The gold standard’s history reminds us that not every economic challenge demands a centralized political solution.
Germany’s renewables energy sector is busy cleaning up these days, commercially-speaking that is, not in terms of environmental impact. So far as that goes, Germany’s much vaunted green revolution has been nothing short of disastrous.
As its heavily subsidized wind-farms and solar panels mushroom, so Germany’s ancient forests are increasingly being felled to make way for the open mining of lignite (brown coal) of which Germany has copious reserves beneath its soil and which is the most unhealthy fossil fuel of all.
Germany’s air is increasingly being polluted by particulates from the burning of lignite to which that country has increasingly turned in recent times to meet the short-fall in fuel for electricity generation there caused by its ludicrous environmental policies.
To appreciate how Germany’s supposedly environmentally friendly policies have come to wreak such environmental damage there, one must first recall the disaster that befell the Japanese island of Fukushima in March 2011. A tsunami resulting from a nearby earthquake caused three nuclear reactors on that island to go into meltdown.
Germany’s Chancellor Angela Merkel immediately responded by ordering closure of her country’s seven oldest nuclear reactors and then announcing that all of them would be phased out by 2022. An energy vacuum was immediately created that renewable sources were simply incapable of filling.
Despite an EU wide cap on carbon emissions, Germany was easily able to, and did, fill that vacuum by increasing the mining and burning of lignite, with very damaging environmental effect. Any inhibiting effect on lignite use that the carbon emissions cap was supposed to have was easily circumvented, since the market in permits for such emissions had long since tanked, rendering the extra price of purchasing them easily affordable.
Germany could have sought to fill the gap between its energy needs and supplies by recourse to fracking for shale gas, just as the US has recently done, since, like it, Germany too is blessed with copious gas reserves exploitable by this means.
Gas is a much better complement than coal to solar and wind generated electricity because the electricity that it generates can more easily be turned off and on than that generated by coal, whilst that generated by wind and the sun is subject to the vagaries of the weather, as well as non-storable. Moreover, for the same quantity of electricity generated, gas emits far less carbon dioxide than coal, lignite being the worst offender in this respect.
Despite all this, Germany turned its back on its shale gas reserves in favor of extracting and burning lignite. It did so out of concern that fracking for gas might have environmentally adverse consequences on the purity of its water.
This is hardly the way to run a business, let alone a country. But then when a country has invested in a sector as heavily as Germany has in solar and wind energy, and when, down the line, it might be possible for it to impose similar daft requirements on the rest of the EU and thereby recoup its investment with dividends because of its market lead in the technology, there may yet be method in its apparent current ecological madness.
Meanwhile, ordinary German citizens are suffering badly as a result of their country’s environmental policies. Not least they are suffering from its exorbitant energy prices, since it is households only, and not corporations, that must pay the vast subsidy that alone makes solar and wind generated electricity at all economic in the first place.
The German government generously subsidizes all who wish to install renewable sources of energy in their homes or business premises. It then allows them to sell all their surplus electricity to German energy companies who are obliged by law to purchase all of it at a fixed price set by the government. Energy companies simply pass on these extra costs to individual consumers, but not business corporations, in the form of a so-called ‘Umlage’, a charge that has resulted in electricity prices in Germany quadrupling in the last four years.
Apart from those who will contract fatal illnesses from the pollution caused by the vast quantities of lignite Germany is currently burning as a result of its perverse environmental policies, their worst victims, however, are those who have been or who are currently in process of being forced from their homes to make way for the open mining of lignite.
One such victim is police officer Stephan Putz, resident of the small village of Immerath in the Rhineland region in the west of Germany. Earlier this week, Putz took a German mining to his country’s supreme Constitutional Court to fight for his right to remain in his home after that company had received state approval to compulsorily purchase all land and property within a vast 42 square mile area in which Putz’s village falls and on which the company had set its sights for the open mining of lignite.
Putz is invoking his right under Article 11 of Germany’s Basic Law to be able to reside freely where he has moved to in that country. Strictly, the Article in question confers upon German citizens only a right to freedom of movement, but that right has widely been construed by lawyers there as according German citizens a right not to be forcibly resettled. One such lawyer, who construed that right so back in 1997, sits on the Court hearing Putz’s case.
I doubt he will win. Too much is at stake commercially should he do so. The fault will lie, however, not with the Court or even the mining company but with Germany’s crazy — or, as I earlier intimated, maybe not so crazy — environmental policies, which gives rise to the following question: Just how green are Germany’s values?