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German Warning: Low-Carbon Economy Too Expensive

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The Wall Street Journal

The costs of Germany’s shift to a low-carbon economy are getting out of control, the country’s biggest energy lobby group said Monday, urging the next government to make energy policy a top priority.

“There will no period of grace for the new government,” Hildegard Mueller, managing director of Germany’s energy and water industry association, known as BDEW, told reporters at a press conference in Berlin.

Her comments echoed those by European energy officials, who warned at an industry conference in Italy last week that Europe’s energy supply is becoming too costly, jeopardizing that continent’s competitiveness.

After the March 2011 nuclear disaster in Japan, German Chancellor Angela Merkel switched gear and announced plans to gradually abandon nuclear energy and to replace it with safer and greener forms of energy like solar, wind and hydroelectric power. Before the disaster, her center-right government had planned to extend the life of the country’s reactors.

Ms. Mueller said that the expansion of renewable energy across Europe, driven by subsidies and other forms of government support, is hurting operators of large industrial-scale power plants. The surge of renewables is increasingly clogging the power grid, reducing utilization rates, and hence profits, of large power stations.

Policymakers, including the German government, are aware of the rapidly changing energy market environment, the rising costs related to support for renewable energies and the impact on the broader economy.

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