Mon, May 27, 2019 - Page 7 News List

Energy policy in Germany has worrying flaws

By Hans-Werner Sinn

Drawing an ever-greater proportion of their energy from green sources, German households already pay the highest electricity prices in Europe, ahead of Denmark, which also relies heavily on wind power. If the German transportation sector is forced to become electric, the resulting increase in power demand will lead to further price increases, inflicting sustained damage on the country’s industrial base.

If Germany wants to keep energy prices constant, it must temper its green ambitions, but without further reducing its carbon dioxide emissions, it will miss its binding EU targets for reducing greenhouse-gas emissions and have to pay fines.

There are only two ways out of this quandary:

The first is to convert existing coal-fired power plants into gas plants, which produce only half as much carbon dioxide. That, at least, would allow Germany to reduce its annual carbon dioxide emissions. This option would require new gas pipelines similar to Nord Stream 2, a joint German-Russian project that already faces stiff resistance from the European Commission and particularly France. Indeed, just a week after signing a new Franco-German friendship treaty in January, Macron suddenly stopped supporting German Chancellor Angela Merkel’s effort to block the EU asserting control over the pipeline, even though it crosses no other member state’s territory and would not normally be subject to EU regulations.

Germany’s second energy option is to buy foreign nuclear power or start building new nuclear power plants on its own territory. Germany would tacitly accept the former, but for the latter to happen, it would have to undergo a politically painful process of returning to reality and retiring the generation of politicians who have insisted on a nuclear phase-out.

In 2009, Sweden, the first European country to abandon nuclear power after the Three Mile Island accident in 1979, reversed its decision. Germany might have to do the same at some stage. While it has already lost most of its own nuclear expertise, the country would not have to look far for new nuclear-power plants: They are available for purchase from France.

Hans-Werner Sinn, professor of economics at the University of Munich, was president of the Ifo Institute for Economic Research and serves on the Advisory Council of the German Ministry of Economic Affairs.

Copyright: Project Syndicate

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