Germany's Energy Flip-Flop

In his 'climate change speech' at Georgetown University in June 2013, President Obama said, “Countries like China and Germany are going all out in the race for clean energy. I want America to win that race, but we can't win it if we're not in it.” (1)

If you look at what's happening in Germany you would decide that it's best we are not in their race. Policymakers have not copied the EU's model which imposes national mandates for renewable electricity, provides lavish subsidies for solar and wind energy providers, and imposes a national cap and trade scheme to raise the cost of carbon dioxide emissions. (2) Germany's radical initiative to subsidize renewable electricity generation has resulted in higher carbon dioxide emissions and the most expensive electricity in Europe, with the poor disproportionately bearing the burden, reports Vaclav Smil. (3) In 2000, the Renewable Energies Law subsidized increased renewable electricity generation. The law had its intended effect: by 2010 electricity generated from the renewables had more than tripled to 17 percent. As Smil notes, “Remarkably a country whose capital, Berlin, as well as the financial capital Frankfurt am Main, normally receive 20 percent less solar radiation than Seattle [and as much sunshine as Alaska], became the world's leader in photovoltaic (PV) electricity generation—and an example of how almost anything is possible with subsidies.” (3)

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The result? Germany has very expensive electricity. In 2012 in the US, the average residential cost of electricity was about $0.12 per kilowatt-hour. In the EU in 2012, the average cost was $0.27. In Germany, the cost was $0.36. (2) Benny Peiser reports, “Germany's green energy transition alone may cost consumers up to 1 trillion euros by 2030. These hundreds of billions are being paid by ordinary families and small and medium-sized businesses in what is undoubtedly one of the biggest wealth transfers from poor to rich in modern European history. The German Association of Energy Consumers estimates that up to 800,000 Germans have had their power cut off because they couldn't pay the country's rising electricity bills. (4) Last month, 6.9 million households were reported to live in energy poverty, defined as spending more than 10% of their income on energy. (5) And regardless of their world-famous massive expenditures on wind and solar, electricity generation by these means still does not equal the remaining German nuclear power generation, and they are dwarfed more than three-fold by coal, two-fold by lignite, a dirty brown coal that creates more pollution. Numbers for 2013 show that coal provided 55.1%, nuclear 19.9%, wind 10.2%, solar 6.4% and the remainder was gas. (6) After the Fukushima nuclear accident, German Chancellor Angela Merkel shuttered eight nuclear reactors and ordered the phase-out of Germany's remaining nuclear reactors by 2022. (7) Alongside nuclear power plants being shut down, ten gigawatts of gas-power plants will be dismantled in Germany by 2015—to be replaced with seven gigawatts of coal-fired plants (8) Over the next two years Germany will build 10 new power plants for hard coal. And then there's the boom in lignite—soft brown coal with a larger pollution footprint. Europe is in a coal frenzy, building power plants and opening up new mines, practically every month. (9)

Industry Troubles

• The world's biggest steel companies have already left for Asia; America's low-cost electricity has brought heavy industries (including petrochemical manufacturing) back to the US. (9)
• In October 2013 the CEO's of Europe's 10 largest utilities finally cried uncle and called for a halt to wind and solar subsidies. (10)
• The chemical company BASF has threatened with a partial relocation of its production abroad if it will no longer be exempt from green levies on electricity. (11)
• German engineering giant Siemens confirmed it is completely winding down its solar business. The involvement ended in a disaster, costing Siemens about one billion euros. (12)
• In March 2013, Bosch signaled its withdrawal from the solar cell and solar module market. Bosch will lose around 2.4 billion euros. (13)

Summary Kaavya Ramesh sums this up well, “By vowing to close its nuclear power plants and instead replace much of the generation with coal-fired generation, Germany is demonstrating that it is not serious about reducing carbon dioxide emissions. Given Germany's already stratospheric electricity rates, there is no wonder Germany does not want to further drive rates higher, but instead will use low-cost reliable coal to make sure the lights are kept on.” (7) References

1. “Unreliable German solar and wind forcing new coal boom,” pjmedia.com/blog, January 25, 2014
2. Robert Bryce, “Manhattan moment: if you want to destroy the economy, copy Europe's energy policies,” Washington Examiner, February 26, 2014
3. Vaclav Smil, “Germany's energy goals backfire,” The American, February 14, 2014
4. Benny Peiser, “Europe pulls the plug on its green future,” the gwpf.org, August 9, 2013
5. Bjorn Lomborg, “Germany's energy policy is expensive, harmful, and short-sighted,” Financial Times, March 16, 2014
6. Byron King, “A tale of two countries and environmental trade-offs for energy,” daily resourcehunter.com, January 16, 2014
7. Kaavya Ramesh, “Germany's grim nuclear phase out,” Canada Free Press, August 5, 2013
8. “Rising coal use clouds Europe's future,” online,wsj.com, February 6, 2014
9. Ezra Levant, “Germany out in the coal,” torontosun.com, January 6, 2014
10. Mark Morano, “Europe's wind & solar dream becomes a nightmare: the new dark continent—wind and solar mandates are breaking Europe's electric utilities,” climatedepot.com, October 17, 2013
11. “Chemical giant BASF threatens to leave Germany over green energy costs,” the gwpf.org, November 11, 2013
12. “Green energy disaster sinks Siemens CEO,” web.mail.comcast.net/zimbra, July 29, 2013
13. Peter C. Glover, “The great renewables scam unravels,” the gwpf.org, June 22, 2013