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.