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America Should Avoid Germany’s Failed Energy Policy

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America Should Avoid Germany’s Failed Energy Policy

December 1, 2014

The Environmental Protection Agency’s new proposed ozone regulations, released the day before Thanksgiving, will raise the price of American energy by forcing new requirements on utilities, coal, oil, and natural gas. The new regulations, out for proposed comment, would limit ozone pollution to between 65 and 70 parts per billion, rather than the current standard of 75 parts per billion. 

As the American public considers the EPA proposals, along with other forthcoming EPA regulations on power plants, the German experience provides a cautionary tale.

Germany has been pressing for lower carbon emission for years. The country wants 80 percent of its energy production to come from favored green energy sources, such as wind and solar, by 2050. But today, less than a quarter of Germany’s energy comes from green sources. 

Germany’s energy production is in such disarray that the country has been forced to beg neighboring Sweden for assistance. Vattenfall, Sweden’s state-owned utility, is planning to sell two coal mines it owns in Germany’s Northeast in an attempt to reduce its carbon footprint. Both the German economic minister and vice-chancellor are pushing the Swedish government to reconsider its decision because Germany needs coal-fired energy.

It is surprising that in its quest to “go green” Germany is relying heavily on coal power. Coal has nearly twice the carbon emissions of natural gas, at 215 pounds of CO2 emitted per million British thermal units compared with 117 pounds. Energy produced though nuclear power barely releases any CO2

Germany is pursuing its 80 percent target without the help of nuclear power, which accounts for about a quarter of current German electricity production. All of the country’s nuclear power plants are set to close by 2022. Germany is forcing Vattenfall to shutter its nuclear power stations, while at the same time pleading with the company to expand its coal mining operations. 

These inconsistencies in German energy policy are happening because green energy is expensive and unreliable. Domestic energy bills in Germany are 50 percent higher than the European Union average. Higher energy prices have negative effects on the rest of the economy. These consequences are especially pronounced for economies, such as Germany’s, that rely on manufacturing.

The wind does not always blow, and the sun does not always shine—especially in Germany. The intermittent nature of wind and solar power means coal, natural gas, or nuclear power plants have to quickly adjust production to meet demands from the power grid. This is known as “cycling.” Similar to how driving cars by frequently accelerating and then slowing down is less efficient than driving at a steady speed, cycling wastes energy and leads to increased carbon emissions. 

These problems with green energy help to explain why only 4 percent of U.S. energy comes from wind and solar. Data from the Energy Information Agency show that, for plants entering service in 2019, levelized wind power costs will be between $64 and $175 per megawatt. Solar power will cost between $155 and $195 per megawatt. For comparison, conventional natural gas fired plants produce energy at a levelized cost of $14 per megawatt. Nuclear comes in at $71 per megawatt, comparable with efficient wind farms. The costs to consumers from renewable energy mandates are even higher when tax incentives are included. 

Contrary to its enthusiastic embrace of green energy, Germany has drastically overreacted to safety concerns over nuclear power. Instead of indicting nuclear power, the 2011 accident at Fukushima showed how safe the developing source of energy has become. The earthquake and ensuing tsunami that led to the meltdown could not have been more severe, and the plant’s failure was complete. Yet, environmental damage and radiation exposure were low and no deaths from radiation have been observed. Nuclear technology has come a long way since the Chernobyl disaster. 

Nuclear energy remains expensive and there are important safety risks to mitigate, but it is still in its infancy. Nuclear energy and natural gas are the future, not wind and solar. As my Manhattan Institute colleague, senior fellow Robert Bryce, argues, “We humans have been relying on renewable energy for thousands of years. And what did we learn in all that time? We found that renewable energy stinks.”

While reviewing the EPA ozone proposal, Americans should take a lesson from Germany. The German experience shows that an energy policy that is anti-carbon and anti-nuclear raises the cost of electricity and is unsustainable. The growth in U.S. natural gas production has done more to decrease CO2 emissions than every green energy government-mandated program in Europe. Natural gas and nuclear power offer low-carbon energy solutions that avoid the major pitfalls of green energy. Rather than traversing further down Germany’s road, America should embrace a pro-growth energy future, driven by nuclear and natural gas. 

Jared Meyer is a policy analyst at Economics21 at the Manhattan Institute for Policy Research. You can follow him on Twitter here.
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