News from Abroad Highlights Energy Experiences

In past months, PACE has argued consistently that policy makers in the U.S. should pay close attention to energy events abroad. Nations in Europe, for example, have pursued many of the same policies being proposed in the U.S. today. We believe it is important to learn lessons from those experiences and recalibrate American policies accordingly. In that light, the news coming in recent days from major nations should give policy makers stateside serious pause.


First the news from Germany, where the government is financing massive construction in the renewable energy sector, including an “energy super-highway” to bring wind power from the North Sea to the nation’s industrial sector in the south. As the Wall Street Journal reports, the project is just part of a $1.4 trillion plan by German Chancellor Angela Merkel to divest her nation’s energy portfolio of nuclear and fossil-fuels by mid-century.

The plan has many industry leaders worried that that the enormous expense, and unknown benefits, of the so-called “energy revolution” could weigh down the German economy. German power prices already have spiked 60% in the past five years, and the nation’s recently released second quarter GDP figures show a more than half-a-percentage-point decline. Almost 75% of Germany’s small- and medium-sized businesses describe climbing power bills as a major risk, with heavy industrials having even more to worry about.

“German industry is going to gradually lose its competitiveness if this course isn’t reversed soon,” said Kurt Bock, chief executive of BASF, the world’s largest chemical maker.

Indeed, Germany’s energy policies are already affecting the economy. Recently, German-based SGL Carbon chose to invest another $200 million in its plant in Washington state rather than back home because electricity prices at its U.S. plant are one-third the cost of those in Germany. The industrial gas company Basi Schöberl GmbH scrapped plans to expand its German operations and chose to build in France instead. BASF, which has 50,000 workers in Germany, has announced it will invest in Asia and the U.S. instead of in Germany.

It also turns out that large-scale investments in wind might not yield the kind of value renewable advocates imagine. A recent report by Michael Bastasch in The Daily Caller found that while wind power in the United Kingdom recently set records for generation, that production came when the grid didn’t really need it. Green groups celebrated this past Sunday when UK wind generated 5 gigawatts of power, about 17% of total demand, shattering the previous UK record by a gigawatt. The groups didn’t focus, however, on the fact that the record production came at 10:00 PM, when many businesses were closed and many residential users had already turned in for bed.

As with all news, it is important to keep the latest revelations from Europe in context. But Germany’s economic losses give credence to the warnings from some U.S. leaders that EPA regulations will cause economic harm. The UK’s recent wind experience, too, provides a strong data point in the debate over the place of renewable energy sources. Making decisions with all possible input helps create sound policy, and Europe continues to supply us with valuable evidence.