Germany – sane and just plain smart
A recent article at Forbes criticizes Germany for switching to renewables and shutting down nuclear, but once again the author does not know his subject.
Yesterday, Renewables International mentioned that the recent article Germany – insane or just plain stupid? published by Forbes contains a number of inaccuracies. But rather than leave that charge standing without substantiation, we wanted to shed light on the misunderstandings.
To be fair, the article starts with sound criticism of Germany's sudden shutdown of eight nuclear plants last year as a reaction to a tsunami in Japan. The Forbes author would probably agree that the move was irresponsible and incompetent, which is exactly what Renewables International called the matter when it happened. But it is worth noting that it was the traditional opponents of renewables – Angela Merkel's Christian Democrats and her coalition partner, the Libertarian Free Democrats – that instituted this sudden nuclear phase-out, not the Social Democrats and the Greens. Indeed, had the Greens proposed shutting down eight of the country's 17 nuclear plants within a week, they would have been rightly laughed out of Berlin.
But from there, the Forbes article loses touch with reality. The author seems to think that Germany is switching to coal, though the country's coal capacity is actually being reduced. Then the author says that feed-in tariffs ("a guaranteed high price… way above market value") are offered "for almost a decade," whereas they are guaranteed for 20 years.
The author apparently does not understand Germany's Renewable Energy Act (EEG), for he later states that “Germany's nuclear production was the only economic way to implement the EEG” (emphasis in original), although nuclear is not even mentioned in the law. Perhaps Forbes thinks that nuclear is needed for a transition to renewables. A lot of Americans think that, but Germans don't think so – they know that baseload power plants are incompatible with intermittent wind and solar. I say “know” rather than “think” because Germans, unlike Americans, have experience with large amounts of wind and solar. The share of renewable power increased from 20 percent in 2011 to 25 percent in the first half of 2012 – five percentage points in six months.
We then hear that renewables are growing so fast that "the grid can't handle it, the transmission system is not there, and the power disruptions and brownouts are wreaking havoc on the country's energy reliability." Unfortunately for Forbes, German grid reliability has been unparalleled in Europe since statistics started being reported in 2006, and the grid even got more reliable in 2011, when brownouts occurred for only 15.31 minutes for the year as a whole – compared to hundreds of minutes a year in the US.
Of course, all of this is terrible for business, which is why some German businesses apparently plan to leave the country. Corporations threatening to go abroad – imagine that.
Embarassingly for Forbes, Norsk Hydro, one of the allegedly fleeing firms, announced only a few days after the article was published that it actually plans to shift production from Australia to Germany because of low wholesale electricity prices (retail prices in Germany are going up; wholesale prices, down). It's hard to know – because Forbes does not provide any links – what exactly all of the other companies in the list of those leaving Germany are doing, but a quick search at Google News today revealed that ThyssenKrupp currently plans to close a business unit in North America, laying off 110 people; that the firm may post a loss exceeding 1 billion in the Americas this year; and that it plans to hire 315 new apprentices in Europe, including 191 in Duisburg, 67 in Hagen-Hohenlimburg, 36 in Dortmund, and 33 in Siegerland – all of which, if I'm not mistaken, are German locations.
The problem, Forbes explains, is that the “green energy sector forgets that they also need steel, cement, and plastic, a fact noted, ironically, by the left-leaning Social Democratic Party Chairman is a Sigmar Gabriel.” Forbes apparently does not know that Gabriel's party was in a coalition with the Greens that implemented not only the original EEG, which provided exemptions for energy-intensive industry from the outset, but also the eco-tax on fossil fuels, which also included exemptions for industry. The idea of exemptions for large industry comes from the green energy sector.
Forbes seems concerned about "social unrest" beginning in Germany because German consumers will have to pay "almost double for energy next year compared to last year." First, electricity is not energy, which also includes motor fuel and heat. But whatever the case, there is no forecast for utility bills to double next year.
If you read Forbes, you know things that Germans don't, such as that "many of Germany's poor and unemployed are on fixed energy credits" – neither the German government, nor any of Germany's poor and unemployed are aware of that (it's news to Renewables International as well). They all think that Germans are on a free market and can change their power provider at the end of the month to pick a cheaper one. Perhaps Forbes should tell the Germans how their energy credits work and what they are called in German. And then Forbes could tell its American readers that Germans are free to choose in ways Americans can't even imagine.
Measured by ILO standards, the German employment rate currently stands at a disconcerting 5.1 percent (though Germany counts the statistics differently, so the unemployment rate is now reported to Germans as 6.8 percent), which – as the New York Times explains – is the lowest rate since reunification in 1991. Social unrest, indeed.
The fact is that none of what is happening in Germany fits what Americans think, and the only regular source of news from Germany in English is Spiegel Online, a laughable source of energy news (the Forbes article cites Spiegel). Germany is switching to renewables quickly, without raising its carbon emissions, with probably the most reliable grid in the world, on a market with freedoms Americans don't even know they lack, with a job market that continues to strengthen (even during the ongoing economic crisis), and in combination with a nuclear phaseout. None of this makes sense to Americans, who respond not by accepting the facts and changing their minds but by getting the picture wrong. So the question is not whether Germany is "insane or just plain stupid," but whether Forbes is "misinformed or just plain lazy." (Craig Morris)