Exxon threatens not to invest billions in EU because of too much bureaucracy

Exxon has warned the European Union that it will leave and take billions of dollars in climate investments with it if Brussels does not make it easier to spend those billions on transition-related projects.

The Financial Times quoted the company today as saying that bureaucracy in the EU is excessive and that it takes too long to start a project, which has prompted the multinational energy company to consider spending the $20 billion in decarbonization investments planned for 2022–2027 elsewhere. In fact, Exxon is doing what many European companies, crushed by a para-Soviet bureaucracy, have long wanted to do or are already doing.

“When we make investments, we have very long time horizons in mind. I would say that recent developments in Europe have not instilled confidence in predictable, long-term policies,” Karen McKee, president of Exxon Product Solutions, told the FT.

“We are seeing the deindustrialization of the European economy, and we are concerned,” McKee said. Deindustrialization also cuts into the customer base to which an energy company offers its products, making the market less attractive.

The leadership of the European Union has repeatedly promised to facilitate transition projects but appears to have been slow to do so. Getting a project off the ground in the EU is fraught with regulatory hurdles and “slow and tortuous” permitting and financing procedures, according to Exxon’s McKee and many other companies involved in the transition.

The EU’s plan for the Green Deal calls for a “predictable and simplified regulatory environment” as one of its four pillars, but judging from the business community’s reactions, this has not yet moved from theory to practice. Faster access to finance is the second pillar of the EU line, but this too is taking a long time to materialize.

In reality, the decision-makers are always people who have never seen a construction site or factory in their lives, know nothing about any production process, and indeed live in the need to justify their existence precisely by “regulating” and “reducing” the role of the private sector. It would be easier to ask a donkey to fly than to see a bureaucrat independently relinquish his power.

It is these delays in implementation that have prompted business leaders to gather in Belgium today to pressure the EU leadership to move from words to action. There is growing concern that the regulatory burden imposed on businesses will scare them away, driving investment elsewhere.

Even some European leaders, notably France’s Emmanuel Macron and Belgium’s Alexander de Croo, have blamed bureaucracy for farmers’ protests. You will see that, beyond a bit of political controversy, nothing will happen: the Franco-German bureaucracy is too powerful and will resist until a cataclysmic event.