SIGMAR GABRIEL has
been on a roll. The boss of Germany’s centre-left Social Democrats (SPD) has
herded his party into a coalition with Chancellor Angela Merkel and become
vice-chancellor. He is jovial, convivial and aligned with the Zeitgeist.
Demonstrating the SPD’s vision of work-life balance, he plans to take Wednesday
afternoons off to pick up his two-year-old daughter from her crèche.
But Mr Gabriel, who
is mulling a run for chancellor in 2017, will by then be judged on a more
daring project. As part of his coalition deal with Mrs Merkel, he is now a
“super minister” combining two portfolios, energy and the economy. He is thus
in charge of rescuing Germany’s most ambitious and risky domestic reform: the
simultaneous exits from nuclear and fossil-fuel energy, collectively known as
the Energiewende, a
term that means energy “turn” or “revolution”.
More a marketing
slogan than a coherent policy, theEnergiewende is
mainly a set of timetables for different goals. Germany’s last nuclear plant is
to be switched off in 2022. The share of renewable energy from sun, wind and
biomass is meant to rise to 80% of electricity production, and 60% of overall
energy use, by 2050. And emissions of greenhouse gases are supposed to fall,
relative to those in 1990, by 70% in 2040 and 80-95% by 2050.
German consumers and
voters like these targets. But they increasingly dislike their side-effects.
First, there is the rising cost of electricity. This is a consequence of a
renewable-energy law passed in 2000 which guarantees not only 20 years of fixed
high prices for solar and wind producers but also preferred access to the
electricity grid. As a result, Bavarian roofs now gleam with solar panels and
windmills dominate entire landscapes. Last year, the share of renewables in
electricity production hit a record 23.4%.
This subsidy is
costly. The difference between the market price for electricity and the higher
fixed price for renewables is passed on to consumers, whose bills have been
rising for years. An average household now pays an extra €260 ($355) a year to
subsidise renewables: the total cost of renewable subsidies in 2013 was €16
billion. Costs are also going up for companies, making them less competitive
than rivals from America, where energy prices are falling thanks to the
fracking boom.
To forestall job
losses, Germany therefore exempts companies who depend on electricity and
compete globally from paying the subsidy. But the European Union’s competition
commissioner, Joaquín Almunia, has been investigating whether the entire
package of subsidies and exemptions violates European law. Only concerted
German lobbying in Brussels just before Christmas has held him back from
seeking repayments for now.
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