by Robert Maynard
Every once in a while, despite the effort of climate change activists, government officials actually make a policy recommendation that makes economic sense. In this case, it is German Government advisers recommending an end to subsidies for renewable energy. Here is a summary of the full story from the Global Warming Policy Foundation:
German Chancellor Angela Merkel won’t like to hear this advice from her advisers: While her government is working hard to reform renewable energy laws, a commission of experts appointed by the Bundestag is recommending to completely abolish the Renewable Energy Sources Act (EEG).
In its annual report, the the Expert Commission on Research and Innovation concludes that the Green Energy Law is neither a cost-effective tool for climate protection nor does it have any measurable impact on innovation. “For both reasons, therefore, there is no justification for the continuation of the EEG ,” concludes the report which will be presented to the Chancellor on Wednesday .
The expert commission lists a number of reasons for their radical advice: There is the spiraling cost of 22 billion euros in green energy subsidies last year; there is also the over-estimated impact of climate change and especially the threat posed by the promotion “very low technology-specific innovation impact in Germany ” . The technology argument in particular plays an important role in the political debate. […]
The EEG stipulates the subsidies for the sale of electricity from renewable energy sources. This enlarges the market for renewable technologies. The result is that the subsidies incentivise companies to exploit market potential rather than invest in research and development. Due to the rapid expansion of old technologies, accompanied by cost reductions, barriers to entry for new technologies could also emerge. The conclusion of the expert committee is devastating: ”The EEG can not be justified in its current form, not least from the perspective of innovation policy.”
The Commission also state that the promotion of renewable energy does not contribute to climate protection since the EU’s carbon dioxide emissions for energy-intensive industries are capped by the emissions trading scheme. Consequently, the EEG-triggered expansion of renewable energy for electricity supply in Europe would not avoid any additional CO2 emissions, but only shift them. “The Renewables Energy Sources Act does not produce any additional climate protection but it makes it much more expensive.”