German Warning: Green Dreams Beget Brown Nightmares

  • Date: 27/09/14
  • Walter Russell Mead, The American Interest

It’s hard to imagine a worse set of outcomes as a result of Germany’s green energy transition

Germany’s energy revolution—its energiewende—was supposed to blaze a trail, and show off a new way countries could meet their energy needs without wrecking their environment or the climate. It was an audacious experiment, but it’s hard to read much success out of it these days.

Yes, renewable energy is booming in Germany, after guaranteed long-term above-market rates called feed-in tariffs were offered to wind and solar power producers, but the costs of those subsidies have been passed along to consumers in the form of green surcharges. For businesses, that affects bottom lines, and many German firms are looking to site production abroad, where energy is cheaper (in the shale gas-rich United States, for instance). For households, that’s been a kind of pernicious regressive tax, as the poor are more likely to notice their ever-rising electricity bills.

But accompanying the growth of renewables in Germany’s energy mix has been a renaissance for a decidedly brown energy source: coal. In the wake of the 2011 Fukushima disaster, Germany began phasing out its nuclear reactors. Berlin took from that crisis that it ought to eliminate nuclear, an effectively zero-carbon energy source, from its energy mix, despite the fact that Germany is situated far away from the fault lines that threaten Japan’s reactors. Solar panels and wind turbines can’t replace nuclear energy; they supply two distinct kinds of energy. Nuclear can be relied on to supply grids consistently, 24/7, 365, while solar and wind can only contribute when the sun is shining and the wind is blowing. To meet its baseload energy needs, Germany turned to its domestic deposits of lignite, an especially dirty form of coal. As the Wall Street Journal reports, that’s how the supposedly green-minded energiewende has rejuvenated German coal use:

Berlin’s “energy revolution” is going great—if you own a coal mine. The German shift to renewable power sources that started in 2000 has brought the green share of German electricity up to around 25%. But the rest of the energy mix has become more heavily concentrated on coal, which now accounts for some 45% of power generation and growing. Embarrassingly for such an eco-conscious country, Germany is on track to miss its carbon emissions reduction goal by 2020. […]

Ordinary Germans foot the bill for these market distortions, having ponied up an estimated €100 billion ($129 billion) extra on their electricity bills since 2000 to fund the renewable drive. The government estimates this revolution could cost a total of €1 trillion by 2040.

Berlin is scaling back some taxpayer subsidies for green power. But Germans still also pay for the energy revolution when job-creating investment goes to countries with lower power costs, as happened earlier this year when chemical company BASF said it would cut its investments in Germany to one-quarter of its global total from one-third, and when bad incentives skew generation toward dirtier coal instead of cleaner natural gas.

Is this what greens envisioned when they hailed the start of the energiewende as a major policy success? It’s hard to imagine a worse set of outcomes for Germany—higher electricity prices, a rising reliance on the dirtiest fossil fuel around (coal), an accelerated phase out of one of the only zero-carbon baseload power sources around (nuclear), and a less diverse, less secure energy mix that leaves Germany exposed to the machinations of exporters like Russia.

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