Germany opens the door for high inflation, with a proposal to subsidize 80% of green energy bills – Do you accept that?

Essays by Eric Worrall

The plan is to continue subsidizing, until investing in renewables reduces energy prices.

Germany considers electricity price ceiling to support industry

05/05/202305/05/2023

Economy Minister Robert Habeck wants to support German industry for years to come with lower electricity prices. His proposal to cap electricity prices is intended to ensure that energy-intensive companies stay in Germany.

Germany Economy Minister Robert Habeck on Friday announced plans to cap electricity prices for energy-intensive industries to protect the industry from sharply rising costs.

Under the plan, an upper limit of €0.06 (about $0.07) per kilowatt hour (KWh) will be in place until 2030.

It will meet at least 80% of the electricity consumption of a well-defined group of German companies from energy-intensive industries such as chemicals, steel and glass manufacturing.

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Habeck, who represents the Green Party in government, is perhaps recommending counter-intuitively that taxpayers should subsidize some of Germany’s biggest polluters. He describes the proposal as a long-term “bridge” solution needed until renewable capacity is expanded and prices fall. Otherwise, the government argues, there is a risk that large employers and sometimes systematically important industries will leave the country.

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The idea is “economically unwise,” said Lindner, whose FDP party has supported the German balance-of-budget orthodoxy.

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Read more: https://www.dw.com/en/germany-considers-electricity-price-cap-to-support-industry/a-65531798

I had high hopes for Habeck, green leader admits coal is needed to solve Germany’s energy crisis. I thought, maybe he can finally recognize the color green.

I guess I was wrong.

This latest scheme is economic madness. Renewable energy will not create a continuous drop in energy prices. Even if renewables are theoretically capable of sustaining energy prices, Germany is still too far north. German solar panels barely work in the summer. Preferably in the winter, Germany gets several hours of sunlight a day and the skies are often overcast.

What about wind energy?

If you think wind power is enough, think again. Europe experiences prolonged wind-driven drought in 2021, raising concerns about ‘global stillness’, a global warming reduces wind speed. The wind-driven drought that engulfs Europe in 2021 will recur.

Let’s hope the German leaders come to their senses before they run out of money.