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Wrong Turn
An Economist Post Mortem on Germany's Late, Great Green Plan

Germany’s turn towards green energy—its energiewende—cost consumers nearly $30 billion last year without actually making the country any greener. What exactly is this polysyllabic mess of an energy policy? The Economist explains:

More a marketing slogan than a coherent policy, the Energiewende is mainly a set of timetables for different goals. Germany’s last nuclear plant is to be switched off in 2022. The share of renewable energy from sun, wind and biomass is meant to rise to 80% of electricity production, and 60% of overall energy use, by 2050. And emissions of greenhouse gases are supposed to fall, relative to those in 1990, by 70% in 2040 and 80-95% by 2050.

This all sounds very nice, but in practice it’s been disastrous for Germany. At the heart of the matter is the simple fact that renewable energy comes at a premium, and the costs for propping it up have been passed along to consumers, both industrial and residential, in the form of higher electricity costs.

Yet this turn towards green energy has produced a browner energy landscape. Germany produced more energy from coal in 2013 than it had in nearly a quarter century, and its emissions actually rose. The Economist describes the effect at play:

The Energiewende has, in effect, upset the economics of building new conventional power plants, especially those fired by gas, which is cleaner but more expensive than coal. So existing coal plants are doing more duty. Last year electricity production from brown coal (lignite), the least efficient and dirtiest sort, reached its highest level since 1990. Gas-fired power production, by contrast, has been declining (see chart). In effect, the Energiewende has so far increased, not decreased, emissions of greenhouse gases.

German businesses are considering jumping ship for cheaper energy prices in the developing world or (gasp!) the United States. For households, these subsidies have acted like a particularly regressive taxThe poor feel the bite of higher electricity bills than do the rich. Germany’s new energy and economy minister Sigmar Gabriel is expected to announce a plan to cut renewable energy subsidies later this week in an effort to keep electricity prices down. That will be a step in the right direction, but significant damage has already been done.

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  • Andrew Allison

    “. . . the costs for propping it up have been passed along to consumers, both industrial and residential, . . .”Is not quite true. As widely reported, the EU is investigating the fact that “energy-intensive” industries have been spared the burden, thereby further increasing the cost to consumers.

  • Bretzky1

    I think most people knew that Germany’s energy policy was going to result in higher prices. The question was whether the benefit that would be gained from the policy was worth the extra cost. And, no, the benefit wasn’t really the production of less green-house gases, at least not in the short- to medium-term. It was no secret that Germany was going to have to consume more coal and/or natural gas to replace the lost nuclear energy, so CO2 emissions were of necessity going to have to rise. The benefit was really the psychological benefit of not having to worry about having a Chernobyl or Fukushima type accident/event occur in Germany. I leave it to the Germans to decide if it has been/will be a fair trade.

  • TommyTwo

    “The share of renewable energy from sun, wind and biomass is meant to
    rise to 80% of electricity production, and 60% of overall energy use, by
    2050.”

    If this is meant as a pious hope, then knock yourself out. If this is an actual plan you mean to implement, you will knock yourself out.

  • Corlyss

    Europe seems to have a lock on the production of stupid ideas. First they bought into the EU, then they traded the energy cow for a handful of boutique energy beans.

    • TommyTwo

      “Europe seems to have a lock on the production of stupid ideas.”

      If only!

      • Corlyss

        Okay. They’re better at it than we are until recently. I really want to revive the economic models we had back in the post Civil War era.

  • Rick Johnson

    As Ludwig Von Mises warned almost a century ago, whenever governments intervene in the economy, they produce an outcome which is worse than the problem they were trying to solve.

    The rising energy costs will make the Germany economy less productive. Failing companies will demand government assistance, which will have to be paid for through increased taxes, which will make the Germany economy even less productive.

    It’s a vicious circle that the anti- industrial revolution Greens were hoping for.

  • AldivosTarril

    Reality is a little different to the FUD and anti-clean energy propaganda offered by this blog.

    Germany’s Renewables Revolution – “German industry enjoys the lower spot prices that renewables create, so it pays about the same for electricity as it did in 1978, and less than French industry pays today.” http://blog.rmi.org/blog_2013_04_17_germanys_renewables_revolution

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