Germany calls its grand green policy experiment the energiewende, its energy transition, and it has produced an energy landscape unlike any other. In the wake of the 2011 Fukushima disaster, Germany began phasing out nuclear energy while simultaneously incentivizing solar and wind energy producers by guaranteeing long-term, above-market rates for the electricity they produced. For many greens, this is progress towards some ideal renewables-based energy mix, but as Berlin is finding out, the costs—both environmental and economic—of this transition are brutal. The WSJ reports:
[M]any companies, economists and even Germany’s neighbors worry that the enormous cost to replace a currently working system will undermine the country’s industrial base and weigh on the entire European economy. Germany’s second-quarter GDP decline of 0.6%, reported earlier this month, put a damper on overall euro-zone growth, leaving it flat for the quarter.Average electricity prices for companies have jumped 60% over the past five years because of costs passed along as part of government subsidies of renewable energy producers. Prices are now more than double those in the U.S. […]One government estimate projects the Energiewende by 2040 to cost up to €1 trillion, or about $1.4 trillion, or almost half Germany’s GDP and nearly as much as the country spent on the reunification of East and West Germany.
This is an important report that takes you through the various problems with Germany’s “turn” towards green energy: higher electricity costs, competitive disadvantages for industries, problems incorporating wind and solar farms into its grid, and (because Germany has shut down its zero-emissions nuclear reactors and been forced to burn record amounts of coal in nuclear’s place) even an increase in greenhouse gas emissions.Greens like to hold up Germany as an example for the rest of the world to follow. To be sure, there are lessons to be learned from this extraordinary energy policy experiment, but they’re cautionary. Governments around the world ought to take a long, hard look at what starry-eyed green idealism produces; they won’t like what they see. Incentivizing renewables with government subsidies only serves to prop up technologies incapable of competing with fossil fuels on their own merit. Policymakers would be much better served diverting those billions (and in Germany’s case, trillions) towards the research and development of better solar panels and more efficient turbines. In teaching us that, the energiewende has done at least some good.