Yesterday Angela Merkel warned that green energy policies are weakening Germany’s competitive advantage in the global economy. Germany, like the rest of Europe, is paying a lot more for electricity today than it did seven years ago. The country has made large investments in solar and wind power, more expensive energy sources than oil and gas. Meanwhile, the US has seen its electricity costs fall and is poaching industry from green-loving Europe. As the WSJ reports, that has Merkel worried:
Traditional energy providers have been stepping up the heat on Ms. Merkel’s center-right government. On Monday, Germany’s biggest energy industry group said that the next government must make overhauling energy policy a top priority. Speaking at an energy conference in Berlin, Ms. Merkel said she still supports further expansion of renewable energy such as wind and solar power to reduce carbon dioxide emissions. But she said the costs need to be contained as global rivals are benefiting from lower energy prices.
Merkel gave little detail to her commitment to turn things around, but it has been clear for a while that Germany’s energy policy, as currently formulated, isn’t working. Berlin has started to scale back some of its green policies, but there’s still a long way to go. The country has been resolute in its opposition to fracking in the past, but permitting exploratory wells to test Germany’s shale resources would be a good start. Merkel will have to be careful when balancing economic realities and green sentimentality ahead of September’s elections, but it’s looking more and more like Germany regrets its “all in” approach to green energy. Solar and wind have potential, but they aren’t ready to compete with oil, gas, or coal, and now Germany is paying the price for its green exuberance.