Early in his first term, President Barack Obama held up Germany as a role model for green energy policy and combating global warming. However, following Berlin’s lead on green energy could lead to skyrocketing energy prices, say conservative groups.
“At precisely the moment that Europe comes to a sobering recognition of its failed energy policies, the Obama administration is punch drunk on expensive green energy,” said Benjamin Cole, spokesman for the Institute for Energy Research. “Next month, Obama will return to Berlin for another speech, this time at the Brandenburg Gate. Maybe he’ll look at Berlin this time, and back away from the European-style energy policies that will harm the U.S. just like they have Germany.”
Germany has seen energy prices go through the roof as the result of the government’s green energy subsidies and mandates. On Wednesday, German Chancellor Angela Merkel said that she would rein in Germany’s green subsidies to ease the burden that has been placed on consumers.
“Dealing with the renewable energy reform is the most urgent of the energy topics, in my view,” Merkel said at a conference. German subsidies support the government’s goal to produce 35 percent of the country’s power from renewables by 2020 — and 50 percent by 2030.
German citizens and businesses have become increasingly burdened by the costs of subsidizing more green energy production. Since 1998, taxes and government charges on energy consumption have risen 243 percent in Germany, and now make up more than half of the price of electricity in the country.
The main culprit behind the rising tax burden is the Renewable Energy Levy — a subsidy for green energy production — which cost German households 7.2 billion euros this year alone and cost German industry 6.1 billion this year, according to the German Association of Energy and Water.
“If we don’t get on top of the country’s energy transition to renewables and are not able to rein in energy costs in the process, German industry’s competitiveness stands to suffer,” Ulrich Grillo, who heads the Federation of German Industry, told “Handelsblatt.”
Grillo said that many German firms could start to invest in the U.S. where a boom in natural gas has kept energy prices low. However, the Obama administration has been promoting renewable energy production.
According to the International Energy Agency, low-income households in Germany have been hit the hardest by the price increases, and the group is urging Germany to keep energy prices affordable or else the public will turn against the country’s green revolution.
“Household consumers carry a disproportionate share of the burden,” according to the IEA’s country report on Germany.
“The fact that German electricity prices are among the highest in Europe, despite relatively low wholesale prices, must serve as a warning signal,” said the IEA’s executive director Maria van der Hoeven.
Earlier this year, the German newspaper Bild was critical of a 12 percent increase in the country’s household energy prices after renewable energy tariffs kicked in. Many German industries were exempted from the higher costs imposed by renewable energy.
“I want a renewable energy law amendment in which feed-in tariffs are not given up, that is an incentive to push things forward, but it will be necessary for those who get support for renewable energy to participate more in grid expansion, energy supply, storage and similar things,” Merkel said.
The 2009 stimulus allocated $90 billion for green energy programs, and the Obama administration has issued $34.5 billion in government-backed loan guarantees. President Obama’s 2014 budget proposal would permanently extend tax credits for renewable energy production, energy efficiency and advanced energy manufacturing.
According to the Congressional Budget Office, three-quarters of energy-related tax subsidies go to green energy and energy efficiency measures: $7.3 billion — 45 percent — in energy tax subsidies will go toward renewable energy and another $4.8 billion — 29 percent — will go towards energy efficiency.
“By artificially propping up green companies with other peoples’ money, you’re not only wasting taxpayer money and forcing pricier energy on Americans, you’re creating a system where companies rely more on government handouts than market signals to remain in business,” said Nick Loris, an economist at the conservative Heritage Foundation.
Twenty-nine states and the District of Columbia mandate that a certain percentage of their energy production come from renewable energy sources, which critics argue raises energy prices in those states.
“This is an unsustainable model and we’re already witnessing many industries collapse in Western Europe as a result of their governments pulling back on the subsidies,” Loris added.
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