Rep. Alexandria Ocasio-Cortez’s (D-NY) draft “Green New Deal” produced anger, confusion, and outright laughter across the nation earlier this month, effectively proposing to eradicate the health insurance, nuclear energy, and fossil fuel industries overnight in addition to providing “economic security” to those “unable or unwilling to work.”
While Ocasio-Cortez’s proposals cater to leftist, radical environmentalists and are utterly ludicrous in an economic sense, causing even CNN’s Jake Tapper to balk at the $40 trillion price tag, it appears that other nations are leaping headfirst into similar proposals that invite economic destruction.
"Green" Demands Could Kill the Germany Economy
Germany grabbed headlines across the globe in late January by proposing a complete government ban on utilizing coal for energy by 2038, effectively signing the industry’s death warrant. President Donald J. Trump has repeatedly slammed Germany for the country’s immense trade surplus with the United States. However, if the German government continues to cave to the demands of green energy extremists, Berlin’s robust economy will be a thing of the past.
As is often the case for ideologically-motivated policy, German taxpayers will be left footing the bill.
The German Coal Commission’s plan involves Germany phasing out coal as early as 2035, a timeline that a number of senior lawmakers have denounced as unrealistic. The proposal would see billions spent to help deal with the economic effects of such a dramatic shift, while the country’s power system will be forced to make a sharp turn to the left.
Moreover, as is often the case for ideologically-motivated policy, German taxpayers will be left footing the bill, sacrificing Germany’s future as an industrial powerhouse in the process.
Chancellor Angela Merkel has made the Energiewende, or energy transition, a key part of her legacy. The Wall Street Journal offered a particularly damning verdict on the coal commission’s proposal, referring to it as “the world’s dumbest energy policy”—which will heighten dependence on Russian gas, sap the country’s coffers, and yet barely make a dent in global coal consumption.
Simply put, phasing out coal and nuclear at the same time in a country of 82 million people would be utterly disastrous.
Taxpayers Will Pay the Price
According to the plan, taxpayers can expect to be hit with a $35 billion aid bill to four coal-dependent regions by 2028 as the country closes its last remaining 120 coal stations. The same stations, that is, that supplied more than a third of Germany’s electricity last year—and which neighboring France relies on to meet peak demand in winter.
Berlin’s phase-out aid bill is just a side dish to the $500 billion already spent on switching off the lights at Germany’s biggest power plants.
By some reports, this aid is already a “definite underestimate” of what is actually required to support these soon-to-be-destitute swathes of German industry.
“The faster Germany pulls out of coal, the more expensive it’s going to be and we’re not talking about negligible costs,” says Lars Ruzic, spokesman of the IGBCE miners, chemical and electrical workers’ union. “[T]he phase-out is an immense disruption for utilities, the coal regions, jobs and the broader economy.”
Worse still, Berlin’s entirely avoidable phase-out aid bill is just a side dish to the $500 billion already spent on switching off the lights at Germany’s biggest power plants, a move intrinsically tied to the fact that Germans are already paying more for electricity than anyone else in Europe. Most leaders would think this markup is bad enough, but Merkel’s plan to squash coal will likely cause price swings across the power, natural gas, and carbon allowance markets.
A Radical Recipe for Economic Destruction
Currently, coal still provides nearly 40 percent of Germany’s electricity. In comparison, even under the pro-coal Trump administration, the US only gets 29 percent of its electricity from fossil fuel. The percentage is even lower in other Western nations—only 5 percent of the UK’s electricity comes from coal, for example. Berlin’s newfound vexation towards coal, then, sets the country up for a massive competitive disadvantage if Germany’s ambition is not matched by its peers.
Germany is full of regions that depend heavily on coal mining, with no other industries capable of absorbing the thousands of job losses.
Every day, German workers are likely to immediately feel the impact of the hasty coal exit. Parallels can be drawn to historic mining regions like West Virginia in the United States, which have had the rug pulled out from under them by politicians eager to baselessly crack down on the coal industry without offering up alternatives.
Likewise, Germany is full of regions that depend heavily on coal mining, with no other industries capable of absorbing the thousands of job losses heralded by hardline environmentalists. “Everyone has something to lose: industry, the regions, workers and the electricity producers themselves,” says Holger Lösch, deputy director-general of Germany’s BDI industry federation, “Who is going to pay for all this?”
Supporters of the measure don’t seem to grasp the impending economic fallout. Stefanie Langkamp from the Climate Alliance Germany network goes so far as to claim that “the coal phase-out should have been much more ambitious.”
Radical environmentalists like Langkamp may not yet have grasped the disastrous effects of the policy they are championing, but it seems Merkel, at least, is wisening up to the catastrophe. Speaking at the World Economic Forum meeting in Davos last month, the so-called “Climate Chancellor” herself admitted that “without being able to assure a baseload in our energy generation, we will not be able to survive.”
Ironically, less than two months ago, the German Environment Minister chastised President Trump for claiming the United States is saving trillions of dollars by pulling out of the Paris climate agreement. She would be better off focusing on the billions her policies are likely to cost German workers.