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Energy transition

German industry fleeing?

The Economist claims in a recent article that "Germany's most energy-intensive industries are now eyeing expansion on the other side of the Atlantic," but does not provide a single example.

The Economist has a policy of not indicating who the author of an article is, but the writer behind "Tilting at windmills" certainly gets the facts right (though a more hackneyed title is hard to imagine). For instance, the author correctly describes the origin and design of feed-in tariffs. And there is little to correct in the numbers.

Granted, I could harp on the usual focus that the Anglo press has on big business, such as when the Economist writes that "some firms have grown fat on the renewables surge," and the example given is "Siemens" – not a firm most Germans would even think of as being in the renewables sector, but then the Economist may not be used to writing about mid-size firms like Enercon, the firm that has built around half of the wind turbines installed in Germany (a search on the Economist website reveals three hits for Enercon). The article does not mention the focus on community ownership in German anywhere and mistakes opposition to projects as NIMByism (in reality, the Germans would just like to own the infrastructure themselves, not have corporations boss everyone around).

The article also claims that Germans have "greater fear of nuclear power," a claim I dealt with here. Overall, it seems clear that the real fear is among proponents of nuclear – that Germany will prove that renewables work.

 - Are German firms really leaving the Germany because of higher energy prices? Send me reports in which particular companies are mentioned, and I'll look into the matter.
Are German firms really leaving the Germany because of higher energy prices? Send me reports in which particular companies are mentioned, and I'll look into the matter.
M.E. / pixelio.de

And then there is the complaint about "Germany's curious refusal to think about Europe strategically." The complaint that Germany is going it alone with its energy transition is quite common – and bizarre. Energy policy has always been a matter the EU intentionally left up to member states, and no one has gone it alone more than France, which has 75 percent nuclear power. Clearly, Germany continues to think about the switch to renewables at the European level, not only with the recent announcement of cooperation with Norway, but also the announcement of closer cooperation with Benelux, France, Austria, and Switzerland – a week before the Economist published its report.

But mainly, I wonder why the author does not give any examples of German companies planning to expand in the United States, especially because the author tends to word things correctly and obviously researched the matter well. The charge that high power prices are scaring away industry from Germany is frequently made, such as in this recent article ("It’s no wonder that so many large industrial corporations are migrating out of the country") from the coal sector in the US, but examples are never given.

 - Germany's premier energy economist Claudia Kemfert also has to deal with unfounded claims that the energy transition is scaring away German industry. Here, she tweets that firms are not leaving the country. Help us investigate the matter by providing us with links to claims about specific firms – we'll look into the matter.
Germany's premier energy economist Claudia Kemfert also has to deal with unfounded claims that the energy transition is scaring away German industry. Here, she tweets that firms are not leaving the country. Help us investigate the matter by providing us with links to claims about specific firms – we'll look into the matter.
Claudia Kemfert

If any of my readers have any list of specific firms leaving Germany for, say, the US, I would love to look into the matter – drop your links in the comments below. Otherwise, the claim seems bizarre in light of Germany's strong economy (which the Economist depicts as though it is ailing, probably because some arbitrary growth targets considered normal among economists are not met), which is actually largely based on heavy industry, not banking and the post-colonial cultural dominance of English, as in the UK.

Just a day before the Economist article was published, Bloomberg pointed out that wholesale electricity prices in the UK could be twice as high as in Germany two years from now, and those are the rates that industry generally pays – not the rising retail rates. Indeed, the problems that Germany now faces do not seem to include the prospect of rising power costs for industry; if anything, wholesale power prices are so low that power providers are struggling – but energy-intensive industry benefits from that situation. (Craig Morris)

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16 Comments on "German industry fleeing? "

  1. heinbloed - 08.07.2013, 01:42 Uhr (Report comment)

    Before some dud comes up with the issue:
    Wacker Chemie is fleeing Bavaria, to Tennessee - since 2011:


    According to their press room "it's electricity price only" why they go to Tennessee.
    But this decision might be reversed, the "family" agreed on a new deal:


  2. heinbloed - 29.06.2013, 18:40 Uhr (Report comment)

    4 €cents/kWh electricity the German heavy industry pays. And not the 11 €cents/kWh as reported (?) in the Economist. What a piece ......
    The chief of GE even thinks the German industry pays 20 €cents/kWh. Where do they get this poor data from?
    Have these people some sort of a shared altar, a sort of 'think-tank'?


    And the reading American public doesn't revolt against these liars?

  3. heinbloed - 27.06.2013, 14:29 Uhr (Report comment)

    Bahjat Tabbara wrote:
    "Remember, RWE and E.ON need to be compensated for shutting down working assets."
    They are dead men walking, their compensation for switching-off atomic powerplants is achieved by dividends each year. They pay the investors. But on a run-down modus by financial terms. Not only technically. Like any old factory. The cheapest electricity is generated by the atomic industry, RWE, eon, Vattenfall and they are pushing down market prices. By being the cheapest. This market factor is called "competition".
    When you have 3 supermarkets in the village and one has to shut down and they all belong to the same family - who will pay compensation ?

  4. Craig Morris - 27.06.2013, 13:51 Uhr (Report comment)

    Bahjat, logically German industry would NOT leave Germany during the Energiewende because prices on the wholesale power exchange are going down.
    Likewise, saying "Some German firms (automobiles) are moving to Bulgaria and Hungary" does not help – I am asking my readers to provide me with specific examples that I can investigate. I'm tired of hearing all of this "firms are leading" without mentioning specifics.

  5. Bahjat Tabbara - 27.06.2013, 13:49 Uhr (Report comment)

    Logically energy intensive German firms would leave if they could: but closing down is not costless and setting up elsewhere is not cheap either. The issue is more than just energy, it is about moving know-how and processes, and this does not happen on the cheap or easily. Some German firms (automobiles) are moving to Bulgaria and Hungary: and no doubt cheap energy is one motive (but also relatively cheap and highly skill + educated labour).
    Energy and labour costs alone are not a motive to move over: what you will see is a period of outward expansion (which was happening anyway) but less likely to see inward declines in the short-medium terms unless there are strategic decisions.
    That said, it would have been wiser for the German government to allow the remaining reactors to operate to their very end (till 2048-2049 with extensions for another 20 years) while pushing for solar and renewable energy at feverish pace. Remember, RWE and E.ON need to be compensated for shutting down working assets.

  6. heinbloed - 26.06.2013, 23:49 Uhr (Report comment)

    RWE looking for set-aside premia?
    The EU instrument of set-aside premias (agriculture politics) seem to be the last resource the stinkers can think of. They are 'dead men walking' in financial terms. Or dead horses pulling ?

    " "I do like backloading. I even prefer set-aside," Terium said, referring to the permanent withdrawal of permits, which requires lengthy structural reform of the market. "
    (Either you pay me for not burning it or I will burn it. And charge you for it.) Great if one doesn't own a mine, just being an exploiter. The owner has to pay him ....

  7. heinbloed - 26.06.2013, 22:13 Uhr (Report comment)

    I think already 2 electricity price increases this year were not permitted by the French goverment (check this). They are afraid that the heavy industry otherwise goes to expensive Germany. Or expensive Spain or Portugal - were renewable electricity is above 50%

    They could have cheap electricity from their neighbours but prefer to play with the atom, an expensive game that is. No one told them when they paid for the race course that all these atomic horses have bills to be paid for ever:


    The French goverment in it's eternal wisdom banned to pay the costs. Mighty. No electricity price increases in France until the first few reactors are switched-off, hear the parole. So the public knows next time who to blame: the sun, the wind ..... and Greenpeace for sure.


  8. heinbloed - 26.06.2013, 21:48 Uhr (Report comment)

    There is at least 1 coal company fleeing Germany, RWE. This utility announced a couple of weeks ago that they will leave German offices and will go to Poland. Maybe electricity is cheaper there....:)

    But stop. Electricity too expensive for a utility?

    So electricity is to cheap in Germany. And this drives away the "Economists"
    ( http://www.economist.com/news/briefing/21569039-europes-energy-policy-delivers-worst-all-possible-worlds-unwelcome-renaissance )
    who do not know what an Energiewende is, that there is more to energy than a bankster's interest.

    Today RWE even declared that their coal power plants are running in the red. Their black coal power plants and their lignite mines (open pits) in Germany as well:

    That this going to happen was foresaid a while ago:


    But no one told it to The Economist ......


    .........well, I tried it hard !

    So Europe's largest coal burner ( RWE burns 70% of the European lignite) is faltering. The 'cheapest' being the loser. Moody's downrated RWE to near-trash status:


  9. Bob Wallace - 23.06.2013, 18:47 Uhr (Report comment)

    US natural gas prices seem to have hit a bottom. Expectations (check the futures market) are that prices will rise further.
    Many NG wells are dropping production rates very rapidly. It will be necessary to drill new wells or re-frack existing ones to keep supplies high. New wells can't be affordably drilled at recent gas prices.

  10. Todd Millions - 22.06.2013, 23:10 Uhr (Report comment)

    If you really want to smack these 'pressitutes'(viaP.C.Roberts),Have a citizen campain to get Volkswagen to get the L1 gauge cars in production.The' Carbon fibre'requirement is good camofluage for covering up the pressure they are under from oil mafias,via banksters and pension funds not to produce these but-Burlap over foam,or light alloy foam sandwich,would serve as well.This has being demonstrated for over 40 years now.The 'safety distraction' howling these vechiles would produce,would be more than offset by the damage of punching thru the 2% thermal efficency barrier imposed by the oil mafia in the 1920'sand maintained to this day.The fact that the optimium hybrid battery pack required for these,would mean most commuters wouldn't fire up the motor for a week at a time-is just gravy to this paradgim bomb.Of course,off peak charging would be no joy to the nuke weenies-Bonus!

  11. Thomas Gerke - 21.06.2013, 09:32 Uhr (Report comment)

    In addition here are two figures from the BASF website:
    Investments for 2013-2017: http://bericht.basf.com/2012/de/bilder/img/120b_de_gr.png
    Investment per business segment: http://bericht.basf.com/2012/de/bilder/img/120a_de_gr.png

  12. Thomas Gerke - 21.06.2013, 09:00 Uhr (Report comment)

    @Kimi Arima:
    BASF gets 30% of their revenue from their own Oil & Gas business and they are lobbying here right now to get the fracking going. So it's a little difficult to assess how much of that article is US & German energy industry lingo to praise fracking and how much is a real issue.
    What is annoying about BASF is that they are always at the forfront of attacking renewables / energy policy designed for long term benefits. They think in quarters and they have the mindset that energy policy should be designed for them.

  13. Greg - 20.06.2013, 01:36 Uhr (Report comment)

    "All this is happening as prices for natural gas and electricity in North America are plunging, thanks to the shale revolution, so Germany’s most energy-intensive industries are now eyeing expansion on the other side of the Atlantic."
    Gas prices are definitely getting cheaper in the US, but are industrial electricity rates really "plunging"? i.e. They are flat in the graph provided in the economist article which is priced in euro. If you take the exchange rate changes out, and look at the dollar price, you see that US industrial electricity prices are actually increasing.
    Having said that, the total price is definitely lower, and the differential is increasing, if energy cost was a business' only concern, then it is a reason to move.
    Also - I wonder if the economist's electricity price graph includes the EEG exemptions - probably not. That would make the difference much smaller.

  14. James Wimberley - 20.06.2013, 19:49 Uhr (Report comment)

    Any company thinking of following BASF is taking a huge gamble on the sustainability of the US fracking boom, or more likely bubble. Some geologists say fracked gas wells have a href="http://www.greatenergychallengeblog.com/2013/02/27/shale-gas-and-tight-oil-boom-bust-or-just-a-petering-out/"70% of their lifetime output in the first year. The industry has to drill thousands of new wells every year just to keep output stable.

  15. Ivor OConnor - 20.06.2013, 14:05 Uhr (Report comment)

    Very very very nice article. I haven't read such a clear and concise article like this in what seems like years. Please keep up the good work!

  16. Kimi Arima - 20.06.2013, 12:10 Uhr (Report comment)

    The one company I've heard about most is BASF. According to the WaPo, BASF has channeled $5.7bn to investments in the US since 2009: http://articles.washingtonpost.com/2013-04-01/world/38182416_1_natural-gas-shale-gas-basf

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