A Policy of Energy Starvation in Germany: A Cautionary Tale

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Last spring, Chancellor Angela Merkel set Germany on course to eliminate nuclear power in favor of renewable energy sources. Now, though, several industries are suffering as electricity prices rapidly rise. Many companies are having to close factories or move abroad. _Spiegel

When governments embrace the green fantasy, their economies inevitably suffer. Germany’s government went even more deeply into energy starvation than US President Obama’s government. Germany actually closed its cleanest and most reliable source of electric power: nuclear plants.

Since Chancellor Angela Merkel’s government abruptly decided to phase out nuclear energy last spring in the wake of the nuclear disaster in Fukushima, Japan, the situation for industries that consume a lot of electricity has become much more tenuous.

Energy prices are rising and the risk of power outages is growing. But the urgently needed expansion of the grid, as well as the development of replacement power plants and renewable energy sources is progressing very slowly. A growing number of economic experts, business executives and union leaders are putting the blame squarely on the shoulders of Merkel’s coalition, which pairs her conservatives with the business-friendly Free Democrats (FDP). The government, they say, has expedited de-industrialization.

The energy supply is now “the top risk for Germany as a location for business,” says Hans Heinrich Driftmann, president of the Association of German Chambers of Industry and Commerce (DIHK). “One has to be concerned in Germany about the cost of electricity,” warns European Energy Commissioner Günther Oettinger. And Bernd Kalwa, a member of the general works council at ThyssenKrupp, says heatedly: “Some 5,000 jobs are in jeopardy within our company alone, because an irresponsible energy policy is being pursued in Düsseldorf and Berlin.”

…There is no sign yet of the green economic miracle that the federal government promised would accompany Germany’s new energy strategy. On the contrary, many manufacturers of wind turbines and solar panels complain that business is bad and are cutting jobs. Some solar companies have already gone out of business. The environmental sector faces a number of problems, especially — and ironically — those stemming from high energy prices.

…the immediate shutdown of seven nuclear power plants last March is affecting supply, as the Krefeld example shows. The steel mill requires massive amounts of electricity to produce stainless steel, used in such products as sinks and auto bodies. The metal is heated to more than 1,600 degrees Celsius (2,912 degrees Fahrenheit) in giant furnaces. A single smelter consumes about as much energy in an hour as 10 single-family homes in an entire year. Electricity makes up a fifth of the mill’s total costs, says Harald Behmenburg, the plant manager.

The price of electricity is moving in only one direction: steeply up. For the Krefeld plant, the cost of a kilowatt hour of electricity has tripled since 2000.

And there is no end in sight. When Merkel’s new energy policy was introduced last year, says plant manager Behmenburg, planning for the future became virtually impossible. Behmenburg says that it is impossible now to know what will happen to the supply situation and the price of electricity in the coming years. The mill, steeped in tradition, didn’t stand a chance of surviving, he says.

…”The promotion of renewable energy has led to substantial displacement effects on employment in the conventional energy production sectors, as well as in downstream industries that are particularly energy-intensive,” concludes the report on a conference held at the Federal Ministry of Education and Research last year. The political opposition has also recognized the importance of the issue. Some believe that the green economy is everything, warns Sigmar Gabriel, chairman of the center-left Social Democratic Party (SPD). “But they forget that they can’t make a wind turbine without steel, plastic, mechanical engineering and electrical engineering.”

It is equally important to stabilize the power grid as quickly as possible to prevent blackouts from occurring. Until now, the reliability of the German electricity supply was seen as a significant advantage for doing business in the country. But the loss of several nuclear power plants, coupled with the unpredictability of electricity from wind and solar sources, has changed the situation. _Spiegel

Germany’s ongoing demographic decline will only be made worse by such abysmally irresponsible policies as the current energy starvation policy. Shutting down reliable sources of large scale power makes a wide range of important industries instantly untenable. The inevitable loss of industry and jobs is accompanied by a tragic loss of opportunity at all levels of society.

US president Obama has embarked upon a similar path to green oblivion, but fortunately for the US, he has been more tentative and cautious than Germany has been. Obama has also been lucky, in that his government has been unable to shut down oil & gas fracking of tight hydrocarbons. As a result of Obama’s fortunate failure to shut down the North American shale bonanza, the US economy is still able to tread water.

But Obama has shut down several coal energy plants — de-stabilising the power grid to a small but significant degree. He has delayed the Keystone XL oil pipeline from Canada, thus unnecessarily reducing global supplies of crude. Future US nuclear development under Obama and NRC chairman Jaczko has been set back many years. But at least they have not shut down the crucial existing nuclear plants. Not yet.

Extra Bonus: Here is a summary of a recent set of 5 future scenarios for the year 2050, from the Deutsche Post DHL. Al Fin futurists find it fascinating that the German futurists failed to include the ongoing demographic decline in the German welfare state, or the ominous consequences of German green policies such as carbon hysteria and anti-nuclear hysteria.

It is possible that the scars from 1930s and 1940s Nazism, and from Communist dysfunction in the East, have not yet healed cleanly in the national psyche of Germany. Wiser Germans had best find a solution quickly, because it is the dysfunctional German psyche that is at the root of the nation’s problems.

Al Fin