Despite Germany’s shift to renewable solar and wind energies, and amid a
recession, its carbon emissions rose by 1.8pc last year
By Bruno Waterfield
Germanys shift to renewable energy was once Angela Merkel’s flagship policy
– now it has become her biggest headache.
“For me, the most urgent problem is the design of the energy revolution,”
said the German Chancellor in her first television interview after being
re-elected last month. “We are under a lot of pressure. The future of jobs
and the future of Germany as a business location depend on it.”
She is not wrong: Europe’s largest country and economy faces a crisis. Such
is the mess over energy that the future of Germany’s much-vaunted economic
competitiveness is now seriously threatened.
Ms Merkel is currently Europe’s most popular leader but there is a growing
backlash against her ill-thought-out energy policies.
And, to cap it all, policies hailed as saving the world from climate change
have, in fact, increased CO2 emissions.
The plan was called energiewende, which can be translated as energy
transition or even revolution. But despite Germany’s shift to renewable
solar and wind energies, and amid a recession, its carbon emissions rose by
1.8pc last year.
In the European Union, as a whole, emissions fell by 1.3pc, mainly due to
recession, according to the Centre for International Climate and
Environmental Research in Oslo.
Ms Merkel has no one to blame but herself. Germany’s shift to renewables
was very much along the norms of the European model, with the aim of going
beyond EU targets. Then along came Fukushima and the wave of anti-nuclear
hysteria that followed the 2011 Tohoku earthquake and tsunami in Japan.
The once-in-a-millennium event at the Fukushima reactor killed nobody,
although the tsunami claimed 16,000 lives. However, it was enough to panic
Germany’s green middle class.
Ms Merkel caved in to shrill demands for the country’s atomic reactors to
be closed. This decision, from a former chemist, who is personally
pro-nuclear, is perhaps the most important economic call she has made. It
is a disaster.
In March 2011, at the height of the eurozone recession, Germany switched
off eight of its 17 nuclear reactors, cutting 7pc of electricity
generation, with another 18pc to go over the next decade. The other nine
reactors will be phased out from 2015 to 2022, bringing forward a previous
2036 deadline by 14 years.
Germany has also stepped up energiewende, as it switches to meet a target
of producing 80pc of the country’s electricity from renewable, wind and
solar power by 2050. The fields carpeted with solar panels and the North
Sea wind farms may have gratified the green conceits of Germany’s middle
class but they have come at a terrible economic and social cost. According
to Nature, the international science magazine, this year German consumers
will be forced to pay €20bn (£17bn) to subsidise electricity from solar,
wind and bio-gas plants, power with a real market price of €3bn.
To pay for this green adventure, surcharges on electricity for households
have increased by 47pc, or €15bn, in the past year alone. German consumers
already pay the highest electricity prices in Europe; before long, the
average three-person household will spend around €90 a month for
electricity, almost twice as much as in 2000. Currently, more than 300,000
German households a year are seeing their power shut off because of unpaid
bills.
Two-thirds of the electricity price increase is due to new government
surcharges and taxes to subsidise renewable energy. While electricity
prices have rocketed and the middle classes receive handouts to put solar
panels on their houses, pensions and wages have not kept up, hitting
Germany’s poorest hardest.
There are some serious practical problems emerging. Solar and wind power is
erratic, which means that Germany will require storage capacity for 20bn to
30bn kilowatt-hours by 2050. So far, the storage capacity has grown by
little more than 70m kilowatt-hours.
Compounding problems, when the wind stops blowing or the sun disappears,
the electricity supply needed to power the national grid becomes scarce.
This has pushed Germany into increased use of heavy oil and coal power
plants, which is why the country released more carbon dioxide into the
atmosphere in 2012 than in 2011.
Its decision to phase out nuclear power also led to a rise in coal prices,
as traders realised that it was likely to keep more coal for domestic
consumption.
Germany has got used to delivering economic homilies on competitiveness to
the rest of Europe. But a new picture is emerging: German industry is in
trouble. Energy prices are 40pc more expensive than in France and the
Netherlands, and the bills are 15pc higher than the EU average. Even though
Germany’s energy-intensive manufacturing sector is given a break with
reduced levies, industries such as chemicals and steel are among the
hardest hit, with energiewende costs of up to €740m a year. The burden
could get even worse after the European Commission (EC) launched an
investigation into the reduced levies.
The Verband der Industriellen Energie- und Kraftwirtschaft, which
represents high-energy manufacturing, is alarmed that the commission could
be about to rule that the levies are in breach of EU competition rules on
state aid to industry. It is concerned that the EC will levy full charges
on companies with immediate effect, and maybe even retroactively, a move it
says could “destroy Germany’s industrial core”.
Germany has become a cautionary tale for Europe, an example of where the
wrong energy policies are damaging, perhaps mortally wounding, its economy,
punishing consumers and the poor while undermining the green objectives, of
reduced CO2 emissions, it set out to achieve.
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