Germany’s top economic adviser has called for a radical rethink of the country’s energy policies, warning that the green dream is going badly wrong as costs spiral out of control.
“We need a drastic policy shift,” said Christoph Schmidt, chairman of Germany’s Council of Economic Experts. “They haven’t paid any attention to costs. These are now huge.”
The government has vowed to break dependence on fossil fuels and source 50pc of all electricity from wind, solar and other renewables by 2030, and 80pc by mid-century. But cost estimates have reached €1 trillion (£840bn) over the next 25 years.
“It is a worthwhile goal, and the whole world is looking to see whether Germany can do it, so we can’t fail. But there have been so many mistakes,” Professor Schmidt told the Daily Telegraph.
He said Germany has no margin for error since its own growth “speed limit” has dropped to 1pc, and the country will face an acute aging crisis over the next decade.
The concerns were echoed by Germany’s powerful industry federation, the BDI, which said it can longer remain silent as green romanticism plays havoc with German power supply.
The group said in a new report that the costs of the so-called “Energiewende” have already gone beyond tolerable limits. “The international competitiveness of German industry is in danger,” it said.
The report said feed-in tariffs for new wind and solar installations should be abolished, and demanded a “strategic reserve” of fossil fuels to ensure a dependable base of power stations for the German grid. “The government’s policy is not joined up,” said BDI chief Markus Kerber.
The group demands action from the government to address “urgent concerns” within 100 days of this week’s elections, according to Handelsblatt.
The “Energiewende” has already led to chaos, with surges of subsidised wind and solar power overwhelming the grid. Utilities E.ON and RWE have threatened to shut down plants producing 23,000 megawatts.
German electricity costs are ratcheting up faster than elsewhere in Europe, and are now twice US levels. Households and the “Mittlestand” backbone of the economy are carrying the burden, paying cross-subsidies to exempted sectors of heavy industry. “Spiralling energy costs will soon drive us into the wall. It has become dangerous,” said the German Chemical Industry Association.
Fears that power bills could cripple German industry combine with growing angst over US shale output, which has slashed American gas costs to a quarter of German levels. German chemical companies are switching plant to the US.
Günther Oettinger, the EU’s energy commissioner, has called for a complete shake-up of Germany’s strategy. “We need industry; we cannot be the good guys for the whole world, if no one follows suit,” he said.
Chancellor Angela Merkel’s decision to phase out Germany’s nuclear power after Japan’s Fukushima disaster has vastly complicated the picture. Utilities have turned to coal and lignite to plug the gap, causing Germany’s CO2 gases to rise while US emissions are falling. The green agenda risks becoming self-defeating if pushed too hard.
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