Germany’s Green Energy Meltdown
American climate-change activists point to Europe, and especially Germany, as the paragon of green energy virtue. But they ought to look closer at Angela Merkel’s political struggles as she tries to form a new government in Berlin amid the economic fallout from the Chancellor’s failing energy revolution.
Berlin last month conceded it will miss its 2020 carbon emissions-reduction goal, having cut emissions by just under 30% compared with 1990 instead of the 40% that Mrs. Merkel promised. The goal of 55% by 2030 is almost surely out of reach.
Mrs. Merkel’s failure comes despite astronomical costs. By one estimate, businesses and households paid an extra €125 billion in increased electricity bills between 2000 and 2015 to subsidize renewables, on top of billions more in other handouts. Germans join Danes in paying the highest household electricity rates in Europe, and German companies pay near the top among industrial users. This is a big reason Mrs. Merkel underperformed in September’s election.
Berlin has heavily subsidized renewable energy since 2000, primarily via feed-in tariffs requiring utilities to buy electricity from renewable generators at above-market rates. Mrs. Merkel put that effort into overdrive in 2010 when she introduced the Energiewende, or energy revolution.
The centerpiece is the escalating emissions-reductions targets Germany now is missing, which surpass the 20% reduction by 2020 to which the rest of the European Union has committed. The policy is also supposed to reduce total energy consumption to 50% of the 2008 level by 2050, with a 25% reduction in electricity use. That was a tall enough order for an industrial economy. Then Mrs. Merkel made it even harder in 2011, with a hasty promise after Japan’s Fukushima disaster to phase out nuclear power by 2022.
Energiewende enthusiasts say the policy is racking up successes despite the problems. That’s true only in the sense that if you throw enough money at something, some of the cash has to stick. In electric generating capacity, for instance, renewables are now running almost even with traditional fuel sources.
Yet much of that capacity is wasted—only one-third of Germany’s electricity is actually generated by renewables. Berlin has invested heavily in wind and solar power that is easiest to generate in parts of Germany that need the power the least, especially the north. Berlin will need to spend another huge sum building transmission lines to the industrial south.
The other costs relate to providing electricity when the wind doesn’t blow and the sun doesn’t shine, which is often in Germany. The traditional plants needed to fill in the gaps are overwhelmingly fired by coal, on which Germany still relies for roughly 40% of its power.
Natural gas would be cleaner and is easy to switch on and off. But gas is more expensive than coal, and the peak daytime consumption hours when gas could recoup that investment are also the times utilities are more likely to be required to buy overpriced solar power.
As a result, natural gas accounts for only 9.4% of Germany’s electricity, down from a little over 14% in 2010. Gas accounts for some 30% of U.S. electricity generation, and the shift to gas from coal explains a majority of the reductions in carbon emissions in U.S. generation since 2005, according to a report last month by the U.S. Energy Information Administration. German households pay nearly 36 U.S. cents a kilowatt-hour of electricity, versus an average of 13 cents in America.
No wonder voters are in revolt. Surveys say that in theory Germans like being green, but polls about household energy costs say otherwise. The right-wing Alternative for Germany (AfD) won a surprising 13% vote share in part on a promise to end the Energiewende immediately. A new study from the RWI Leibniz Institute for Economic Research finds that 61% of Germans wouldn’t want to pay even one eurocent more per kilowatt-hour of electricity to fund more renewables.
This is casting Mrs. Merkel’s coalition talks into disarray. Her prospective Green Party partners want to double down on Energiewende distortions by banning coal, starting with the 20 most-polluting plants. Mrs. Merkel’s center-right Christian-Democratic parties and the free-market Free Democrats are willing to close 10 plants at most, in recognition that more would strangle the economy of energy absent nuclear power after 2022.