Following closely on the heels of the Intergovernmental Panel on Climate Change’s Sixth Climate Assessment report, industrial leaders in Germany have told national leaders to stop with their constant posturing and pontificating about what they are going to do about climate change some day soon — God willing and the creek don’t rise.
Government Dithers As World Burns
Utz Tillmann, head of VCI, the trade association that represents the German chemical industry association, tells Handelsblatt that too many officials spend their time batting around ideas about future actions without any organized structure to help frame those discussions. “The government always gets caught up in the small stuff and misses the big picture,” he said. He says VCI can’t even make an appointment to meet with the economics ministry, despite chemicals being Germany’s third largest industry.
Ottmar Edenhofer, head of the prestigious Potsdam Institute for Climate Impact Research, agrees. “Climate policy is too focused on carbon dioxide instead of providing a concrete answer on how we achieve our climate goals,” he says. In his mind, the only way to put together a credible global response to warming temperatures is through the imposition of a worldwide carbon tax, but the German government is not considering such a policy at the moment.
There are a lot of people who detest the idea of a carbon tax, but that is primarily because everyone has an immediate negative reaction to the word “tax.” It’s a natural human characteristic. What is needed is an economic mechanism that corrects the market distortions created when an industry — any industry — is allowed to foist off part of its costs of doing business onto the public. Just as Americans love the idea of affordable health care when asked about it in surveys but loathe Obamacare, it all comes down to framing the discussion. Any attempt to limit the ravages of a warming world must include economic incentives that encourage sane responses rather than insane denials.
Coal And The Hambach Forest
Coal has become a flash point in German politics lately. For generations, the country has depended on burning lignite — otherwise known as brown coal. The problem is, lignite is some of the dirtiest fuel on Earth. It’s right up there with oil from the Alberta tar sands in terms of the amount of emissions created when burned. And there is a large lignite mining industry in Germany.
German activist have been working for years to protect the Hambach forest, located in the state of North Rhine-Westphalia in western Germany. It is owned by RWE, an energy company that mines lignite. It wants to cut down the forest so it can remove the coal underneath. Up to 50,000 people have descended on the area to protect the trees, sparking clashes with police. Recently, a court in Münster issued a temporary ban on cutting down trees in the forest, some of which are up to 350 years old.
In an unusual twist, German search engine Ecosia has offered to buy the 500 acres of land the forest sits on from RWE for €1 million. According to The Guardian, Christian Kroll, CEO of Ecosia, wrote a letter to Rolf Martin Schmitz, head of RWE, recently in which he made the unsolicited offer. “We think that a fair reconciliation of interests can be found between RWE and the people, and with our commitment to buy the remaining stretch, we are pursuing the ecological and societal interests of those who have committed themselves to protecting the forest and dedicated themselves to nature conservation,” Kroll wrote. RWE has yet to respond to the offer.
Jobs And Politics: An Explosive Combination
The government would like to stop depending on lignite to make electricity but eliminating all those jobs in the mining industry has significant political ramifications. In the US, concerns about coal mining were one of the factors leading to the success of the Trump presidential campaign. Everyone agrees we need to take immediate action of climate change but no one has a plan on how to navigate the turmoil that massive economic changes will bring.
Kyle Field has written an excellent article that focuses on those economic changes. Herbert Diess, the head of Volkswagen, is warning the transition to electric cars will put thousands of German auto workers out of a job. Part of the money created by such market adjustment mechanisms must be dedicated to helping people transition to new employment opportunities. Otherwise, civil unrest will occur and could explode into armed insurrection both internally and across national borders. Discussing ways to deal with climate change must include robust policies to limit the economic hardship new policies will impose on the populace.
The central role that economics play in crafting an effective response to climate change is being driven home by declining support for Germany’s Energiewende — the government’s plan to phase out fossil fuels for making electricity and boost renewable energy resources. It sounds good on paper, but Eric Schweitzer, head of the German Chambers of Commerce, tells Handelsblatt, “The mood regarding the Energiewende has reached a tipping point. Acceptance is dwindling away above all because of increasing prices for electricity.”
Distributed Microgrids Are One Answer
It’s hard to sell the virtues of renewable energy if the price of electricity goes up as a result. Those price increases have political consequences as well. Fossil fuel advocates have been using higher prices to hammer clean energy programs elsewhere around the world. The official position of the new Australian government is that renewable energy will bankrupt ordinary people due to higher energy bills. In Arizona, the fierce opposition to Proposition 127 — which would mandate that state to adopt a 50% renewable energy target — centers on the argument that renewable energy will dramatically increase utility bills.
One effect in Germany is that many small and medium sized companies are now planning to create their own energy grid using solar panels and battery storage to allow them to control their own electricity costs. That’s not a bad thing. Distributed microgrids are the next revolution in the utility industry and will be a vital part of designing effective climate change strategies, assuming we can get governments to stop speculating about pie in the sky solutions for the future and focus on constructive steps they can implement today.
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