Germany Renewable Energy Subsidies Must Stop

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Originally published on Lenz Blog.

That’s what a new report by “experts” on innovation calls for, as Reuters just reported.

I actually agree with that. That probably comes as a surprise to readers, but it will become clear in a couple of moments.

The most important part of the Reuters article is this paragraph:

The report is unlikely to have much impact on policy.

That observation is correct. The only party that might have supported such a fringe minority loser position was the FDP. And they got booted out of the German Parliament in the last election. I am a former FDP voter, and I changed my mind and voted for the Green Party this time because of their horrible positions on renewable energy.

Former Green Party Member of Parliament Hans-Josef Fell has already demolished this report here (in German language). There is not much to add. I found a link to the report at Fell’s website, and here it is.

The “experts” only take two short pages to develop their critical point of view.

They start off with whining about the high costs of a feed-in tariff system. They don’t consider the cost of keeping energy based on fossil fuels, with prices for oil going up by a factor of 50 in the last 40 years.

That’s only to be expected. These are “experts” on research policy. They lack clue one on energy issues.

They then fall for the common error to state that it doesn’t matter how much CO2 the German electricity generation sector emits, since there is a ceiling on CO2 emissions in the EU anyway.

That’s correct as far as it goes, but obviously one can reduce that ceiling much faster if CO2 reductions proceed quickly than if one does nothing to improve the situation. With that particular argument one could doubt the value of any efforts in emission reduction. I don’t think there is any merit to it.

I learned from their position paper that there are people studying innovation in the renewable sector, and that those people have been unable to find any.

That says something about the quality of these studies. It does not change the fact that innovation in the renewable energy sector was the most resounding success of the German feed-in tariff systems.

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It is a fact that prices of solar and wind energy have gone down massively in a very short time of only about a decade. That’s innovation. And you don’t need a “study” from “innovation experts” to understand the game-changing and revolutionary effects of that innovation.

There are several goals of the Law on Priority of Renewable Energy, but the most important one is actually to help develop technology in the sector.

That’s because in contrast to the other goals (environment, saving costs compared to staying with fossil fuels, leave more fossil fuels for future generations), more innovation in renewable energy will help developing the sector everywhere on the planet. The first three goals are mainly about the situation in Germany only.

These “innovation experts” seem to think that you would get more innovation without a massive-scale market enabled by the feed-in tariff. They are wrong. As Hans-Josef Fell correctly remarked, you don’t get any innovation without a market to actually sell the products you are developing.

So why do I agree with their conclusions?

That’s because we need to make sure that the German feed-in tariff law is not a subsidy law, or – in the terms of European Union law – a form of “state aid”.

If the system has any aspects that allow the EU Commission to view it as “state aid”, like the French feed-in tariff system, the EU Commission will try to abuse this for an illegal power grab and start dictating German energy policy over their competition competence.

So I agree with the part of stopping “subsidies”. The coming feed-in tariff law reforms in Germany should have as the most important goal to make the EU Commission shut up in this debate, for two reasons. One is that the EU Commission’s ideas about the feed-in tariff deserve a sound rejection. They are useless and harmful, like their stupid idea about requiring to run everything on an auction model. That fringe minority loser position was another idea supported by nobody in Germany, except possibly the FDP. The other is that basic values of democracy require to take the limits of competence delegation to the EU very seriously.

The feed-in tariff should be devised in a way as to make it impossible for the Commission to view it as “state aid”. There are several ways this may be done.

One is to frame the issue as one of safety. Germany has decided that nuclear energy is not safe. And even the EU Commission has – up to now – not dared to interfere with that decision.

So just decide in the same way that generating electricity with coal and gas is not safe. That’s correct, of course. Keeping fossil fuels in the mix risks enormous damage from global warming. Much more than damage from radiation in case of a large-scale nuclear accident.

Then declare everything in the feed-in system as necessary to phase out the extremely dangerous fossil fuel energy generation. Just set the goals of renewable energy market share, as the German government has done, and declare that the feed-in tariff policies necessary to achieve those goals are safety measures.

As I have argued before, fire prevention measures in building safety codes come with a cost. Are these costs state aid? Is requiring the use of fire resistant doors etc. a “subsidy” for the makers of such doors?

Of course not.

And exactly in the same way, requiring a certain market share of renewable energy as a safety measure against global warming is far from “state aid” or a “subsidy”.

It may be possible to make this even clearer than it is already under the present German system. If so, the German legislator should do anything possible for the noble goal of telling the EU Commission to stop their illegal and undemocratic power grab.