Out of Control Policy Blog

Germany's Green Energy Policies Are Shutting Down Industry

President Obama often highlights the renewable energy policies of certain European countries, only to see those countries quickly abandon their policies shortly after. As I observed in my commentary last week:

Even as President Obama vowed he “would not walk away from the promise of clean energy” or “cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here,” German officials were debating whether to cap, reduce, or scrap the country’s subsidies to solar.

German taxpayers have backed more than $130 billion in solar subsidies to date, contriburting largely to rising electricity costs for households (second highest among European countries). But German businesses may be hit even harder.

Last year, following the panic from the nuclear power plant disaster in Japan, German officials voted to phase out all of the country’s nuclear power plants – even though Germany’s vast solar energy systems produce less electricity than two of the country’s remaining nine nuclear plants (8 plants were forced to close in 2011). Siemens recently estimated that the exit from nuclear power could cost German families more than $2 trillion by 2030, roughly two-thirds of the country’s GDP. German newspaper Spiegal reports how these policies are impacting the country’s industries:

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.”

As President Obama continues to espouse the investments of European countries into renewable energy, his administration would be wise to look at the effect these subsidies have had on businesses and households.

To read more about President Obama's European energy envy, read my commentary "Should We Double Down on Clean Energy?"

Adam Peshek is Research Associate


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