NCPA - National Center for Policy Analysis

The Cost of German Fear

September 12, 2011

Germany's heavy-handed intervention into its energy market is playing havoc.  In the aftermath of Japan's Fukushima nuclear power plant meltdown, the Merkel government has caved on nuclear power, even though no German nuclear plants are vulnerable to tsunamis.  Instead of reversing the decision of the previous left-leaning administration, Germany will go through with the phasing out of its nuclear plants by 2022, says Steven F. Hayward, the F.K. Weyerhaeuser Fellow at the American Enterprise Institute.

  • In May the International Energy Agency estimated that the phase out decision would add at least 25 million tons of carbon dioxide to Germany's greenhouse gas emissions, though this may prove an underestimate if Germany prolongs or expands the use of coal-fired power plants to fill the gap, as is likely.
  • Last month Germany's economics ministry released a study that estimated that the cost of the nuclear phase out in lost jobs, higher energy prices and carbon emissions permit fees will be about $46 billion.

For Germany, renewable energy will not be a realistic panacea.

  • While they are the world's leading producer of solar power, accounting for 43 percent of the world's total installed base, solar power accounts for only 1.1 percent of Germany's total electricity supply and supplied only 5 percent as much electricity as its nuclear power plants.
  • For all of the effort and subsidies Germany has put behind wind and solar power, they still both account for a fraction of the power output of nuclear power in 2010.
  • To make up for the lost nuclear power, solar capacity would have to grow more than 20-fold from its current level, but Germany is already cutting back on solar subsidies because it cannot afford them.

Source: Steven F. Hayward, "The Costs of German Fear: Energy Fact of the Week," American Enterprise Institute, August 24, 2011.

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