human species is in absolute overshoot, polluting and consuming much more mineral and natural wealth than what can be regenerated in a year. Shifting manufacturing locations (ie. who gets to emit those gases or use those finite resources) while trying to hurt each other’s bottom line definitely won’t help here nor change the big picture.

Seen in this light, green policies are nothing more than window dressing for spite, a strategy from classical game theory. Considering the grand scheme of things, it can be viewed as a plot to hurt China by shrinking European demand through war, deindustrialization, decoupling and decarbonization. If all goes according to plan, if there is such a plan, this will hurt China more than what the US has to suffer as a result. Who knows, they might even get richer in the process, attracting investment and much more… Also, on the long run — or so the thinking goes — this would be making commodities cheaper on the world market after EU demand is gone; real climate concerns, resource depletion or European living standards be damned.

OECD — one of many names used to describe the Empire. Image source

If you still have doubts, the numbers clearly illustrate what is going on here. The impact of energy inflation is already affecting the OECD countries twice as much as the center of the ‘organization’ itself. While ‘allies’ are expected to spend 18% of their GDP on energy, the US will get away by expending a modest 8% of its gross domestic product on electricity and fossil fuels.

Preventing China from rising has become obsession number one for the Empire, even if it comes at the cost of impoverishing its closest allies, or wrecking the entire planet.

It shouldn’t come as a surprise then, that the US now wants Europe to send everything (4) into a war it simply cannot win. Tanks. Armor. Guns. Everything what’s left after the great give-away back in 2022. The only problem is, that this is exactly what Russia expects NATO to do. They are making no secret of the fact that they are fighting a traditional firepower-centric war of attrition aimed at demilitarizing Ukraine and its western sponsors. As US Lt. Col. Alex Vershinin wrote in his latest essay:

Wars of attrition are won through careful husbandry of one’s own resources while destroying the enemy’s. Russia entered the war with vast materiel superiority and a greater industrial base to sustain and replace losses. They have carefully preserved their resources, withdrawing every time the tactical situation turned against them. Ukraine started the war with a smaller resource pool and relied on the Western coalition to sustain its war effort. This dependency pressured Ukraine into a series of tactically successful offensives, which consumed strategic resources that Ukraine will struggle to replace in full…

After Europe’s deindustrialization (and now demilitarization) runs its due course, western ‘allies’ will be compelled to buy US made equipment — unless they want to pay an unreasonably high premium for German made steel. This would, of course, further enrich the US military industrial complex — even though they themselves lack the capacity to fulfill existing orders… (All of which makes me wonder how the US plans to wage its next war, this time against the biggest manufacturing hub of the world… But who am I to ask?)

Material reality, people’s living standards, the climate and ecosystems, not to mention world peace, is of no concern to Empire strategists though. The grand chessboard game must be won, at all costs. Who will left to populate this ‘chessboard’ after industrial civilization has run its due course is of course not pondered upon.

Until next time,



(1) This is not to be confused with MWh-s of electricity generated by wind. Much of the gas used up by the industry (especially in metallurgy, glass and cement manufacturing) falls into the “process heat” category — in other words: it is burnt to produce high heat (above 800°C) to melt and burn stuff. This is the part of fossil fuel use which cannot be replaced by electricity, nuclear power, geothermal heat or what have you: neither of these sources can go above these temperatures and hope to survive it. That leaves us with burning ‘Green Hydrogen’, but it’s just making things worse. It ties up a ton of resources (solar panels, wind turbines) and produces very little energy in return. (The overall H2 conversion and forwarding process is so wasteful, that you get back maybe 1/3 of the energy you spent creating Hydrogen in the first place.)

(2) In the US many companies specialize on producing steel from scraps via arc-furnaces. The problem is, not everyone can do this: someone has to produce the dirty, carbon intensive raw steel first which then can be recycled later. The other issue comes from arc furnaces themselves: they use a lot of electricity (about 440 kWh per metric ton), and are thus only economical where power is cheap and plentiful — not in Europe for sure.

(3) Fun fact: in the meantime China is building more LNG tankers (using good old dirty coal based steel) to meet increased demand — in one of many ways to find a way around import regulations… “If you cannot import it, build a vessel to deliver other folks import then” — could be the new Chinese saying.

(4) The propaganda piece, written by people who had more than a thing or two to do with unprovoked and unjustified invasions (Iraq comes to mind here), spins the entirely bogus narrative of Evil Vlad waking up one day realizing that he alone must reinstate the Soviet Union. If you are like me, and feel rather skeptical about that childish narrative, I highly recommend reading Noah Carl’s excellent summary, which I have came across on The Seneca Effect (thanks to Ugo for re-posting it).




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