Merkel Snubs Global Warming And Dumps The Solar Industry

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.

Extended Bio

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.


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8 Responses to Merkel Snubs Global Warming And Dumps The Solar Industry

  1. Craig Crosby says:

    I cannot applaud the implications in this piece; nor can I condemn the truth of it. I believe Al Gore had a book about inconvenient truth, and this certainly fits into that slot.

    I suspect that Climate Scientists have been instructed to be conservative in their pronouncements. What with science’s predilection to understate and qualify everything, my thought is to take every reasonable precaution to lessen and mitigate warming inputs. The dangers seem too off the chart, and requiring that we pay as we go for energy is not that big an ask. Not because we know what is in store, but because we do not.

    ‘It’s tough to make predictions,” as said Yogi Berra, “especially about the future.”


  2. Willem Post says:


    Another great post.

    I hope the below article helped Gabriel, Merkel, etc., to switch their religious convictions.

  3. Joe Public says:

    Hi Euan

    O/T but I’m unaware of any other means of contacting you. Had you considered having an email address on your sidebar?

    Anyway, to business:-

    Remember this item which you covered in

    “In just over five years Britain will have run out of oil, coal and gas, researchers have warned.”

    Well the Beeb seem not to have:-

    “Independence: Scottish government view …….14% increase in oil and gas production between 2013-18” [It’s ‘inside’ the graphic.]

    From theMay 2014 “Oil and Gas Analytical Bulletin Scottish Government” – page 4:-

    “Moreover, several large new fields are expected to come onstream. For example, within the Scottish portion of the North Sea, Golden Eagle is due to begin production in late 2014, the Schiehallion redevelopment is expected to be finalised in 2016, and Mariner in 2017. These developments are forecast to produce over 230,000 boe per day in 2017 and 2018.

    ……………It is also estimated that new fields and field restarts could add approximately 250,000 boe per day to production in 2014. Taking into account the projected decline in base production from mature fields, such forecasts suggest a net increase in production of approximately 80,000 boe per day.

    Looking to the longer term, Oil and Gas UK’s central forecast is for production to increase by approximately 14% between 2013 and 2018. This reflects the expected impact of new fields coming onstream and production efficiency increasing in existing fields. …………. a number of larger new fields are about to come onstream in the next two to three years and that could take production back to the level of two to three years ago where it could be sustained for the remainder of this decade.”

    The Beeb, Anglia Ruskin University and the Scottish Government can’t all be correct.

    • Euan Mearns says:


      Any UK university that proclaims the UK is going to run out of oil and gas in 5 years deserves to be closed down. Your statement:

      Taking into account the projected decline in base production from mature fields, such forecasts suggest a net increase in production of approximately 80,000 boe per day.

      I feel is quite likely on the money – give yourself a coconut for being able to work out in your head what legions of civil servants and academics seem incapable of doing.

      I have all the data I need to do a detailed and accurate bottom up forecast of UK oil and gas production. I always meant to do this ahead of the referendum. But alas it would take me 2 to 4 weeks work and keeping this thing going is using 12 hours a day as it is. But your estimate above is probably good to ± 50,000 bpd. The big projects coming on are Claire redevelopment and Lagan. But after that decommissioning takes hold and the lack of big new discoveries takes us on down. North Sea still producing oil and gas in 2030, but not a lot of it. If you check out my “countries” series of posts you’ll see this does not have to be a disaster if we rebuild manufacturing and exports – actually working for a living, which is no bad thing.

      The cost of decommissioning to an environmental gold standard does pose a threat to the whole oil and gas industry.

      • It doesn't add up... says:

        Originally the idea was that the government would act as trustee for the costs of decommissioning by swiping money that would otherwise have been set aside as provisions during the years of production via PRT, leaving the oil companies able to claim back PRT repayments to help fund the cost when incurred. Naturally, government has welshed on that deal. It was perhaps the Piper Alpha disaster, for which the government turned out to be chief insurer via PRT reclaim, that made this almost inevitable.

  4. Ted S. Lundy says:

    Good news!

  5. Mike Parr says:

    The article contained a number of unsubstantiated assertions. For example: “The green subsidies have led to rising costs and job losses in many other areas, such as heavy industry, commerce, agriculture and transport”.

    Taking heavy industry: (Jan 2014) Norsk Hydro ASA will invest Euro130m in a new production line at its rolled products plant in Grevenbroich, Germany. The new line will increase annual capacity for aluminium car body sheet to 200,000 metric tons. (the same bunch the year before signed a long term energy deal with Vattenfall)

    I await with interest examples where German heavy industry is shutting up shop.

    I could also cite that fact that electrical power, as a proportion of household bills in Germany is little different from that in the UK. BTW, Eurostat data on German residential energy costs indicates 29eurocents/kWhr – you appear to be using old data – raising the question what else in the piece is out of date.

  6. Pingback: Germany’s ‘Energiewende’ as a model for Australian climate policy? | Brave New Climate

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