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Germany's Energiewende Is Not Just Unworkable, It Might be Illegal

wind turbine

Germany’s Energiewende, or “energy revolution,” has been heralded by greens as a shining example of the kind of true commitment to renewable energy that our planet requires, but in practice it’s been a flop. As the country phased out its nuclear reactors in the wake of the Fukushima disaster, it heavily subsidized wind and solar farms, passing the costs of these subsidies to consumers in the form of higher electricity prices. In a bid to keep them competitive—and, well, to keep them in Germany—Berlin decided to exempt many of its energy-intensive industries from these high energy prices.

But now the EU is stepping in. The European Commission, concerned that these exemptions violate competitions laws within the trading bloc, will open up an investigation on the matter this Wednesday, Spiegel reports:

[EU Energy Commissioner Günther Oettinger] said many provisions in the law appeared to be in breach of EU single market rules and competition law. For example, he said, it wasn’t acceptable that Germay subsidizes its own wind power but makes no subsidies available to operators from Denmark and Norway that deliver windpower to Germany. […]

The Commission plans to launch proceedings aimed not only at banning such exemptions in the future, but also requiring companies to repay the charges they were exempted from in the past.

This all goes back to the decision to prop up technologies that weren’t ready to compete on their own merits. Any country that tries to phase in large amounts of wind and solar at this point in time will be saddling their industries and households with higher prices. That’s going to hurt that country’s competitiveness and rankle voters.

Angela Merkel seems to have realized this and has pledged to reform the Energiewende if re-elected this September. Germany’s Environment Minister has pledged to phase out solar subsidies by 2018. Walking back from this idealistic overextension is certainly a step in the right direction, but if the Commission decides to force companies to go back and repay charges they were previously exempted from, Europe’s engine could sputter. And the implications of that for the already struggling continent are enormous.

[Wind turbine image courtesy of Shutterstock]

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  • bpuharic

    Hmmm…seeing a bit of a double standard here. Although I’m in favor of nukes, and once had the opportunity to defend them to Ralph Nader, the fact is, as the extreme right wing economist Veronique de Rugy has pointed out, the nuclear industry across the world has some of the largest subsidies of any industry. It does little good to slam ‘green’ industries as welfare sponges without realizing nukes are the king of subsidies. Here in the US, liability for nuclear accidents is limited to $500M. Anyone think a nuclear accident like that in Fukushima would stop when it reaches that number?

    Here in PA, our local energy prices, driven by the nuclear plants in the area, have gone up over 30% in 2 years.

    • Bill_Woods

      Under Price-Anderson, the industry’s liability is more than $12 trillion.

      Pennsylvania hasn’t built any nuclear plants recently; why would old plants drive up prices?

      • bpuharic

        There’s still depreciation on nuclear equipment and amortization of loans. And don’t yell at me. Yell at De Rugy who ain’t no liberal, being a regular columnist at “National Review”

      • Jim__L

        What the right hand giveth, the left hand taketh away… heavy government regulations (and Green legal games) drive the prices up, subsidies drive the prices down.

  • K Bledowski

    A sensible analysis.

    One factual correction. It’s not true that “the country phased out its nuclear reactors in the wake of the Fukushima disaster”. The 2011 Bundestag vote stipulated gradual phasing out of all nuclear reactor through 2022. Nine nuclear reactors are still opearting.

  • Corlyss

    I’m eager to see how the new German position fares among an electorate brainwashed for the last 60 years about the evils of nuclear energy and the last 40 years about Mother Gaia and how the little people can save her by abandoning cheap energy and starving in the dark.

  • Pete

    Any guesses on when Germany will reverse its anti-nuclear policy?

    • Bill_Woods

      Well, Merkel won’t (again). And whatever SPD government follows her won’t either. So, with luck, whatever CDU government follows that. 2020-22?

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