Germany risks economic decline as green dream spoils

Germany is committing slow economic suicide. It has staked its future on heavy industry and manufacturing, yet has no energy policy to back this up.

German nuclear power plants
Germany's nuclear power plants. Their closure will cut off a fifth of the country's total power Photo: Reuters

Instead, the country has a ruinously expensive green dream, priced at €700bn (£590bn) from now until the late 2030s by environment minister Peter Altmaier if costs are slashed - and €1 trillion if they are not. The Germans are surely the most romantic nation on earth.

The full implications of this may become clear over the next decade, just as Germany’s ageing crisis hits with maximum force and its engineers retire; and just as German voters discover - what they suspect already - that it costs real money to hold a half-baked euro together.

The likelihood is that Germany will start to lose its economic halo soon, “de-rated” like others before it.

America was over-rated in 2000. Russia and Britain were over-rated in 2007. Brazil, India and a string of mini-BRICS were over-rated in 2011. Today the country most obviously trading at its cyclical peak is Germany, a geostrategic “short” candidate that is drawing down its credit from past efforts. However, the slippage may be slow, since Germany has locked in a lasting edge over southern Europe through a fixed exchange rate.

Chancellor Angela Merkel tied a deadweight around the ankles of her country when she suddenly - and flippantly - abandoned her nuclear policy after Japan’s Fukushima disaster in 2011. “This has forever changed the way we define risk,” she said at the time. “It’s over.”

 

She was talking about politics, of course, not science. It was an earthquake and tsunami that caused the Fukushima tragedy. Germany’s nuclear plants are not at risk from such flooding, nor are they built on tectonic faultlines. As a scientist with a PhD in subatomic reactions, Dr Merkel knows that the post-Fukushima panic in Germany was hysterical.

Eight nuclear reactors were shut immediately, the rest to be wound down by 2022. This will cut off a fifth of Germany’s total power. To global astonishment - and the Left’s chagrin - she then unveiled her Faustian “Energiewende”, the grand plan to derive half of all German electricity from wind, solar, biomass and other renewables by 2035, and 80pc by the middle of the century.

The assumption was that Germany would gain a “first-mover” lead in renewables, reaping the reward later. They overlooked the Chinese, who copied the technology. Chinese firms gouged the German home market with the aid of cheap labour, a cheap yuan, cheap state credit and a global trade system that let them get away with it.

The German solar industry has been smashed. QCells, Conergy, Solon and Solarworld have all gone bust or faced debt restructuring. The subsidies for feed-in tariffs have been leaked abroad. Eight of the world’s 10 biggest solar firms are now Chinese.

As a solar enthusiast, I am grateful to the Germans for their altruism. Roughly €100bn of their money has gone up in smoke - one way or another - developing solar technologies that have helped drive down costs to near “grid parity” in low latitudes. The great prize of market-based solar is within grasp. Sadly for German citizens, they will see no special benefit.

 

In the end, it is wind from thousands of turbines in the Baltic - generating 25,000 megawatts (MW) by 2030 - that is supposed to power Europe’s industrial heart. This is an astounding gamble. As of today, barely 300 megawatts of offshore wind capacity is in place. The cables across the country do not exist.

READ ENTIRE ARTICLE HERE: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10303285/Romantic-Germany-risks-economic-decline-as-green-dream-spoils.html

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