Merkel’s Madness: €7,6 Trillion For Germany’s Climate Project

  • Date: 24/08/19
  • Fritz Vahrenholt & Roland Tichy, Tichys Einblick

Angela Merkel has called for a further tightening of Germany’s climate target – the nation should become CO2-neutral. By 2035, the costs will be twice of Germany’s economic output of a whole year. Which household can raise an extra 1,000 euros per month?

For Angela Merkel, these are just a few words: “We want to be climate neutral by 2050.” In the devotional mood at the Protestant Church Congress in Dortmund, where the Chancellor spoke these words, the faithful applauded her. No wonder: After all, the former investigative journalist Hans Leyendecker had announced ex cathedra – as president of the Kirchentag: “Anyone who does not acknowledge that climate change is man-made has no place at the Kirchentag.”

It is no longer a question of scientific debate and research, but of a new dogma of faith – who would dare to have any doubts if his name were not Galileo Galilei? The Chancellor was able to bask in glow of the unity that religion offers the heart. Who wants to calculate what it means financially for German households if words are followed by deeds? The Chancellor now doesn’t want “any more chicken feed” in climate policy, as she had already announced a few days earlier to her MPs of the parliamentary CDU/CSU party group. The Fridays for Future demonstrations demand a reduction of CO2 emissions to zero by 2035, the PR disaster caused by Youtuber Rezo’s “The Destruction of the CDU” video and the election successes of the Greens have obviously had an effect on the Chancellor.

People remember 2011 and Markel’s rash decision to prematurely abandon nuclear power. When the German chancellor believes that Germans want to save the world, she decides very quickly, whatever the cost. Only votes and public mood counts.  Economic or other rational considerations no longer play any role – just like her decision to open the border for all and sundry. And now the jump onto the climate bandwagon because of demonstrating pupils and singing Protestants.

After a two-hour visit to the Potsdam Institute for Climate Impact Research (PIK) on 14 June, Merkel apparently decided to turn German climate policy on its head. After his discussion with Merkel, PIK Director Ottmar Edenhofer announced euphorically: “Following the financial crisis and the refugee crisis, the Chancellor is now tackling the climate crisis”. Well then, one is tempted to add, what could go wrong with that!

“Pillepalle”  (chicken feed) – by this Merkel apparently means the previous CO2 reduction target of 90% by 2050. Once – in 1994 – the then head of Deutsche Bank Hilmar Kopper had caused outrage because he arrogantly described the sum of 50 million German marks as “peanuts”. It became the ‘worse word of the year.’ But what is Merkel’s Pillepalle in comparison? It is a number with twelve instead of seven zeros behind the number five. With so many zeros, the citizen’s perspective and the Chancellor’s overview are quickly lost.

It amounts to about 4,600 billion euros, but it could also be 5,000 billion, i.e. 4.6 or five trillion. This was calculated by experts from the National Academy of Sciences Leopoldina, the German Academy of Engineering Sciences and the Union of the German Academies of Sciences and Humanities for their report published in November 2017 (“Sector coupling – Studies and considerations for the development of an integrated energy system”). Per household in Germany, this total would mean additional monthly costs of either 640 euros (if the reduction is to be achieved by 2035) or 320 euros if the reduction is to be achieved by 2050. Monthly, mind you, not annually. So this is Merkel’s Pillepalle from the point of view of the people who have to pay for it.

The decisive finding from this research – financed by the Federal Government – is not only the astronomical sum of investment, capital and operating costs. When it comes to saving emissions, it’s the same as in competitive sports: the necessary training effort for further performance improvements increases as you get closer to the absolute maximum of what’s possible. This means that every additional CO2 reduction step is significantly more expensive than the previous one.

Merkel calls for cost explosion

A 40 percent CO2 reduction by 2030 has been assumed as the reference value. The researchers calculate the costs incurred by then at 1,500 billion euros. They courageously assume that the costs will not change significantly up to a reduction of 60 percent. The authors of the report then describe the next steps as follows:

It is evident that the costs for the energy system as a whole will rise sharply with increasing reduction targets and otherwise the same boundary conditions. This increase grows more strongly than proportionally with the reduction target: an additional reduction of 15 percentage points (from 60 to 75 percent) leads to higher systemic total costs of around 800 billion euros, while a further reduction of ten percentage points (from 75 to 85 percent) causes additional costs of almost 1000 billion euros, and a further reduction of five percentage points (from 85 to 90 percent) causes an additional 1300 billion euros.”

How can this exponential cost increase be explained? The authors of the report explain:

The technical effort for any further reduction is much higher for already high values, since all potentials for direct electricity use have been exhausted and low-cost fossil natural gas must be replaced by elaborately produced synthetic energy sources. In addition to conversion plants such as electrolysers, including the entire infrastructure required for this, this requires a large number of additional solar and wind power plants in order to be able to provide the electricity for operating the electrolysers CO2-free.”

If this estimate is continued beyond 90 percent, the exponential increase will result in additional costs for the last ten percentage points up to zero emissions of around 3,000 billion euros. This sum of around three trillion euros thus makes the difference between the previous “Pillepalle” of 4.6 trillion and Merkel’s zero-emission target. The Chancellor’s new promise to achieve the last ten percentage points of CO2 reduction increases the additional energy costs from 4,600 to around 7,600 billion euros by 2050.

This is an astronomical figure: it is more than double the amount of all goods and services produced in Germany in 2018. This can no longer be achieved with the usual shell game, in which growing costs are shifted back and forth between households and shadow households, taxpayers, the economy and the state budget. It will be hitting mercilessly on German consumers who are already burdened with the highest energy costs in Europe. If it were up to Greta Thunberg, the loud chorus of climate activists and Merkel’s promises that the zero-emission target would be reached by 2035, additional costs of at least 1,050 euros per month per household would become due.

No more prosperity for all

These gigantic sums make it clear that the energy revolution will thus become a gigantic program to destroy prosperity and impoverish large parts of the population. Which family can afford a monthly additional burden of between 500 and 1,000 euros without having to limit its daily lifestyle significantly? In coming years and decades, the socio-political struggle for the distribution of these costs could lead to considerable disillusionment among many a young climate activist as soon as they have to pay the electricity bill themselves.

But it is not only the financial expenditures for zero emissions that are likely to represent a growing potential for social conflict. Since transport and heat are also to be completely decarbonised, i.e. largely electrified, for which, according to the report, “at around 1,150 terawatt hours, almost twice as much electricity is required” as today, and one wants to rely entirely on wind and photovoltaics, the report comes to the conclusion:

In this case, the installed capacity of wind power and photovoltaics would have to be increased sevenfold compared to today — at the same level of energy consumption”.

You’ve read correctly. Not doubled or tripled, but increased sevenfold. Anyone driving through Germany’s countryside can imagine what this means: hardly a spot in Germany would be spared – even if the capacity of the individual wind turbines were assumed to have doubled. Every 1.5 kilometres there would then be a 200-metre-high windmill. There are still no wind turbines in front of the Federal Chancellery or in the English Garden in Munich or on Hamburg’s Binnenalster. The destruction of Germany’s landscape is currently taking place in rural areas where few voters live. But if the number of wind turbines increases sevenfold, they move ever closer to the towns and cities and chop up the green lungs around the conurbations.

Wind industrial sites instead of forests

Even today, tens of thousands of citizens in rural regions are defending themselves in countless initiatives against the further expansion of wind power plants. Many are successful and have succeeded in pushing local politicians to object to new wind farms. As a result, the Federal Environment Agency is increasingly concerned about the impending failure of the Energiewende( energy revolution) in terms of public acceptance and now recommends building wind turbines between the tree tops of forests instead of on agricultural land. The big advantage? Most forests are in public hands and nature conservation rarely resists there. Anyone who has ever taken the A61 road between Bingen and Koblenz knows what the result looks like. The latest victim of this policy is the Reinhardswald in Hessen which was once considered a fairytale forest. The forest that is supposed to reduce CO2 is being destroyed. Climate protection is self-destructing.

As resistance to wind turbines grows, voices from the energy industry are also increasing in favour of photovoltaics, which has now made up for its cost disadvantage compared to wind energy. These plants are particularly beneficial for cultural landscapes, as long as they are not placed on house roofs. Above all, however, the result is likely to become even more fragile for the energy supply side because the sun hardly generates any electricity during winter months, so that without wind energy around six months of the year would have to be covered by storage.

As Hans-Werner Sinn, the former president of the Ifo Institute, has shown, realistic storage of the required quantities of electricity in Germany by further pumped storage plants or batteries is simply impossible. The authors also come to the conclusion that the idea of decentralised storage, for example in private e-cars, will not work in practice, at best as a short-term storage facility: “The buffer capacity of the electric fleet is in the range of a few hours”. However, up to five or six months are required to bridge the dark lull. It is also questionable whether car owners are willing to be regulated when using their vehicles and maintain batteries instead of vehicles.

Electricity prices increase sixfold

The only alternative would be to use the solar electricity surplus in summer to produce hydrogen and methane (“power to gas”). This is technically possible, but extremely expensive, because about 70 percent of the energy is lost during the conversion steps. Even the most optimistic scenarios calculate a six-fold increase in the corresponding electricity price.

This raises the simple question: Who should pay? At present it is the consumers. The so-called energy-intensive industry is exempt from this requirement and may pass on its energy costs to its customers. However, the economy cannot reduce its energy costs at will. More and more companies are operating at the limits of what is physically feasible – it is the limits of physics that cannot be overcome even with more resources. The chemical company BASF, for example, has halved its CO2 emissions,” calculates Saori Dubourg, responsible for construction chemicals and European business on the Board of Executive Directors with a total of 80,000 employees. “More is not possible”.

The steel industry, the aluminum industry, the cement industry – all industries that are already forced to emigrate and are still squeezing out the old plants – argue similarly. Drastic CO2 reduction targets, such as those prescribed by the German government for German industry, are a solo effort and determine the national cost level. But we don’t have any national markets,” said Dubourg, who is expressly committed to the Paris climate protection targets: “With such a solo effort, industry would have to think about “postponing investments”. It says it in a small circle, the economy is publicly silent. Other industries may still have air – but it will be expensive in any case and the structure of the industry will change – that is: disappear.

Take the car, for example: what happens if individual mobility becomes paralysed or production in Germany becomes too expensive? “When the car disappears, the lights go out,” says Joe Kaeser, head of Siemens AG, “and without an energy crisis. The entire value chain is collapsing, across the board.”

Long value chains – from the end product to supply to the basic industry – are the secret of German industry. It is a competence chain that is constantly losing new links. What is collapsing here, for example, is the Siemens Energy Division. Orders for energy-efficient turbines? “Exactly zero,” says Kaeser. Thousands of jobs are now being cut. These are the actual costs, which are not yet included in the calculations. “We’re not Greenpeace with production attached,” Dubourg comments dryly.

If you follow the Chancellor, there would have to be another factory after every one, one that somehow removes CO2. To pump into the earth and to store – this way is meanwhile legally forbidden in Germany. Germany lives like a wonderland: all wishes are to be fulfilled, costs are to be pushed aside. But that only works in Berlin’s bubble, which is sealed off from reality, perhaps a few more kilometres to the Potsdam Climate Institute.

3000 trillion for four months

The full extent of the fiasco that Angela Merkel’s recent climate protection offensive is leading the country into becomes all the more incomprehensible when one puts the physical effect in relation to the three trillion euros that German households will have to spend in the next three decades. After all, the step from the supposed ” Pillepalle ” to zero emissions is only one by the last ten percentage points, the most expensive.

The three trillion euros that the Germans pay for it save the earth’s atmosphere approximately the amount of CO2 that corresponds to the increase in China’s emissions in four months. These have increased by about 250 million tons from 2017 to 2018. China emitted a total of around 9,500 million tons last year. By way of comparison, total German CO2 emissions amounted to around 870 million tonnes – less than ten percent of China’s total. And China has declared within the framework of the Paris Agreement that it will reach the gigantic volume of 12,500 million tonnes by 2030. It’s cheap in the beginning. So it would be sensible to save more in China and less in Germany.

But the Chancellor doesn’t seem to be concerned about hard figures on this issue anyway. At the Kirchentag she said that Germany has an “obligation” to be a pioneer in climate neutrality. She justified this obligation as a historical debt: After all, as an early industrialized country, Germany has been emitting CO2 for a very long time. To demand from a country like Liberia – Merkel sat together with the Liberian President Ellen Johnson-Sirleaf on a podium – that it should become climate neutral is, on the other hand, “cynical”. She likes to overlook the fact that it is the wealthy countries that protect the environment and fight for a better climate.

Germany is still one of the pioneers because it can afford climate protection, even if it has long since been at the expense of the last green lungs and nature reserves in Germany. But an impoverished Germany will no longer (be able to) care about this.

However, the Chancellor herself may also appear cynical. If one compares the woman who today, at all costs, does everything she can to go down in history as Climate Chancellor with the woman who led the opposition in 2003, it would be cynical. In an interview with Hugo Müller-Vogg, she described her “Germany nightmare” as follows: “Everyone owns a windmill and even still believes that they are doing something for the environment, but forgets the high subsidies. Merkel makes sure that her nightmare becomes reality. But then she is no longer Chancellor.

Full story (in German)

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