Germany and Spain are backing off on the green-energy subsidies
posted at 6:31 pm on February 17, 2013 by Erika Johnsen
For me, one of the most perplexing moments (out of the many) of President Obama’ State of the Union address last week was when he insisted that “as long as countries like China keep going all-in on clean energy, so must we.” So… because China is doing it, we must also relentlessly throw money we do not have at politically favored technologies now so awash in superfluous supply that its all they can do to keep their heads above water? China’s solar and wind industries are a hot mess of overcapacity, after the government got into the business of creating heady artificial incentives directing capital in their preferred green-energy direction — remind me of the appeal in continuing to do the same thing?
We don’t even have to look as far as China for extant examples of governments reaping the costly consequences of their prematurely sown venture socialism. Germany and Spain have for years fancied themselves forward-thinkers on the green-energy front, and have implemented a bunch of subsidies, standards, and regulations aiming to prop up what it seems environmentalists the world over have deemed to be the holy grails of renewable energy, but the fact that these technologies are not yet pragmatic nor affordable is being made especially stark by Europe’s recession. The fiscal squeeze means that put-upon consumers are rather less willing to finance politicians’ green-energy ambitions than usual, and Germany and Spain are dialing it down in the face of financial reality. The WSJ reports:
Germany subsidizes producers of renewable energy such as solar and wind power in part by imposing a surcharge on household electricity bills. As the industry has grown, demand for the subsidy increased, driving the surcharge higher. …
Fearing a voter backlash from anger over the lopsided financing of green energy, Ms. Merkel’s government on Thursday proposed putting a cap on the green-energy surcharge until the end of 2014 and then restricting any rise in the surcharge after that to no more than 2.5% a year. The government also plans to tighten exemptions, which would force more companies to pay, and achieve a cut in green subsidies of €1.8 billion ($2.42 billion). …
The Spanish parliament took a similar step on Thursday, passing a law that aims to curb rising household electricity costs by cutting aid to the renewable-energy industry. …
Among the changes in the Spanish system, the new law indexes certain subsidies and compensation to an inflation estimate that strips out the effects of energy, food commodities, and tax changes.
Spanish renewable-energy companies are highly perturbed, of course, that the government is “backing away from previous promises that it would ensure them a reasonable return on their investments,” but… shouldn’t the fact that the government has to ensure even just a reasonable return on their investments have raised some gigantic siren-accompanied red flags in the first place?
For Germany, some of these are meant to be short-term fixes as the government starts to look at comprehensive reform of their green-energy laws and taking it down on notch on all of the subsidies and mandates — forcing consumers to use particular products, before they can actually appeal to consumers on their own merits, will do that to ya.’
And we want to double down on following this expensive example, because…?