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Fritz Vahrenholt: Germany Faces An Energy-Political Fiasco

Prof. Fritz Vahrenholt

If the loss of German competitiveness becomes clearly palpable, and the destruction of nature turns into a leading political issue, then voters and citizens could bring about a change in politics.

The German government aims to increase the share of renewable energies in electric power consumption from 30% today to 45% by 2025. Using a decarbonization plan, the aim is to crank up the share by renewable energies to 80%. No other country in the world is currently undertaking such a Harakiri course, one that will drive electricity prices to skyrocketing levels never seen before. Renewable energies are two to three times more expensive in their generation when compared to the existing conventional plants. The cost difference now towers at the astonishing figure of 25 billion euros annually which are not only being paid by the citizens via their power bills, but also by business and industry. In the end it burdens industrial competitiveness, costs jobs, and represents a social transfer from bottom to top of immense dimensions. Investors in solar, wind and biogas receive double-digit returns over 20 years  through state-guaranteed fixed prices. These returns are being paid by power consumers, and the poor among them who are unable to afford them.

Already today Germany has the second highest electricity price (after Denmark) in Europe. According to estimates from Berlin-based think-tank AGORA, the so-called renewable energy feed-in tariff will rise from 6.35 €ct/kwh today to an astounding 7.3 €ct/kwh in 2017. Competitive electricity prices are crucial in keeping Germany’s energy intensive industries, such as the productions of copper, steel, silicon or aluminum, or the raw chemicals or the production of engineering gases such as oxygen, hydrogen, chlorine or ammonia. Currently energy intensive plants are paying only 15% of the energy apportionment. Should this exemption be repealed, the vertically integrated value creation chain of the metal processing, electrical and chemical industries would collapse. Indeed already today electricity costs for German industry are around 26% above the EU average. Compared to the USA the difference is now near 150%. Germany still has an industrial share that is 23% of the gross value added, and allowed us to overcome the deep 2008/2009 economic crisis better than most nations. However the creeping process of deindustrialization has already begun. The benefactors of our job losses will be the USA and the Far East.

Already today one thing is clear: The German path to a hasty exit from nuclear energy and now its exit from coal are no convincing blueprint for energy production in other countries. China continues as before to put on line one coal power plant every 14 days and India is on the path to copy its neighbor. Germany does not have the courage, as other countries do, to expand its renewable energies on sensible scale at a workable rate that is economically bearable, and one that can be handled by the power grid and without destroying the landscape and nature. Scaling back of the over-subsidization of renewables and over-burdening of the citizens and industry in England, Spain, Denmark, Italy, Poland and the entire East Block will not be happen in Germany. This is because the German government fears the high priests of the Energiewende in policymaking, media and groups who insist on believing a 100 percent changeover to renewable energies – no matter what it costs – can be carried out in the near future without adversely impacting Germany as a place to do business. So why are we implementing a frenzied energy policy and involving high risks for social stability, competitiveness and nature?

It is driven by fear. It is driven by the fear that we will irreparably damage our climate with CO2.

Yet, new scientific findings have come out showing that CO2’s impact on the global climate has been vastly overstated by the IPCC. There has not been any significant global warming in 17 years, even though one third of the historical CO2 emissions took place during the same period and atmospheric CO2 concentrations have been rising year after year. The climate models, whose prognoses have been shown to be false, are unable to simulate the natural fluctuations of the climate. The 60-year cyclic ocean currents provided half of the warming the globe saw between 1978 and 1998 and now that the cycles have entered their cool phase; no warming is expected until 2030. The sun, which during the second half of the 20th century saw the highest level of activity in the past 1000 years, will also contribute to cooling as it has entered an unusual period of weakness not seen in 200 years. Yes, CO2 is a climate-impacting gas, but it will not heat the mean temperature of the earth more than 1.0 – 1.5° C by the year 2100.

Nature is giving us plenty of time to convert our energy supply system to one that is sustainable. Why then is there this madly rushed, go-it-alone that puts everything at risk? No nation on earth is going to follow us when they see that our own industrial basis is getting destroyed and the citizens becoming overburdened.

Resistance is beginning, however – but not in Parliament or in government. The generation of renewable power is associated with a consumption of land area and a corresponding destruction of nature that is at an astronomical scale. To replace the power amount from a single coal power plant, one needs more than 500 square kilometers of area. The hunger for land area on which to install wind turbines remains to be satiated and about 1000 turbines taking up a land surface of 1500 square kilometers are added each year. Wind parks are increasingly encroaching on villages and towns on one side, and being built on naturally delicate areas in need of protection. In the German states where the Green Party is part of the government, forests are being opened up to allow the construction of wind parks. This is a catastrophe for most species of predatory birds and bats and the surrounding ecosystem.

In the meantime, some 500 citizens’ initiatives are fighting against the further construction of wind energy. It doesn’t take a leap of the imagination to see that this movement is well organized, well informed, capable of handling conflict and able to take on the German Parliament. Here a huge amount of expertise from thousands of minds is coalescing, and no longer bowing to the whims of mayors and state councils. The mood of the citizens has tipped.

The citizens now understand the dilemma of volatile wind and solar energy. When there is no wind – and that can be the case for an entire week – doubling the capacity won’t help. Zero remains zero. The same is true for solar energy at night and on gloomy days. Here only the development of storage technologies could help, but these are prohibitively expensive. Their costs would be added (if they were ever to be developed) to the already expensive solar and wind power. Far more dramatic is the increasingly more frequent over-production of power on windy days. Easter Sunday, 2016, was such a day. It was a national holiday, a time when Germans consume little electricity. Under high winds, power utilities first throttled down the gas, nuclear and coal power plants. Next the first wind parks were taken offline because of the over-charged grid – however, the park operators and investors still continued to be paid even though they produced nothing. Here the power customers were forced to pay for something that never got delivered. This is something one sees only in a centrally planned economy and in fact even led Sigmar Gabriel to state that other countries think  we’re “nuts” with this model. Yet shutting down of a large number of wind parks, as was the case on Easter Sunday, still often does not solve the over-supply problem. There is at times still too much power rushing into the grid, and the danger of exceeding the allowable frequency rises. In over-supply cases, power prices actually fall into negative territory and we are forced to dump our “waste electricity” into neighboring countries Poland, Netherlands, Austria and Switzerland, who in turn are not thrilled about seeing their massive power installations get devalued.

However the apologists of the renewable lobby busily paint a world that suits their view. Here they claim periods of oversupply result from coal plants being allowed to operate, which in turn overload the grid and so force the wind turbines to be shut down and surplus power to be dumped on foreign markets with payments included. But why do these terrible coal power plants continue to operate? Don’t renewables have priority by law? Why not just switch them off? What many people do not know is that a minimum of 20% of the demand for power must be generated by conventional generators in order to secure the secondary reserves. When an ICE high speed train leaves a station, when a steel mill is fired up, or when the lights go on in a stadium, at this moment a power plant has to be activated, and not manually, rather activated automatically by the frequency drop in the power grid. Solar and wind cannot reliably provide this secondary reserve. It is not for the love of coal that the German Power Agency and the four power grid operators leave the coal power plants on line. They know that otherwise the power grid could collapse.

It is high time for the German federal government to acknowledge that it makes no sense to build additional wind turbines in, for example, the Baltic region between Rostock and Stralsund because it would end up being a zero-sum game. During periods of high winds, the power grid quickly becomes completely full. In such a case an existing turbine would have to to be shut down for every new one that got installed, and yet would still have to be paid. Only when the grid bottlenecks are removed, and only when there is a competitive storage technology, does a further expansion of wind and solar energy make sense in such bottleneck regions – and there are many in Germany. We already know that the expansion of the grid can only be implemented first after the shutdown of the last nuclear power plants in 2022. In the meantime installing more massively fluctuating wind and solar capacities is simply thoughtless. Especially southern Germany will suffer from excessive power market distortions.

And to make matters worse, a further expansion of renewables will not save a single tonne of CO2 because the traded CO2 certificates in this country will only lead again to correspondingly more CO2 emissions in Europe.

Germany has a 2.5% share of the globe’s total CO2 emissions, China has 29%. Moreover China has not committed itself to any CO2 reductions by 2035 and so is free to keep emitting CO2 at breakneck speed. That’s the result of Paris. Everything that the German federal government aims to achieve in CO2 reductions by 2020 will be wiped out by China in just a mere 3 months. Steel, copper, machines, and even solar panels from China carry no CO2 sticker. With these imported products, we are in fact importing huge amounts of CO2 emissions.

Two scenarios for the trend up to 2020 are possible:

1. Policymakers continue on the course to a fiasco. The fear of the dreaded CO2-induced climate catastrophe is just too great.  A course  change away from the Energiewende would be a declaration of political bankruptcy, with unforeseeable consequences for political disenchantment. Instead there will be corrections and interventions by the state in multiple attempts to get some control over the faulty development. In the end what will be left is a state-administrated energy management that is inefficient, expensive and detrimental to growth.

2.  Several factors of influence are needed to cause a fundamental course correction. If global temperatures do not rise, the loss of German competitiveness becomes clearly palpable, and the destruction of nature turns into a leading political issue, then voters and citizens could bring about a change in politics. This process will accelerate if the grid failures become more frequent and supply instability increases.

But also in the second scenario there would be more state and less market. After a blackout the call for more state control would become even louder. The times of competitive and market-oriented energy management are over.

Professor Fritz Vahrenholt

Fritz Vahrenholt was one of the founders of the environmental movement in Germany. He holds a PhD in chemistry and is Honorary Professor at the Department of Chemistry at the University of Hamburg. Since 1969 he has been a member of the Social Democratic Party (SPD). From 1976 until 1997 he served in several public positions with environmental agencies such as the Federal Environment Agency, the Hessian Ministry of Environment and as Deputy Environment Minister and Senator of the City of Hamburg. In 2001, he founded the wind energy company REpower and was director of RWE’s renewable energy division Innogy, one of Europe’s largest renewable energy companies. His 2012 book The Neglected Sun sparked a broad public discussion in Germany about the dogmatism in climate science. He is the chairman of the German Wildlife Foundation and a member of the GWPF’s Academic Advisory Council.