Column: Germany's energy transformation based on unsustainable subsidies, an unstable system

On Dec. 3, while 190 governments were meeting for two weeks of climate change talks in Lima, Peru, Chancellor Angela Merkel’s cabinet agreed to a package that continues Germany’s optimistic but unrealistic goal and increases subsidies for measures designed to cut emissions.

Regarding Germany’s “climate protection package,” Barbara Hendricks, Environment Minister, admitted, “if no additional steps were taken, Germany … would miss its targets by between five to eight percentage points.”

The results of the German agreement will require operators of coal-fueled power plants to reduce emissions by at least 22 million tons — the equivalent of closing eight of them. The Financial Times believes the plan will “lead to brownouts in German homes.”

With the goal of generating 80 percent of its energy from renewable sources by 2050, Germany has aggressively pursued a green dream with unsustainable subsidies that have produced an unstable system described by the Financial Times on Nov. 25 as “a lesson in doing too much too quickly on energy policy.”

So what should the U.S. and other countries learn from Germany’s generous subsidy programs and large-scale deployment and integration of renewable energy into the power system? These are the questions U.S. legislators should be asking themselves as they argue over a tax extender package that includes a retroactive extension for the now-expired Production Tax Credit for wind energy.

Fortunately, the answers are easy to determine. Finadvice, a Switzerland-based adviser to the utility and renewable industry, did an exhaustive study, “Development and Integration of Renewable Energy — Lessons Learned from Germany.”

The report’s introductory comments include the following statement, “The authors of this white paper would like to state that they fully support renewables as a part of the power portfolio. … a couple (of the authors) have direct equity interests in renewable projects.” The authors’ viewpoint is an important consideration, especially in light of their findings. They wanted Germany’s experiment to work; yet they begin the executive summary with these words:

“Over the last decade, well-intentioned policymakers in Germany and other European countries created renewable energy policies with generous subsidies that have slowly revealed themselves to be unsustainable, resulting in profound, unintended consequences for all industry stakeholders. While these policies have created an impressive roll-out of renewable energy resources, they have also clearly generated disequilibrium in the power markets, resulting in significant increases in energy prices to most users, as well as value destruction for all stakeholders: consumers, renewable companies, electric utilities, financial institutions, and investors.”

After reading the paper, I was struck with three observations. The experiment has 1) raised energy costs to households and business; 2) the subsidies are unsustainable; and 3) without intervention, the energy supply is unstable.

Anyone who reads the paper will conclude there is far more to providing energy that is effective and economical than the renewable fairytale storytellers want consumers to believe. The German experiment proves butterflies, rainbows and pixie dust won’t power the world after all — coal, natural gas and nuclear energy are all important parts of the power portfolio.

If only U.S. legislators would read the paper before they vote for more subsidies for renewable energy, maybe we could learn from Germany’s expensive and destructive experience what they haven’t yet learned themselves.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy.

Column: Germany"s energy transformation based on unsustainable subsidies, an unstable system