The German economy, the fourth-largest in the world, has ground to a standstill. There is no growth. Manufacturing is depressed, trade is weak, inflation is high, and jobs are scarce. Germany is now the sick man of Europe, and misguided energy policy is largely to blame.
Germany has just recorded its third consecutive quarter of recession, marked by negative gross domestic product (GDP) growth. The central bank expects the rest of the year to be no better. Germany has recently experienced its highest rate of inflation in a quarter of a century. German inflation, among the highest in Europe, remained stubbornly high at 6.2 percent in July, compared with 5.3 percent for the eurozone as a whole. This despite the fact that German manufacturing is facing “its sharpest slump ... since May 2020”—that is, when the entire world was locked down.
What President Donald Trump was referring to in 2018 was Germany’s increasing dependence on Russian gas, which in turn resulted from “green” energy policies implemented over the previous decade. These near-sighted and self-sabotaging policies effectively destroyed Germany’s highly efficient and inexpensive domestic energy production capacity derived from world-class coal and nuclear power. Before this decade of folly, Germany’s coal plants were among the most modern and efficient in the world. Low-carbon nuclear energy produced a substantial portion of Germany’s power needs. But all of this was forsaken in the quixotic pursuit of a utopian vision of zero-carbon green energy.
Import of Russian gas thus became essential to the German economy. Germany imported more than 1.7 trillion cubic tons of gas from Russia in 2021, constituting nearly half of its total gas usage that year. As a result of the Russia–Ukraine war, the sanctions regime imposed on Russia by the United States and the West, and the sabotage of the Nord Stream pipelines, Germany has been forced to find alternative sources of emergency fuel stock to keep its lights on and its citizens from freezing.
As a result, Germany’s electricity prices are now among the highest on the planet. The only countries paying more per kilowatt hour anywhere in the world are Denmark and Italy. Along with Germany, Italy’s energy supply was most affected by the disruption of Russian gas. Overall, those European nations that relied most heavily on Russian gas are paying more for electricity than other countries and suffering worse inflation as a result.
For background, coal had been essential to German energy and thus to the economy as a whole. But facing intense pressure from green politicians and evangelists of a looming climate apocalypse, Germany embarked on a plan to completely eliminate coal and other fossil fuels from its energy complex. This despite the fact that Germany’s consumption of coal was relatively minor as a portion of global totals—according to the International Energy Agency, China, India, and Southeast Asia consume three-quarters of global coal—and the coal was processed with much less of an effect on the environment.
Germany reversed course on coal in 2022, as the geopolitical crisis forced “energy security to trump climate goals.”
Decommissioned plants were reactivated, and plans to mothball others were postponed. Germany consumed more than 8 billion tons of coal in 2022, up by 19 percent from 2021. Despite the increase and because of the efficiency of German production, carbon emissions near the end of 2022 were nonetheless at their lowest level in 30 years.
The German government’s position is that this increased use of coal was “a last resort and short-term backup to secure energy supply” amid the emergency. Despite the stark reality on the ground, the nation’s leaders say they remain committed to eliminate coal by 2030 as part of their long-term objective to achieve “net-zero emissions.”
Nuclear Could Have Saved Germany
At its peak, Germany had 36 nuclear reactors capable of producing 26,375 Mwe (Megawatts electric) of low-carbon power annually. Under political pressure from anti-nuclear factions, by 2011, only 17 reactors remained. But even still, Germany obtained one-quarter of its electricity consumption from nuclear power. As a result of the Green Party’s relentless opposition, supported by environmental activists, and then the anti-nuclear fear-mongering that prevailed following Japan’s Fukushima nuclear reactor accident in 2011, all but a handful of Germany’s remaining reactors were promptly shut down.Virtue-Signaling Straight Into the Abyss
According to ClimateWatch, just three countries—China, India, and the United States—produce 42.6 percent of global greenhouse gas (GHG) emissions. On the other hand, Germany produces 1.75 percent of global GHG emissions. A 25 percent reduction in Germany’s emissions—devastating to German GDP—would bring the proportion down to 1.3 percent of global GHG emissions.So, in other words, Germany’s leaders have been willing to bankrupt its economy, impoverish its people, and plunge the nation into darkness for a rounding error. While German leadership virtue signals their way to perdition, China and other countries have been unapologetic in their intentions to increase GHG emissions as their economies grow.
The proposed solution of German leaders has been for its citizens to consume less and its factories to produce less or move manufacturing offshore. But why should the German people suffer for the idiocy of their leaders? Why should German industry be sacrificed to benefit other economies at the expense of their own?
Germany’s beleaguered citizens appear to have had enough of this disaster. Political change is in the winds. The populist conservative party, Alternative for Germany, has just emerged as Germany’s second strongest party, polling at 20 percent support nationwide and more than one-third in some regions. One of the party’s main selling points is that it’s “an aggressive opponent of the government’s energy and climate policy.”
Perhaps it isn’t too late for Germany after all.
