Altmaier Paper on Renewable (1): No Need for Cost Reduction

Jan 30 2013 Published by under European and German energy law

This post is one in a series I am writing right now discussing German Environment Minister Peter Altmaier’s recent proposals on reform of the Law for Priority for Renewable Energy, which fortunately have zero chance of getting enacted.

In this post, I ask why there is any need to reduce electricity prices in the first place. If there is no such need, that settles the question right there.

In contrast to Peter Altmaier I don’t believe slightly higher electricity prices are a bad thing.

For one, while Germany has been very successful in deploying renewable energy, it has been less so in saving energy. The best method for reducing energy demand (saving energy) is having higher prices. That’s just basic economic common sense.

The most important issue of our time is to barely avoid eradication of all life on our planet from global warming. To achieve that, people need to consume less electricity. Every watthour not used is one watthour less that needs to be generated. As long as there is any fossil fuel generation left in the system, high prices are a good thing, since they lead to less waste and a bigger market for efficiency.

People will switch faster to LED light bulbs if their electricity price is higher.

Both the European emissions trade system and the German ecotax are designed to increase prices, and reduce energy consumption by doing so. That design principle is sound, and reducing energy costs is a bad idea to begin with on a planet threatened by global meltdown.

Prices are ridiculously low in our age in the first place. 1 kWh costs less than thirty cents Euro in Germany, adding the surcharge rise this year to last year’s summer 25 cent average. 300 years ago one would have needed one horse working at full power for about 80 minutes to get that energy. Good luck with trying to get that done on thirty 2013 cents.

As noted before, the cost of solar (the most expensive option historically) in Germany is only a measly  0.14% of GDP. If anything, that amount of spending is far too modest considering the existential threat of global warming. I am sure Peter Altmaier has heard of that global warming problem somewhere. How can he possibly advocate for anything putting a brake on the most important countermeasure?

As noted before, the costs of renewable energy in Germany as a part of household expenses are so small one needs a magnifying glass to see them. They are only at 0.3%.

The interesting thing about that is that my post was based on numbers released by the German Ministry of Environment. It seems Peter Altmaier may want to read that report of his own Ministry. Maybe then he would understand that there is no problem with costs to begin with.

But even if one thinks there is a problem with cost, his proposals for solving it are not helpful. I will discuss these in different posts.

 

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