Germany’s grandiose plans for an Energiewende have not been panning out too well. In the wake of the Fukushima blowout, the country embarked upon a long-term and wildly ambitious quest to get rid of coal, natural gas, and all of their nuclear power plants — which means a whole lotta’ renewables are going to need to come online in the near future. The forcible transition has not been cheap, in more ways than one; energy prices have been ticking ever upward, and in the next decade, Germany will need to “invest” bigtime in new power plants, renewables projects, and infrastructure changes. Government subsidies are expected to amount to more than $32 billion in 2014 alone.
Such intense manipulation of the free market, of course, is no easy feat, and the European Union is wondering if perhaps Germany hasn’t perhaps been engaging in some… untoward special treatment of their politically favored industries. The WSJ explains:
EU regulators said Wednesday that they are looking into Germany’s renewable-energy law, which funds investment in green energy. Under the law, nearly 2,300 heavy energy users—including chemical company BASF SE and steel producer ThyssenKrupp AG —can avoid paying a surcharge that other consumers face. EU officials have criticized the exemptions for some companies as a subsidy that distorts competition. …
The exemptions from the levy were Berlin’s attempt to reconcile its ambitious plans to shift power generation away from coal, natural gas and nuclear energy toward renewable sources—the so-called energy transformation—with the need to protect the competitiveness of its energy-hungry industrial base from rising electricity costs. …
EU antitrust chief Joaquín Almunia said Wednesday the probe will focus on the exemptions’ effect on competition in certain sectors, including the transfer of costs to other energy users. “We think this is selective treatment and this introduces discrimination, so that’s the main point of the investigation,” he said in Brussels.
German officials are pretty upset about the investigation, fearing that, if they are indeed forced to change their laws and recover the monetary aid granted to these companies to help them pay for Germany’s relatively more expensive energy prices, the companies will lose their competitive edge on the world stage — a very well-founded fear, I might add, seeing as how the chemical company BASF SE has already announced that they plan to move a lot of their production and investment to the United States, where their energy needs (hello, natural gas!) are less expensive.
The German government essentially wants to have their cake and eat it, too, on this one, and I suppose that’s their choice — but continually subsidizing the heck out of every which industry is one costly way to live. Germany wants to maintain a strong industrial base with plenty of jobs, but they also want to meet their energy needs almost completely with decidely more costly renewable sources as well as ban even the possibility of fracking for natural gas. The EU will have to decide if Germany is breaking whatever rules, but Germany can’t be surprised that engaging in policies that make them less competitive might make them… you know, less competitive.