Germany’s current economic nosedive is a cautionary tale that shows what can happen when so-called “green” parties control a country’s energy policy. It must be acknowledged, however, that one of the architects of the German energy and economic crisis was also Angela Merkel of the centre-right Christian Democratic Union party (CDU), which under her leadership has moved so far to the left that it is virtually indistinguishable from the left-wing Social Democratic Party (SDP). Today, Germany is on the edge of a precipice from which it will find it difficult to bring itself back up, but which is also a lesson for the other European countries. Will we learn from it?
In 2011, following the public reaction to the Fukushima disaster, the then-German Chancellor Angela Merkel announced that the country would give up nuclear power in favour of a renewable future. Since then, there has been only one day when renewable energy sources, led by wind turbines and solar power plants, have produced enough energy to cover the country’s energy needs. The other few thousand days have been cloudy, cold and grey, and Germany has produced most of its energy from then until now by burning coal.
Between then and now, the war in Ukraine happened, and Germany was cut off from the cheap natural gas it was getting from Russia – not least because the Chancellor was soft on Putin’s occupation of Crimea. The green-red Scholze government, which depends on the radical Green Party for its existence, has nevertheless completely shut down all the country’s nuclear reactors.
Until March 2011, Germany generated a quarter of its electricity from nuclear power, with 17 reactors. By 2021, only 12 per cent remained, and today it has zero. However, coal-fired electricity generation has increased exponentially, now covering more than half of the load with significant carbon dioxide emissions, even though the authorities promise to reduce this figure by 2030.
The deployment of wind and solar capacity was initially supported by feed-in tariffs, but this has largely given way to auctions, and companies have had to start paying real exchange prices for expensive electricity generated from renewable energy sources (RES). Companies have therefore started to buckle under the rising cost of electricity. In the past, renewable sources deficits were covered by nuclear power plants and Russian natural gas. Both energy sources are now out of reach. The Germans have brought themselves into an unenviable situation. The blame lies with the infamous Green Transition, which has been given the political name Energiewende.
What is the Energiewende, and why is it leading Germany down a path of stagnation and decline?
The so-called Energiewende, which is the transition from nuclear power to renewable energy, is the biggest political project undertaken by the German authorities since German reunification.
The term was first used in the title of a 1980 Öko-Institut publication calling for a complete phase-out of nuclear and oil power. On the 16th of February 1980, the German Federal Ministry for the Environment hosted a symposium in Berlin entitled Energiewende: Atomausstieg und Klimaschutz (Energy transition: nuclear phase-out and climate protection). In the following decades, the term Energiewende has proliferated; in its current form, it dates back to 2002, when it was implemented by the government decrees for renewable energy under the leadership of the socialist Chancellor Gerhard Schröder, who is today one of Putin’s puppets and was on the supervisory board of Gazprom until recently.
The Energiewende policy includes: reducing greenhouse gases by 40 percent by 2020 (the target was not met) and 80-95 percent by 2050 compared to 1990; reducing primary energy consumption by 20 percent by 2020 (the target was not met) and 50 percent by 2050; achieving the renewable energy target (including biomass) – 60 percent by 2050 – and shutting down the country’s nuclear reactors, even though they are the main source of carbon-free electricity (this target was met). Electricity is to be 40-45 percent renewable by 2025, 55-60 percent by 2035 and at least 80 percent renewable by 2050, “which requires new technologies to provide ancillary services,” according to the German Energy Agency (Deutsche Energie-Agentur – DENA). It also requires a major increase in energy efficiency: compared to 2008, electricity consumption is to be 10 percent lower by 2020 and 25 percent lower by 2050. However, by 2015, it was actually only 3 percent lower.
1,300,000,000,000,000,000.00 taxpayers’ euros into a bottomless green hole
It is difficult to calculate how much the Energiewende has cost the German taxpayers so far, as new opportunity costs are being incurred every day as sectors of the economy collapse. On the failures of the green transition to renewables, the German Federal Court of Auditors calculated that the direct cost of the renewable energy sources transition alone cost 160 billion euros between 2013 and 2018, adding that the expenditure is “grossly disproportionate to the results.” The total cost of the transition to date is estimated at more than 650 billion euros. The transition itself has wreaked such havoc across the economy that Germany has had to spend an additional 500 billion euros to date to tackle its energy crisis, and another 216 billion euros in derivatives to bail out the failed energy giant Uniper, which ran into trouble after Russia’s attack on Ukraine. To date, the cost of the Energiewende has therefore already exceeded a staggering 1.3 trillion euros (€1,300,000,000,000,000,000.00).
Research documents the transformation of this great idea from a thing of national pride into a national disgrace and an existential threat to the Energiewende. Although it was initially very well received by Germans, they now consider it too expensive, too chaotic and too unfair. So, what happened?
Germany built its energy and economic policy on the wrong foundations
Germany has been stagnating since 2018. The coronavirus pandemic and the Russian invasion of Ukraine, which cut off the supply of cheap energy, have only exposed the symptoms of a disease from which the country was already suffering.
The German economy and the accompanying Energiewende policy were based on several basic postulates:
– Russian gas supplies will never stop,
– the Chinese market will buy their cars and other hardware forever,
– migrants from the Middle East and Africa will be successfully assimilated into the workforce.
The policy of Gerhard Schroder, and even more so of the East German Angela Merkel, has been to lean heavily on friendly Russia. Until the invasion, Germany imported 55 percent of its gas from Russia. Then, Russia began to reduce the flow of gas to Germany and finally stopped it altogether. This was the first unpredictable piece of the jigsaw that pushed German industry to the brink. At that point, they could still have saved themselves.
If all the country’s remaining nuclear reactors had not been shut down in times of emergency – against the advice of experts – the catastrophe would have been much smaller, or perhaps even non-existent, if the reactors that had already been shut down had been restarted. Instead, they – in the thrall of the Green Party – quite irrationally shut down the last remaining nuclear power plants.
At the time of the closures, it was already known that the German car industry was in dire straits, because their car manufacturers could not prepare for e-mobility, which was forced the most in the European Union by Germany. The German big three (Volkswagen, Daimler and BMW) were completely powerless in the Chinese market (which accounted for a third of sales before the outbreak of the coronavirus) against cheaper domestic competition (BYD, Geely, Zeekr, Nio and other Chinese manufacturers offered cars competitive with the German competition for a lower price). This was the third act of the tragedy unfolding.
German industry found itself in the grip of lower demand and high energy prices, which were high almost exclusively for political reasons. In Germany, the wholesale price of electricity between January and July 2024 was €67.6/MWh, compared with €38.3/MWh in the same period in 2019.
This is largely linked to the closure of nuclear power plants, the maintenance of renewable energy sources and the switch from cheap Russian gas to expensive liquified natural gas. Unlike the Moscow pipeline, liquified natural gas does not have the advantage of long-term contracts that stabilise prices. The fuel simply goes to the highest bidder on the free market. Liquified natural gas also has higher transport costs and needs to be liquefied. Fracking is also banned in Germany and is used to great effect in the USA. Germany is now dependent on gas, which costs four to five times more than in the USA.
German industry is fleeing
A survey of around 3,300 companies by the German Chamber of Commerce and Industry (DIHK) found that 37 percent are considering downsizing or moving abroad, up from 31 percent last year and 16 percent in 2022.
For energy-intensive industrial companies, around 45 percent have considered downsizing or relocating, according to the survey.
“The confidence of the German economy in energy policy has been severely shaken,” said Achim Dercks, Deputy Managing Director of DIHK, adding that the government has failed to provide companies with the prospect of a reliable and affordable energy supply. “Those who fail to recognise this will eventually see the de-industrialisation of our country,” he said.
More than a third of industrial companies in Germany are cutting investments in core processes because of high energy costs, according to the survey, which further showed that two-thirds of the energy-intensive industry is in trouble.
The German patient as a warning
The German crisis is therefore more of a political crisis than an energy or economic one, and both left and right parties have contributed to it. For years, Germany has trusted Russia to continue to support European industry with cheap energy, overlooking the rise of a dictator who wants to reverse the world order. At the same time, it has unleashed an electric vehicle revolution in the EU, for which its own industry was not prepared in the slightest.
For Slovenia, a sick Germany is not only a warning, but also an imminent danger. It is, of course, our biggest export partner, and Slovenia’s automotive cluster, which accounts for a large part of GDP, is directly dependent on the health of the German economy. From a political point of view, Germany is a warning of what happens when ‘green politicians’ subjugate economic interests and make irrational decisions in the name of ideology. The Slovenian climate plan is almost a copy of the German Energiewende. Prime Minister Robert Golob has publicly stated on several occasions that Slovenia can also survive on renewable energy sources alone, while experts have all shown disagreements when such statements have been made. The government officially supports the referendum on the second unit of the Krško nuclear power plant, but on the other hand, it is perfidiously sabotaging it – both with “Golob’s” secretary at the Ministry of the Environment, Tina Seršen, a social scientist with a strong anti-nuclear agenda, and with a prominent member, Miroslav Gregorič, who has repeatedly been completely irrationally critical not only of nuclear power, but even of a referendum in which the people would decide whether we still want it.
So, what can we learn from the German example? The path of 100 percent dependence on renewable energy sources, the demolition of the nuclear foundations and the war on the economy are leading to the disintegration of the country. That is to say – the policies of the Golob government are leading to disintegration. But which country can be a role model for us in terms of energy efficiency? France!
France passes through the energy crisis with flying colours
In the 1970s, in the midst of the oil crisis, Pierre Messmer‘s government decided to go “all nuclear” in France. This decision led to the construction of 58 standardised nuclear reactors throughout the country over the next 25 years. At the same time, France developed expertise in managing the nuclear fuel cycle by building the world’s largest civilian reprocessing plant at La Hague, as well as experimental fast reactors.
In February 2022, President Emmanuel Macron announced his plan to restart the civil nuclear programme to build six to 14 new reactors, while extending the lifetime of current nuclear reactors.
France has many industrial problems today, but the energy crisis is not one of them. French electricity prices in 2024 are, on average, €28.41/MWh lower than German prices and, magically, France emits less carbon dioxide per capita than Germany – because German industry relies heavily on coal-fired power plants.
So, Slovenia’s path to the future is not untrodden. Two of Europe’s industrial superpowers have walked it, and the empirical evidence of their paths suggests that one is right and the other wrong. Unfortunately, the Golob government wants to take the wrong turn by any means necessary.
Mitja Iršič
