The American Interest
Analysis by Walter Russell Mead & Staff
Germany And Spain Throw Green Energy Under the Bus

Consumers in Europe are revolting against their countries’ green energy policies. For over a decade, the governments of Germany and Spain have been funding their subsidies for solar and wind energy by passing on large costs to the consumer. In Germany, an extra charge is added to household electricity bils, and that charge nearly doubled in January. Worried about the consumer reaction, Merkel’s government is now furiously backpedaling, according to the WSJ:

Fearing a voter backlash from anger over the lopsided financing of green energy, Ms. Merkel’s government on Thursday proposed putting a cap on the green-energy surcharge until the end of 2014 and then restricting any rise in the surcharge after that to no more than 2.5% a year. The government also plans to tighten exemptions, which would force more companies to pay, and achieve a cut in green subsidies of €1.8 billion ($2.42 billion). The plan is a quick fix pending comprehensive reform after the election, government officials said.

Merkel hopes to gain votes by taking these measures to cap green energy subsidies. Meanwhile, Spain is following suit, cutting renewable energy subsidies in an attempt to push down energy costs. The logic is clear:

Renewable-energy producers “are going to receive less revenue, but these measures are better for consumers” said Energy Minister José Manuel Soria.

What both countries are experiencing is the pain of trying to subsidize an industry that’s not ready for prime time. If renewable energy eventually becomes viable, it won’t need subsidies; capital owners who can make money off of it will ensure it’s put to use. But until then, these attempts to prop up struggling industries are foolish and painful to consumers.

[Image: Shutterstock]

 

Published on February 17, 2013 10:00 am