Green Economics

Green economics will lead to poverty.

While the shale boom in the US has lowered electricity bills for consumers, Europeans are struggling to keep up with rising energy costs, in large part due to ambitious emissions targets set by the EU. In Germany, known for both its aggressive push towards renewables and the storied competitiveness of its exporters, companies may soon lose an exemption that dispenses them from paying expensive renewable energy surcharges. Business leaders worry this will “destroy Germany’s industrial core.”

In no other country has the shift towards renewable energy been so aggressively pursued as in Germany, where policy wants to increase the percentage of renewables in the electricity mix to 35% by 2020 and 80% by 2050. The main instrument behind this push is Germany’s Renewable Energy Act (EEG). Enacted in 2000 by the red-green coalition government, the law provides for feed-in tariffs to ensure long-term guaranteed prices for a wide array of renewables as well as levies for infrastructure improvements.

And:

German businesses are becoming increasingly concerned that they may lose their privileged position and, even worse, be forced to repay hundreds of millions of Euros to the German government. Speaking to Euractiv this week, a representative of the VIK industry, a lobby for heavy energy users, warned that a loss of the exemptions could saddle companies with billions of euros in additional costs and “destroy Germany’s industrial core.”

Berlin hopes to negotiate an agreement with Brussels to keep exemptions in place for the most energy intensive companies who face intense international competition, while weeding out the more abusive cases. A document procured by Reuters this week hinted that the government may be prepared to cut exemptions by more than €1 billion. The government dismissed the leak and denied all plans to do away with the discounts, but Environment Minister Peter Altmaier admitted that some of the 2,300 companies in the exemption scheme may not deserve special treatment.

Even if Berlin can cut a deal with Brussels, no doubt highly wary of inflicting damage on the continent’s strongest economy, German voters may prove to be a more formidable obstacle. Anger is mounting in the country as energy bills rise. With German households footing the bill for corporate exemptions, voters may offer much less clemency to industry. Both the Greens and SPD have pushed for a significant cut back or even an end to the exemptions.

In the UK rising fuel prices are already killing the old and poor.

The number of people dying as a result of fuel poverty is three times higher than government estimates suggest, according to new academic research.

Some 7,800 people die during winter because they can’t afford to heat their homes properly, says fuel poverty expert Professor Christine Liddell of the University of Ulster. That works out at 65 deaths a day.

What is the cause?

The British government is forcing its citizens to buy more green energy, and the resulting price hikes are making those citizens poorer. This is what happens when the government controls markets. If the government would leave the energy markets alone, British citizens could access the energy they need at prices much more affordable.

Wind Power is unreliable.

The report also says ‘low wind events’ are more frequent than previously acknowledged, concluding: ‘Wind cannot be relied upon to provide any significant level of generation at any defined time in the future… [there is] urgent need to re-evaluate the implications of reliance on wind for any significant proportion of our energy requirement.’

And the effect of all this ‘Green’ Energy on grid reliability?

Germany is way ahead of us on the very path our politicians want us to follow – and the problems it has encountered as a result are big news there. In fact, Germany is being horribly caught out by precisely the same delusion about renewable energy that our own politicians have fallen for. Like all enthusiasts for “free, clean, renewable electricity”, they overlook the fatal implications of the fact that wind speeds and sunlight constantly vary. They are taken in by the wind industry’s trick of vastly exaggerating the usefulness of wind farms by talking in terms of their “capacity”, hiding the fact that their actual output will waver between 100 per cent of capacity and zero. In Britain it averages around 25 per cent; in Germany it is lower, just 17 per cent.

The more a country depends on such sources of energy, the more there will arise – as Germany is discovering – two massive technical problems. One is that it becomes incredibly difficult to maintain a consistent supply of power to the grid, when that wildly fluctuating renewable output has to be balanced by input from conventional power stations. The other is that, to keep that back-up constantly available can require fossil-fuel power plants to run much of the time very inefficiently and expensively (incidentally chucking out so much more “carbon” than normal that it negates any supposed CO2 savings from the wind).

Both these problems have come home to roost in Germany in a big way, because it has gone more aggressively down the renewables route than any other country in the world.

So far the Green/Socialist Madness has not totally engulfed the US. But it is not from want of their trying. We know from history (and recent at that – see R, USS) that command economies are not as efficient as market based economies. And yet the faithful (it is a faith because reality never sways their understanding) continue on.

Are companies any better? On an individual basis the answer is no. But you can set companies against each other and companies that can’t match the competition fail. And we are better off for the failures. But governments (at least in the short term) do not fail. That is because they can steal (tax) to make up for their failures. Companies in collusion with government are the worst of all possible worlds with possibly the sole exception of straight up communism.

Another defect of command and control economies is that you need commanders and controllers to see that the rules are enforced. That is expensive. Markets require much less of that sort of expense. You need only watch for fraud. And everybody watches for fraud. Without pay. Self interest and competition keeps market economies tolerably honest at much less expense.

And lest you think I’m blaming one Party you might want to look at what happened under Nixon’s Wage and Price Controls: “Old Oil” and “New Oil”. Every Party has delusions that its commands and controls will improve our situation. And people believe that clap trap. The only Party running against that sort of thing is the Libertarians. And nobody (well very few) votes for them.