Germany's Green Energy Policy Backfires

February 21, 2014

Germany's radical green policy has actually led to higher carbon emissions, says researcher Vaclav Smil in The American.

Germany passed its Renewable Energies Law in 2000, subsidizing renewable energy generation by promising fixed payments to wind, solar and biogas producers. The law also required the use of renewable energy above all other sources, insisting that the energy grid absorb wind and solar power over that of coal or gas, even if that requires the shutdown of traditional energy plants.

By 2010, renewable electricity generation had more than tripled. And alongside that increase came the most expensive electricity in all of Europe.

  • Somewhat ironically, Germany also saw higher carbon emissions.
  • To meet all of its energy demands, Germany has turned to using the most inexpensive alternatives (importing natural gas costs about three times the American price) such as lignite and coal.
  • As a result, its carbon dioxide emissions did not decrease as intended.

Notably, energy policy has had impacts beyond electricity prices and carbon emissions.

  • Home ownership in the United States is around 65 percent, similar to the United Kingdom and lower than the 80 percent rates in Spain and Italy. But in Germany, only 43 percent of families own their home.
  • And it is the poorest families that have been most affected. In the United States, almost 90 percent of households in the last quartile own their own homes, and 50 percent in the lowest quartile are homeowners. But in Germany, the numbers are a respective 60 percent and 20 percent.

This is important because those without homes are affected even worse by Germany's high electricity rates than homeowners are. Those who own homes can place solar panels on their roofs, taking advantage of state subsidies that at least can help to offset the high electricity rates. Renters, on the other hand, have no way to offset those costs.

Germany's experience serves as yet another example of poorly-constructed government policies rife with unintended consequences.

Source: Vaclav Smil, "Germany's Energy Goals Backfire," The American, February 14, 2014.

 

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