03.04.2013
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Myth-busting continues

"A spectacular fail by command economists"

In English, the current German energy policy debate sounds like no one likes the Energiewende. The Social Democrats and the Greens, who first implemented the Renewable Energy Act, don't like what Angela Merkel's center-right coalition plans, and her government now manages a policy they once opposed, so top government officials now have trouble expressing their support for their opposition's baby.

A recent article at Forbes is a great example of what that looks like to North Americans. The author, Howard Rich (chairman of the Americans for Limited Government), seems to be mainly concerned that the government is interfering in the free market with "command energy economics."

Never mind that it's the United States that sets binding targets for its utilities to get, say, 20 percent renewable power by 2020. Germany is required by EU law to present its targets as well, but it does not require anything from specific businesses, and the targets are not ceilings. So unlike the United States, Germany does not tell its companies what to do and when to stop.

 - Claudia Kemfert, a staunch supporter of renewables and the energy transition, is Germany's most prominent energy economist. Taken out of context, her criticism of the German government's current policies can make her sound like she opposes renewables, however.
Claudia Kemfert, a staunch supporter of renewables and the energy transition, is Germany's most prominent energy economist. Taken out of context, her criticism of the German government's current policies can make her sound like she opposes renewables, however.
© Roland Horn

As I recently wrote elsewhere (PDF), Germans have freedoms Americans don't even know they lack. Rich starts off the article praising consumer choice as though the issue of renewable power should be left up to the few consumers who want 100% green power. What Rich does not tell his readers is that citizens are not seen merely as consumers in Germany. The result in energy policy has been that people are allowed to invest profitably in energy projects themselves – from solar roofs for homeowners to local community wind farms – thereby competing with big business.

Rich is concerned that renewables "despite heavy government subsidization… simply aren't filling the void" left behind by nuclear. In 2012, nuclear was down 8.3 percent year over year, with renewables up 7.8 percent. Judge for yourself whether this is a problem – and keep in mind that no additional nuclear plant is scheduled to be taken down until 2015, whereas renewables continue to grow every year.

There is nary a fact Rich gets right. He claims that Germany adopted "exorbitant fix prices" for renewables in 2000, when in fact the prices paid for wind power ranged from 5 to 9 cents per kilowatt-hour; it wasn't until 2004 that the roughly 50 cents per kilowatt-hour for solar was implemented. The policy was the brainchild of a "Socialist-Green coalition," though the SPD calls itself Social Democrats, not socialists. And the current conservative-libertarian coalition has not been "ramping up government's plan to phase in renewables" since 2011.

In fact, Chancellor Merkel is working to slow down solar in particular. Rich even quotes a "former German environmental minister" claiming that "Merkel's coalition stopped its work" after the sudden nuclear phaseout of 2011 without telling us that the quote comes from Social Democrat Sigmar Gabriel, a chief supporter of renewables in Germany. Likewise, the "economic expert" who speaks of "chaotic standstill" is Claudia Kemfert, Germany's leading energy economist – and a staunch supporter of renewables. Her recent book is entitled (in German) "The struggle for power: myths, might, and monopolies."

 - Sigmar Gabriel, also a staunch supporter of renewables and the energy transition, was instrumental in protecting the Renewable Energy Act as Environmental Minister under Chancellor Merkel's first coalition government from 2005-2009. Since then, he has been critical of the new coalition's changes to the law, and again – taken out of context – his criticism can make him sound like he opposes the very thing he is defending.
Sigmar Gabriel, also a staunch supporter of renewables and the energy transition, was instrumental in protecting the Renewable Energy Act as Environmental Minister under Chancellor Merkel's first coalition government from 2005-2009. Since then, he has been critical of the new coalition's changes to the law, and again – taken out of context – his criticism can make him sound like he opposes the very thing he is defending.
© SPD-Parteivorstand/ D. Butzmann/ F. Jaenicke/ S.Knoell/ B Kraehahn

What Kemfert and Gabriel criticize is a lack of planning and structured progress. Rich makes these staunch supporters of the energy transition sound like anti-government libertarians who simply want the cheapest source of energy. In fact, these people are the ones who supported the alleged "exorbitant fix prices" back when they were implemented.

Finally, Rich writes that "Germany has been forced to construct numerous new coal plants in an effort to replace the nuclear energy it has taken off-line" and "will build more coal-fired facilities this year than at any time in the past two decades." Doesn't anyone at Forbes know how long it takes to build a coal plant? Easily five years, meaning that the first coal plants built in reaction to the sudden nuclear phaseout of 2011 would not even be possible until 2016. Every German coal plant going up this year was already under construction when Fukushima happened.

That's not everything that needs correcting in the Forbes article, but we’ll stop here. The important thing to understand is that Germany is not the command-and-control marketplace that Howard Rich would have us believe. It is a democracy where citizens are not relegated to the role of consumers, where politicians can tell big business they have to accept their consumers as competitors, and where there is great support for the energy transition across the political spectrum – which is why the debate is so lively.

In general, Americans would be well advised not to see the US as "free" in Germany as "socialist." The US is the country where health insurance firms tell you what doctor you can go to (in-network and out of network), something Germans would never tolerate. (Craig Morris)

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4 Comments on ""A spectacular fail by command economists" "

  1. Greg - 14.05.2013, 01:44 Uhr (Report comment)

    Note the article is an opinion piece from a far right lobby group. Don't expect Forbes to do any fact checking - as it's opinion. I think the correct reaction is to shame Forbes for publishing such crap.
    http://en.wikipedia.org/wiki/Americans_for_Limited_Government

  2. Todd Millions - 06.04.2013, 00:17 Uhr (Report comment)

    Dare one mention the stacked up and intertwinned subsidies of all energy production in US and other N.americian' volenteered to become 3rd world shit holes'?The direct nuc subsidy begins with a straightforward federal 5cents per kwh-and no measurements of listed capacity vs delivery are ever published in vettable form.The twisty additions to this amount to much more.The same for coal oil and gas.All as bogus as Monsanto -'biofuel'. The actual smearing of grid interconnected wind,hydro and solar was sketched out well enough in the original early 70's edition of-'Earth energy and everyone',in Buckminister Fuller's into essay-worth digging up.The reason powercompany wennies,beleived it wouldn't become anything they would ever have to face-Hogtownittus. Mr Morris,Hogtownittius.

  3. James Wimberley - 03.04.2013, 21:35 Uhr (Report comment)

    You are surprised that reactonaries like Mr. Rich, founder of a a href="http://www.motherjones.com/mojo/2012/10/joe-walsh-tammy-duckworth-now-or-never-americans-limited-government"ibertarian lobby - not a genuine membership organisation - that channels money from the Kochs to right-wing politicians, lie about renewables? It's the only way left to stop them.

  4. Thomas - 03.04.2013, 16:46 Uhr (Report comment)

    Great article.
    It's indeed funny how wrong so called "experts" / "journalists" get VERY simple facts all the time. Especially in international media outlets, but also in domestic publications...
    Especially the key elements of the Renewable Energy Sources Act seem to be incredibly difficult to understand.
    1. guaranteed access to the grid (natural monoploy) for all producers of renewable electricity (Market access) 2. A minimum price system for renewable electricity generation (To enable profitable operation, ensure access to financing and remove distortions from decades of subsidies in fossil/nuclear energy sources) 3. priority of renewable energy (to reduce external costs of fossil-nuclear energy sources)
    In essence all of these are very straight forward market framework conditions... what happened afterwards is the market magic of private capital being mobilized for investments.
    Any free-market fan boy criticizing this policy-framework should reconsider his position since generating 1 kWh produced by a new rooftop-solar system in 2012 is actually cheaper in Germany than Arizona or California...
    If free market forces are indeed the most efficient way to do stuff then Germany is obviously closer to the ideal of free markets in the energy sector. -)

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