This is a guest post by Andrew McKillop. Andrew has held posts in national, international and European Commission energy, and energy policy divisions and agencies. An extended bio is given at the end of the post.
Mutter and Stutter
Germany’s Angela Merkel, nicknamed the Mutter for “Mother” of a successful Germany who got herself re-elected, is said by Berlin daily ‘TAZ’ to have already decided she will not attend the Ban Ki-Moon-initiated UN climate conference in New York this September. The paper says this was “confirmed by a government spokesman“. If so, Merkel’s decision to snub the event is likely another sign that efforts to implement present climate agreements, and forge new ones are already dead in the water. Germany EEG or renewable energy law (Erneuerbare-Energien-Gesetz) is another very likely collateral victim.
The EEG law is the pillar of all downstream financing of Germany’s now troubled renewable energy industry. According to recent figures (May 26) from the German Government, gross employment in renewable energy decreased from its probably historic peak of about 375 000 in 2012, to about 360,000 in 2013. This was “only” a 7% decrease in one year but hides dramatic declines, even a collapse in specific renewable energy equipment producers and service providers.
The Federal ministry for Economic affairs and Energy’s statistics show that the solar PV industry’s workforce numbers in Germany fell by 50% from 100,300 people in 2012 to 56,000 in 2013.
A report (titled: “Gross employment in renewable energy sources in Germany in 2013″) which was put together collaboratively by the Ministry and other organisations including the Centre for Solar Energy and Hydrogen Research of Baden-Württemberg, the DfW Institute for Economic Research and other industry watchers said the collapse in the solar industry “came as a consequence of lowered targets for PV installation” and “was not unexpected”. It also said that a ‘repeat-boom’ scenario as in 2010-2012 is very unlikely to happen again because German solar energy is now in “managed decline”, also driven by falling German, European and world prices for solar PV equipment.
Germany’s wind power sector slightly bucked the trend in 2012-2013, with a small total increase in employment, but the Economic affairs and Energy Ministry and industry watchers such as DfW estimate the net overall decline in German renewable energy funding at about 20% for 2012-2013, with a high likelihood that similar double-digit declines will operate in 2014 and 2015. Wind power employment will soon also decline in Germany.
Taxing Free Energy
Likely the most somber threat to German renewable energy has been made by the former arch-Green, German Vice Chancellor, and No 2 in Merkel’s cabinet, Sigmar Gabriel As Minister of Economic affairs and Energy, Gabriel has touted the idea of applying surcharges for “self-consumed” renewable energy, especially solar PV and wind energy, ostensibly to cover grid and service costs.
If you produce it, you must pay a tax, even if you are Saving The Planet!
One of Gabriel’s former in-crowd ecologists and arch Green himself, the deputy leader of the Greens in the Bundestag, Oliver Krischer, said that Gabriel’s proposal on top of the general retreat for Green Energy in Germany signals that “nothing at all is left of the renewable energy jobs miracle” in Germany. Merkel is abandoning the sinking ship.
Krischer added that “The brakes on the expansion of renewables by the previous conservative-liberal government is now fully hitting the job market,”. He also said that: “Thanks to the current EEG reform (by Merkel’s coalition government) the innovative and young renewables industry will lose even more jobs”.
The report by the Economic affairs ministry, the Baden-Wurttemburg Solar and Hydrogen energy institute, DfW and other economic forecasting entities however only figured an explicit estimate of “gross employment“ created by green energy subsidies. It did not count job losses in “non-green sectors” due to the same subsidies – which is a controversial subject. Under any hypothesis however these job losses run at more than 3-to-1, meaning that 1 job created in the green energy sector means 3 jobs lost elsewhere.
This is light years away from “Keynesian multipliers” and very close to the real world. Directly due to Germany’s “Green energy ramp”, average domestic electricity prices in Germany are above 25 euro cents per kiloWatthour, according to German official data and Eurostat.
This prices household electricity at about $540 per barrel equivalent of energy.
Domestic spending on electricity has to rise – domestic spending on anything else has to fall. If you have another explanation, send Merkel a postcard telling her all about it.
The green subsidies have led to rising costs and job losses in many other areas, such as heavy industry, commerce, agriculture and transport – as well as for Germany’s Big Four conventional power plant operators – all of them paring back on investment and employment as their earnings retreat. For a net analysis, the number of jobs that were prevented from happening, or were destroyed as a result should be deducted from the gross number of green jobs. This would give us “the honest number”. Which is either zero or negative.
Political Blowback is Sure, Certain – And Coming
Official figures for the net effect of renewables on employment in Germany were originally supposed to be presented in July, according to Gabriel’s Economics Ministry. However, the presentation has now been delayed “until the autumn”. This gives Merkel a few extra months to cook the books while ignoring “The Planet Which Cooks” from global warming !
Researchers such as the president of the Munich-based IFO institute, Hans-Werner Sinn, believe that the net effect of subsidies for renewable energy on the labour market is “at least equal to zero”.
Delving down a little further – and also explaining why both German and Chinese solar PV industries are in a very unenviable situation – the capital intensity of production in emerging sectors, in this industry, is smaller than in the older ones. Technology progress has added its own anarchy to the shaken paradigm of green energy. German economic researchers say “There are no indications for this outcome”, for an industry (both in China and Germany) that has already exhausted its “low hanging fruit” installation and applications opportunities. The same applies to wind power, possibly with a couple years delay.
“There is no positive net effect on employment by the EEG,” said Sinn: “Through subsidies for inefficient technologies not a single new job has been created, but wealth has been destroyed“.
As a chemical engineer by training, Angela Merkel was “persuaded” that nuclear power was the best energy solution until Japan’s Fukshima disaster of 2011. After that Germany’s Energiewende green energy program was a roadmap for her country and for the world. Today her coalition government has no alternative but to accept empirical evidence and back off from an economic catastrophe – that could have been avoided.
Andrew McKillop has held posts in national, international and Euro Commission energy, and energy policy divisions and agencies.
These missions have for example included role of National energy coordinator, Govt of Papua NG, Director of Information at the AREC technology transfer subsidiary of OAPEC, Kuwait, Senior energy research associate at the UN ILO and UNDP, Senior advisor to President, Hydro & Power Authority of British Columbia, Canada (BC Hydro), Seminar leader at the Administrative Staff College of India, Hyderabad, study, Senior energy associate at the Canadian Science Council, and elsewhere.
Andrew McKillop is a regular contributor to many specialist oil and energy Web sites. He was first energy editor of the journal ‘The Ecologist’ and has published works with other analysts, e.g. ‘Oil Crisis and Economic Adjustment’, Pinter Publishing, with Dr Salah al-Shaikhly, currently the Interim Iraqi government’s Ambassador to London.