Sigmar Gabriel is currently the leader of the Social Democratic Party of Germany (SPD), who has intentions to run for chancellor 2017. He has made a coalition deal with the current chancellor of Germany, Angela Merkel. As a part of this deal he is now considered to be a "super minister" because he is going to be combining two portfolios, energy and the economy. Under this reform, Germany will simultaneously stop using energy created from fossil fuels and nuclear power plants. Gabriel is using the marketing slogan "Energiewende" (which means turn or revolution) as promotion.
Energiewende consists of a timetable for different goals. Germany's final nuclear power plant is to be shut down by 2022. Renewable energy from the sun, wind, and biomass are set to rise to become 80% of electric power in Germany. The main goal is to reduce the emission of greenhouse gases by 70% in 2040, and 80-95% by 2050.
It appears that German consumers and voters like the goals that are being set under Energiewende, however they are beginning to dislike the side effects of this domestic reform. The main issue that many Germans are beginning to have with Energiewende is the rising cost of energy. It is not cheap to subsidize renewable energy sources. The average household in Germany has to pay 355 dollars a year to subsidize renewable energy sources under Energiewende. The cost of production is also rising for German companies making them less competitive. New estimates by a consulting firm, known as McKinsey, suggest that there is almost nothing that can be done to reduce the cost of subsidizing. On top of that, Germany's unemployment rate is predicted to rise due to the disband of nuclear power plants and other facilities that create energy from fossil fuels.
There are also other issues with renewable energy besides cost. The sun does not always shine, and the wind does not always blow, making these alternative sources of energy unreliable. As for now, conventional power plants have to remain online in order to assure a continuous supply of energy.
Mr. Gabriel is taking a massive risk with Energiewende. Will it be worth the reward?
http://www.economist.com/news/europe/21594336-germanys-new-super-minister-energy-and-economy-has-his-work-cut-out-sunny-windy-costly
I think this policy is way too extreme for the times. Renewable energy has made gains but I don't believe it is anywhere close to being able to replace current energy production methods, much less at a comparable price. My father was in Germany in the past year and was in awe of the prices for energy compared to the here in America. It makes sense that the article foresees German firms becoming less competitive due to increased production costs from energy.
ReplyDeleteRecent electricity production from burning coal in Germany has hit its highest levels since 1990 and now they're importing more black coal from the United States being its cheaper than brown coal (lignite).
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