Germany: Do. Or Do Not. There is no Try.
June 26, 2012
It used to be that the United States was the bold technological leader of the world. The space program, jet engines, the microchip, satellite GPS, the internet – all of these were important initiatives that could not have happened without major government involvement. All of them carried a certain amount of financial, or even physical, risks. All of them spun out a wide variety of benefits that have created whole new industries that the country could lead and dominate in.
Now we are faced with a Tea Party congress bent on leading us back to the 19th century, both technologically, and socially. For now, it seems we have a faction that will opt to watch as other countries take the lead in the most important revolution of the century.
Great article in Technology Review gives plenty of space to pros and cons.
Along a rural road in the western German state of North Rhine–Westphalia lives a farmer named Norbert Leurs. An affable 36-year-old with callused hands, he has two young children and until recently pursued an unremarkable line of work: raising potatoes and pigs. But his newest businesses point to an extraordinary shift in the energy policies of Europe’s largest economy. In 2003, a small wind company erected a 70-meter turbine, one of some 22,000 in hundreds of wind farms dotting the German countryside, on a piece of Leurs’s potato patch. Leurs gets a 6 percent cut of the electricity sales, which comes to about $9,500 a year. He’s considering adding two or three more turbines, each twice as tall as the first.
The profits from those turbines are modest next to what he stands to make on solar panels. In 2005 Leurs learned that the government was requiring the local utility to pay high prices for rooftop solar power. He took out loans, and in stages over the next seven years, he covered his piggery, barn, and house with solar panels—never mind that the skies are often gray and his roofs aren’t all optimally oriented. From the resulting 690-kilowatt installation he now collects $280,000 a year, and he expects over $2 million in profits after he pays off his loans.
Despite the costs, Germany could greatly benefit from its grand experiment. In the past decade, the country has nurtured not only wind and solar power but less-heralded energy technologies such as management software and efficient industrial processes. Taken together, these “green” technologies have created an export industry that’s worth $12 billion—and is poised for still more growth, according to Miranda Schreurs, director of the Environmental Policy Research Center at the Berlin Free University. Government policies could provide further incentives to develop and deploy new technologies. “That is know-how that you can sell,” Schreurs says. “The way for Germany to compete in the long run is to become the most energy-efficient and resource-efficient market, and to expand on an export market in the process.”
If Germany succeeds in making the transition, it could provide a workable blueprint for other industrial nations, many of which are also likely to face pressures to transform their energy consumption. “This Energiewende is being watched very closely. If it works in Germany, it will be a template for other countries,” says Graham Weale, chief economist at RWE, which is grappling with how to shut its nuclear power plants while keeping the lights on. “If it doesn’t, it will be very damaging to the German economy and that of Europe.”
To some German economists, the country’s energy policy is simply wrong-headed. Hans-Werner Sinn, president of the Ifo Institute for Economic Research at the University of Munich, is especially scathing. “The Energiewende is a turn into nowhere-land, because the green technologies are just not sufficient to provide a replacement for modern society’s energy needs,” he says. “It is wrong to shut down the atomic power plants, because this is a cheap source of energy, and wind and solar power are by no means able to provide a replacement. They are much more expensive, and the energy that comes out is of inferior quality. Energy-intensive industries will move out, and the competitiveness of the German manufacturing sector will be reduced or wages will be depressed.”
German politicians, of course, are betting that Sinn is wrong. And plenty of encouraging signs argue against his pessimism. The cost of solar panels has dropped sharply, which means that solar power may become more competitive. Battery costs may follow suit. If fossil fuels continue to become more expensive, renewable power sources will look more attractive. “Forty years is a long time, and one is continuously being surprised by favorable technological developments—for example, the way in which the price of solar cells is coming down,” Weale says. “From my point of view, I want to emphasize how challenging the Energiewende is. At the moment, it’s looking difficult. But with the right incentives, one can have good reason to believe that technological progress will be a lot faster than we currently expect.”
Do you ever wonder what if might feel like to be out on the edge, pushing the envelope – instead of cringing, dithering, and clinging to the past?
Care to bet against them?