The Costs of Green Dreams
Germany’s “Green” Transition Punishes the Poor

Germany’s vaunted energy transition—its energiewende—has been extraordinarily costly to the German consumer, and those costs aren’t going anywhere. German newspaper Handelsblatt reports that the bill for this rapid transition towards renewables and away from nuclear power is costing the country some €28 billion every year (translated):

The costs of the energy transition amount for the current customer at 28 billion euros per year. A household with an electricity consumption of 3,500 kilowatt hours thus pays 270 euros a year for the implementation of the energy transition. This is the result of calculations from the Institute for Economic Research (IW) for Handelsblatt. The calculations include not only the costs of the promotion of renewable energy, but also costs of network expansion. […]

Ulrich Grillo, president of the Federation of German Industries (BDI), has sounded the alarm: “The calculations make it clear what the costs of the energy transition really are. Companies fear that they will actually continue to rise,” he told Handelsblatt.

Germany rashly decided to shutter its nuclear reactors after Fukushima, spooked by risks its own plants, sited far from major tectonic plate boundaries, will never have to contend with. It had the gall to package this decision as part of a “green” plan, despite the fact that these reactors are one of the only sources of zero-carbon baseload power the world yet has. So while it’s been able to boost renewables through government subsidies called feed-in tariffs (the big reason why electricity bills are rising), it isn’t reaping huge emissions reductions because the country has been forced to burn coal at near-record levels to replace the shuttered nuclear plants. That Gordian knot of incompetency would be difficult to tie even if it was your intention to create a disastrous energy policy; it’s remarkable that Berlin stumbled into its current situation with (presumably) good intentions.

And so now, the average German household is being gouged 270 more euros a year on its power bills. For the wealthy, this extra expenditure will by and large go unnoticed. But for Germany’s poor that’s a lot of extra money to be shelling out. In this way, expensive energy is a particularly pernicious form of a regressive tax on a fundamental household need. Not only is Germany’s energiewende failing to make the green strides expected of it, it’s also hurting the country’s most vulnerable in the process.

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