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Merkel's nuclear exit

by DoDo Wed Jun 1st, 2011 at 07:49:04 AM EST

Under the impression of three post-Fukushima regional elections that saw losses for their parties and big gains for the Greens, and undaunted by protests from all of Merkel's fellow G8 leaders, German chancellor Angela Merkel's federal government is moving ahead with its phaseout of the phaseout of the phaseout of nuclear power: over the weekend, after tough negotiations, the leaders of the CDU, CSU and FDP parties reached a framework agreement about shutting down all 17 reactors in Germany by 2022.

The devil is in the details, however. The terms of the nuclear phaseout themselves seem to include a number of back doors allowing for yet another 180-degree-turn in the future. As for replacement capacity, it is unclear what exactly the government wants beyond new power lines, though early signs are that instead of supporting accelerated expansion of renewables, they want to allow existing energy giants to expand coal and gas generating capacity. At the same time, whatever the government intends to do, lately the prospects of coal power aren't all that rosy.

frontpaged



The framework agreement

First the politics. This is an agreement of the governing parties only. Of those, previously,

  • the Chancellor herself sought to maintain an impression of impartiality (and sought to avoid the impression of opportunistic political manoeuvring) by setting up a so-called 'ethics commission' made up of experts, who delivered a report advocating a nuclear phaseout by 2021;
  • the Bavarian CSU already completed its 180-degree-turn and adopted a plan with 2022 as the date of exit;
  • in Merkel's CDU, the voices for phaseout won overhand with the argument of election losses, but the old nuclear advocates, especially state PMs who criticised Merkel openly before the talks, sought to delay matters by questioning every detail;
  • however, it was the FDP under its new leader who took up the mantle of the last pro-nuclear hero, and tried to prevent the setting of a specific date.

In the end, they agreed these key points:
  • the seven oldest units and one more problematic reactor (that is the ones shut down after Fukushima) are phased out immediately;
  • six more reactors will last up until 2021;
  • in 2018, progress shall be checked, and the three most modern reactors may run until 2022;
  • the fuel rod tax introduced alongside last year's (now dumped) 12-year extension of plant lifespans remains.

The dates seem essentially identical with those according to the Schröder government's original nuclear phaseout schedule, so SPD and Greens will supposedly have it difficult to refuse agreement. Then Merkel could pretend to have achieved consensus, although the opposition wasn't asked.


Back doors

In their first reactions, SPD and Greens focus on the detail that not all plants will be dismantled. Even one of the eight plants 'phased out' now, supposedly for safety reasons, shall be maintained as 'cold reserve' for winter shortages until 2013. In practice, that should probably mean a plant status similar to maintenance shutdowns.

The federal parliamentary faction co-leader of the Greens, former Schröder government environment minister Jürgen Trittin, focused his criticism on another back door: the liberal rules on electricity generation credits. These were introduced by the original nuclear phaseout: plant owners were allowed to run plants until specific amounts of electricity are generated, and they could ask for a shift of small amounts between different plants. Now it seems practically all the electricity generation credits of shut-down plants can be shifted to those continuing running. So, potentially, the government plan could mean the status quo until 2021.

I think further: incidentally, 2021 is an election year – so a right-wing government returning in 2017 or 2021 after a defeat in 2013 would have the opportunity to execute another phaseout of the phaseout once Fukushima recedes from public memory.


Replacement capacity

The governing parties didn't detail how they imagine the replacement of nuclear power capacity, beyond vague references to renewables. Back when they extended nuclear plant lifespans, the rhetoric was that nuclear is necessary until renewables are ready – except they kept erecting roadblocks to the expansion of renewables (more later). Now, on one hand, the fact that the agreement included no change to renewables penetration targets has its message, too; on the other hand, the 'ethics commission' made its calculation with all the fossil fuel plants planned or proposed by the energy giants. Since new coal plants would need to operate 25 to 40 years to bring back the investment, of course, this scenario would fix the energy mix well beyond 2022.

Coal can count on key players in the SPD, too. You may remember how the federal environment minister in Merkel's first, Grand Coalition government advocated and approved lots of new coal power plants as something necessary until renewables are ready, a trend that foundered only in the wake of local protests and legal challenges aiming to enforce requirements that made the projects unprofitable (see Where is my coal renaissance?). That minister, Sigmar Gabriel, is now SPD chairman, and already a few weeks ago, he was back to the same argument: he spoke of coal as "bridge technology", borrowing the term the CDU invented for nuclear. This weekend, Hannelore Kraft, PM of Northrhine-Westphalia state, used a more veiled argument: she warned that an improperly prepared nuclear phaseout could lead to more expensive electricity which in turn could force energy-intensive industries (she is thinking of smelters in her state for example) to move abroad.

These low-key moves were countered further left. Also from the SPD's left wing: for example, the SPD boss in Hessen state called for the share of coal to be cut below 10% by 2030. Greenpeace thinks nuclear phaseout by 2015 and a coal phaseout by 2040 is feasible. As for the Greens, already last year, they had a plan including a fossil fuel phaseout on the electricity market by 2030. In the present debate, the first I noticed was Green MEP Daniel Cohn-Bendit in a taz interview two weeks ago, who emphasized that an energy sector shift is only credible if the replacement capacity is renewables, and climate protection should not be forgotten. On Monday morning, it was federal Greens co-chairman Claudia Roth who repeated the same arguments, and said: "It cannot be that the devil nuclear is exorcised with the Beelzebub coal".


Unintended lack of success

Yet another handy German word without precise English equivalent is Zweckoptimismus. Literally, it is "optimism with/for a goal". "Calculated optimism" is close but not quite as strong. Sometimes it is translated as "wishful thinking", except the latter is understood as self-deception, while the German is meant as something designed to bring about the desired outcome by creating a positive buzz. That's what the previous attempt at a coal renaissance was about, and we have it now, too.

Take, for example, the Deutsche Welle article Coal's future suddenly looks brighter in Germany, which is based in its entirety on the claims of a lobbyist. In spite of the title, the lobbyist is in truth listing a string of problems and challenges for coal, and asking for state help.

For a start, there is the price of the fuel. Germany's well-known coal subsidies are subsidies for domestically mined hard coal, which are phased out until 2018 under an EU agreement. Back when coal subsidy lobbyists fought their last-ditch battle, once the argument of securing jobs (there aren't that many miners any more) and industry faltered, one semi-environmentalist argument was added: the end of German hard coal mining is not the end of German hard coal burning power plants, just a switch to cheaper imports, originating from even dirtier mines abroad and transported thousands of miles with coal dust and sludge spewing, fossil fuel burning ships. However, China's hunger for coal changed that situation:

A few years ago, Wodopia said, imported coal in the harbors of Amsterdam, Rotterdam and Antwerp cost 40 euros per ton. "Now we pay over 100 per ton," he added. "A lot has happened."

...Coal imports, he said, will not always be available at reasonable prices. Australia won't always be able to supply the massive amounts of coal it currently exports.

"There are no more countries like Indonesia, which a short while ago was a kind of insider tip and has since emerged as a major player on the world market," Wodopia said. While some new deposits have been found in Africa, the political situation in some countries there has made exploitation difficult.

He estimated that in the next 10 years, prices for imported coal could rise dramatically.

While Mr. Wodopia the coal lobbyist interprets the above, with calculated optimism, as an argument for the future viability of subsidy-free coal mining in Germany, it also means that coal-fired power generation gets a lot more expensive. Meanwhile, the previous attempt at a coal renaissance showed that regulation makes plants more expensive, too. And there comes the pleading – hidden behind nice words about higher efficiency plants:

Technological developments in the area of coal-fired electricity generation have made efficiency rates of 46 percent possible. Plans for the next generation of power plants, with an efficiency rate of over 50 percent, are already on the drawing board. What is missing, according to Wodopia, is political support. In other words, regulations need to be loosened.

(In fact, later on, he also asks for subsidies for a domestic 'model mine' to test new mining methods to be used abroad...)


Unintended success

Over the last five years, photovoltaic solar power experienced an unprecedented boom in Germany, while module prices dropped more than 50%. So right after the 2009 elections, the current Merkel government sought strong reductions in the feed-in rate. I argued earlier that the intent was to choke the market, but due to the bumbling way the rate reductions were brought about, the effect was the opposite: the creation of massive bubbles at the rate change dates (see Turbulent times for solar power for details).

The trend is still the same: prices continue to drop and installations remain strong. So in March 2011, it was agreed to make up to 24% annual rate reductions a permanent feature. (Can you think of any industry that would accept such a challenge?) But for some solar opponents, even that is clearly not enough: last week, an FDP leader called for even stronger rate reductions, now taz reports that a coalition working group is preparing a proposal with up to 34% annual rate reductions.

At any rate, the new solar capacity, combined with sunny late spring days, was also credited with smoothing the supply situation after the shutdown of the oldest nuclear plants. What's more, for a week now, there is a practical simulation of nuclear phaseout: five more plants are down for scheduled maintenance, leaving only four operating.

Display:
Meanwhile, another unthinkable happened: the government is also re-opening the search for a final storage site, explicitly including sites in Southern Germany. (For background, see the section 3 in Nuclear dump (of final storage and German elections).)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon May 30th, 2011 at 03:04:21 PM EST
Some more details are coming out.
  • There shall be an annual review of progress, with a remit explicitly excluding a deceleration of the nuclear phaseout.
  • Off-shore wind: the plan is for 10 wind farms by 2020, and 25 GW capacity by 2030.
  • There is, after all, a specific commitment on new fossil fuel: 10 GW shall be completed by 2013, supposedly to have enough reserve capacity, and it is not specified whether another 10 GW to be added by 2020 is fossil fuel or renewable.
  • Energy efficiency: annual consumption shall drop 10% by 2020, this shall be achieved with more efficient home appliances and more building renovation.
  • The re-launch of the search for a final storage site, is also connected to a recommendation of the 'ethics commission' that it should be possible to easily evacuate the site if a problem is found. This apparetly doesn't apply to the salt mine site of the current Gorleben facility.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 31st, 2011 at 06:32:00 AM EST
[ Parent ]
The fossil fuel commitment may lead the SPD to give its approval for the plan while the Greens seem poised to oppose it – here is Jürgen Trittin's latest interview on the matter:

Jürgen Trittin zum Atomausstieg: "Für Lob gibt es keinen Grund" - taz.deJürgen Trittin on the nuclear phaseout: "There is no reason for praise" - taz.de
taz: Herr Trittin, die Koalition will 2022 aus der Atomenergie endgültig aussteigen. Müssen Sie Schwarz-Gelb loben? taz: Mr. Trittin, the coalition wants to finally get out of nuclear energy in 2022. Do you have to praise Black-Yellow [CDU/CSU+FDP]?
Jürgen Trittin: Dafür gibt es keinen Grund. Die Regierung korrigiert einen Irrtum, den der vor sieben Monaten beschlossenen Laufzeitverlängerung, mit einem weiteren Irrtum. Jürgen Trittin: There is no reason for that. The government fixes an error, that of the reactor lifespan extension adopted seven months ago, with a further error.
Sie verbindet den Ausstieg aus der Atomenergie nicht mit einem forcierten Ausbau der erneuerbaren Energien. Sie plant den zusätzlichen Bau von fossilen Kraftwerken mit einer Leistung von 10 Gigawatt. Kommt es dazu, beschert uns dies 25 Jahre lang einen massiven Konflikt zwischen erneuerbarem Strom und Kohlestrom im Netz, denn so lange werden solche Anlagen abgeschrieben. Damit bremst Schwarz-Gelb den Ausbau der Erneuerbaren aus.It doesn't connect the exit from nuclear energy with an accelerated expansion of renewable energies. It plans the additional construction of fossil fuel power plants with a capacity of 10 gigawatts. If that comes to be, it will give us a massive conflict between renewable electricity and coal power electricity in the network for 25 years, as it will take that long for the inverstment into such plants to be written off. With this, Black-Yellow brakes the expansion of renewables.

As a reminder, the government's (unchanged) target is 35% renewables in 2020. Asked about the chances of the Greens with one of their themes 'solved', he first points to the history of electoral gains even while the original nuclear phaseout was in place, and adds:

...Zweitens prophezeie ich Ihnen, wenn Schwarz-Gelb in diesem Land noch einmal genauso viele Kohlekraftwerke bauen will, wie jetzt in der Fertigstellung sind - und das ist der Plan -, kommt es an jedem Standort zu massiven Auseinandersetzungen mit den Menschen vor Ort....Second, I predict to you, if Black-Yellow wants to build the same number of coal power plants in this country as are currently in construction - and that's the plan - then there will be massive conflict with locals at each of the sites.

Then Trittin is asked about the renewed viability of Black-Green coalitions, which he answers with a sidesweep at the SPD (my emphasis):

Wir wollen die Gesellschaft ökologisch und sozial modernisieren. Mit wem wir das durchsetzen können, mit dem können wir uns vorstellen Regierungen zu bilden. Nur ich bleibe dabei: Wenn ich einen Strich unter alle inhaltlichen Vorstellungen ziehe, dann gibt es immer einer größere Schnittmenge mit der SPD als mit der CDU - obwohl sich zwischen beiden gerade eine große Kohle-Koalition andeutet.We want to modernize society ecologically and socially. We can imagine to form a government with anyone whith whom we can implement that. Only I maintain: on balance after considering all ideas on substance, then there is always a greater intersection with the SPD than with the CDU - although right now, there is an indication of a Grand Coal Coalition between the two.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 31st, 2011 at 06:33:07 AM EST
[ Parent ]
DoDo, your compendium of the situation is very well done, and your bits of comment and analysis are well-thought and right on. Kudos for this diary.

"Life shrinks or expands in proportion to one's courage." - Anaďs Nin
by Crazy Horse on Tue May 31st, 2011 at 10:50:39 AM EST
[ Parent ]
E.on announced that it will sue against the continuation of the fuel rod tax.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 31st, 2011 at 12:16:12 PM EST
[ Parent ]
already "know" what's next:


Europe poised to rely on natural gas

Natural gas is likely to become the energy source of choice after moves by Germany and some other European nations to turn their backs on nuclear power

(...)

Gas is relatively abundant and cleaner than coal - a selling point for a region that has pledged to lead the world in fighting global warming. These considerations have fuelled Brussels' backing for a sprawling new pipeline, known as Nabucco, that would by 2017 link Austria to oceans of gas in Azerbaijan, reducing the bloc's dependence on Russia.

(...)

Poland and other European states are also pushing to use hydraulic fracturing techniques to access shale gas deposits trapped in rock, despite environmental concerns.

Gas accounts for 23 per cent of European Union power generation, compared with 28 per cent for nuclear and 19 per cent for renewable sources of power, such as wind and solar.

And of course:


Cost is a serious concern. Ronan O'Regan, director of energy and utilities at PwC, the professional services firm, estimated that Germany could expect to spend €3bn ($4.3bn) for every 1,000 megawatts of new offshore wind capacity. An equivalent gas-fired plant would cost about €800m.

Because, of course, as we know, the only thing that costs money in power generated in a gas-fired power plant is the power plant...


"The interesting question is whether renewables can take up the slack.

"I think it's going to be pretty challenging in the short term," Mr O'Regan said.

Except that renewables are not asked to take the slack "in the short term" (the plants are to be shot in 2021, no?) and that, as DoDo has noted, renewables have taken up the slack in Germany this year...


Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon May 30th, 2011 at 04:09:06 PM EST
That's a remarkable comment on gas fired plants.

Not beating the best energy comment of the year, but working on it.

So far the clear winner is Moody's with something like: Risks involving nuclear power generation in Japan are higher than was previously believed.

by rootless2 on Mon May 30th, 2011 at 04:17:15 PM EST
[ Parent ]


Austerity can only be implemented in the shadow of a concentration camp.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon May 30th, 2011 at 08:02:03 PM EST
[ Parent ]
European Tribune - Merkel's nuclear exit

I think further: incidentally, 2021 is an election year - so a right-wing government returning in 2017 or 2021 after a defeat in 2013 would have the opportunity to execute another phaseout of the phaseout once Fukushima recedes from public memory.

The 1980 swedish referendum on nuclear power ended with a majority for gradual nuclear exit and a minority for immidiate nuclear exit. The ýear 2010 was generally understood as the final year for the gradual exit. Well, that did not happen.

So I think the plan is to take offline the most dangerous plants and then wait until the mood changes.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Mon May 30th, 2011 at 04:23:23 PM EST
There is 8000 MW of nuclear capacity in the north-German nuclear cluster (Brokdorf, Brunsbüttel, Emsland, Grohnde, Unterweser and Krümmel). There is a great deamnd for greater interconnection between the continent and the hydropower of Scandinavia to make possible greater utilization of wind power down south. The southernmost of these plants (Grohnde) is located about 750 km from the Swedish nuclear power plant Oskarshamn. The distance between the big hydro plants of northern Sweden and Stockholm is a somewhat longer than 750 km. Building five new reactors with a total output of 8000 MW in Oskarshamn would cost roughly 25 billion euros. The Swedish national debt is about 30 % of GDP. The cumulative budget surplus during the next three years is supposed to be somewhere around 35 billion euros.

Just sayin'...

Oh, and the distance to the French border is about half of this.


Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon May 30th, 2011 at 04:45:37 PM EST
[ Parent ]
Is 25 billion the cost of the full life-cycle, or "just" construction? I am thinking decommission costs. That cost for GW is not that much...
by cagatacos on Tue May 31st, 2011 at 01:26:33 AM EST
[ Parent ]
25 billion euros is only construction costs (counted as baseline costs plus 50% cost overrun), which however dominate the nuclear cost mass. In Sweden decomissioning is financed by a tax on nuclear energy, 0.1-0.2 eurocents per kWh, which are put in a segregated fund which finances decomissioning in its entirety: scrapping the plants, storing the fuel until the deep repository is completed, building the deep repository, and developing the technology needed for all this.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue May 31st, 2011 at 08:22:17 AM EST
[ Parent ]
I wrote:

...in March 2011, it was agreed to make up to 24% annual rate reductions a permanent feature... a coalition working group is preparing a proposal with up to 34% annual rate reductions.

For those interested in policy, I detail what the "up to" is about.

The original feed-in law system in Germany had three key points: a guarantee of purchase for 20 years for each installation, a rate for the purchase for that entire period fixed in the year of installation, and an annual degression of the rate for new installations.

For photovoltaic solar cells, a fourth element was added from 2009, in the very first modification in reaction to the unplanned fast growth and price drops: the annual degression rate was made a function of prior year new installations, increasing in steps of 1 percentage point at specified limits.

Actual new installations well exceeded the highest limits set for the 2009, 2010 and 2011 degressions, and (as told in the diary) the one-off degressions in 2010 backfired. So they played with the new installations dependency instead:

  • the base degression rate is now 9%, for an 'ideal' annual new installation rate around 3 GW;
  • at 3.5 GW, 4.5 GW, 5.5 GW, 6.5 GW and 7.5 GW built in the 12 months up to September the previous year, the rate increases in steps of 3% (hence there is a 24% degression above 7.5 GW);
  • at 2.5 GW, 2 GW and 1.5 GW,  the rate decreases in steps of 2.5% (hence there is a 1.5% degression only below 1.5 GW).

What the coalition working group now wants is an increase of the steps at 3.5 GW to 7.5 GW from 3 to 5 percentage points.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 31st, 2011 at 01:48:15 PM EST
as opposed to what they committed in France, which I am unable to detail because nobody understands it... basically a fixed quota that may be installed in a given year, first in first served, with larger installations needing to tender for the tariff.

It's a shame nobody on the commission that revised the tariff regime read German, or had access to translators or anything.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Jun 1st, 2011 at 10:21:41 AM EST
[ Parent ]

Merkel Faces Grids to Unplug German Nuclear

Chancellor Angela Merkel must carry out a 10 billion-euro ($14.4 billion) expansion of Germany's electricity-delivery network or her decision to exit nuclear power can stunt growth in Europe's largest economy.

Cables are needed to connect new offshore wind farms in the north to the factory-rich south and high-volume lines to France are necessary for imports to cover a shortfall as Germany phases out reactors that provide 23 percent of demand. A grid upgrade is essential, and Germans must end their opposition to new power lines overhead, energy economics professor Christoph Weber said.

"The grids are the Achilles heel and greatest challenge of the energy policy," University of Duisburg Essen's Weber said in an interview. "The government will have to overcome significant problems on the ground to get the lines built."



Wind power
by Jerome a Paris (etg@eurotrib.com) on Wed Jun 1st, 2011 at 04:39:47 AM EST

PwC: Planning biggest threat to Europe's renewables revolution
European renewable energy capacity grew 30 per cent last year, but byzantine planning rules now threaten to derail expansion drive

Europe's renewable energy capacity grew 30 per cent last year, but its recent successes are in danger of stalling unless the roadblock presented by byzantine and outdated planning rules is removed.

That is the stark conclusion of a major new report released today by PwC, the Potsdam Institute for Climate Impact Research and the International Institute for Applied System Analysis. The report singles out the continent's complex infrastructure planning and permits regime as the biggest single threat to the fast-expanding renewable sector in Europe and North Africa.

The report, Moving towards 100 per cent renewable electricity in Europe and North Africa, follows a study by the same group last year which concluded that it was technically feasible for the region to generate all of its electricity from renewable sources by 2050.

The latest research reiterates that it is possible for a super grid to balance electricity supply and demand using only renewable sources, such as offshore wind farms in the North Sea, solar parks in the Mediterranean and North Africa, and stored hydroelectric facilities in Scandinavia.

But it warns that this scenario will not be realised without urgent and wide-ranging reforms to infrastructure planning regulations across Europe.



Wind power
by Jerome a Paris (etg@eurotrib.com) on Wed Jun 1st, 2011 at 04:41:12 AM EST
[ Parent ]
Strategic infrastructure?

How quaint and unserious.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 1st, 2011 at 05:27:28 AM EST
[ Parent ]

Nuclear Phaseout Could Spell Disaster for German Energy Giants

With the government's decision to phase out nuclear energy, Germany's four biggest utility companies face an uncertain future. Profits could tumble this year by as much as 30 percent and the companies are also becoming increasingly vulnerable to takeovers. Are the days of giant energy companies numbered in Germany?



Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 02:03:21 PM EST
More like wishful thinking, I believe. Haven't The Very Serious People been telling us since forever that the giant (quasi-public) German energy companies Can't Possibly Work?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 2nd, 2011 at 03:45:40 PM EST
[ Parent ]
Well, since the only companies which could possibly buy them are the French (semi-State-owned and nuclear-happy) ones, I'm not sure what they are worried about most...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 04:57:25 PM EST
[ Parent ]

Germany's nuclear U-turn may well empower France

Ms Merkel's move is surprising for several reasons. First, there seems little logical explanation for such a sudden about-turn except for populist politics. Second, it is obvious that there has been no reflection on what this all means for Germany's longer-term prospects. It is easy to announce a doubling of renewable energy and claim that this will put you at the forefront of the green revolution. But in practice, getting there will be expensive, fraught with risk and highly uncertain.

Experts generally concur that this great drive towards renewables will push up costs for business given that renewables are not yet using mainstream technology. Consumers too are bound to see sharp increases in their energy bills as Germany is forced to import ever more electricity from its French neighbour while it waits for its green revolution to take hold. Already in April alone, Germany imported 43 per cent more electricity from France at an additional cost of about €60m ($86.6m), according to French officials.

Let me see if I get this right (and not even commenting on the underlying facts): nuclear power is cheaper, but importing nuclear power from France has increased the bill for Germany? That's... strange.

And let's see:

  • Germany never had a big debate about ending nuclear power (oh, wait, it was the country's policy until the conservatives reversed it just a few months ago),

  • they haven't been ramping up renewables on a large scale (oh, wait, close to 50% of the system capacity - if not quite yet production - is from renewables, up from very little only 15 years ago)

  • they haven't chosen a clear path towards renewable energy (oh wait, the new Energiekonzept actually happened before Fukushima!)

  • renewables are definitely not mainstream (oh wait, Europe has been installing more wind than gas-fired capacity almost every years of the past 5, and solar is following, and Germany is the undisputed leader for both)

  • renewables are horribly expensive, as all serious people know (oh, wait, thanks to the merit-order effect, wind actually brings prices down!)

Grrrrr


Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 05:56:10 PM EST
oh, and, evil, evil Germans:


Germany will not simply end up importing nuclear-generated electricity from its neighbours. It will also have to import much more gas (presumably from Russia, making it even more dependent on Moscow), coal and oil. Inevitably this will push up prices for everyone else. Thus Germany's unilateral decision could impact the competitiveness of not only German industry but of Europe as a whole already under pressure from an overvalued currency, at least against the US dollar.

We have a euro currency crisis, but the problem is that the euro is too strong!

We have a 20-year liberalisation drive which has made our utilities invest almost exclusively (unless pushed by nasty greeny governments) in gas-fired power plants, but the problem is now that nuclear plant closures make us buy more gas.

We have Germany taking decisions unilaterally when I remember distincly that making energy a EU-level policy was violently resisted by ... tadam ... France!

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 2nd, 2011 at 06:05:23 PM EST
[ Parent ]
Of course the fact that Germany will have (perhaps) to import more fuel in ten years has not much to do with the current economy. The reactors shut down are old, small, off the net for months and years anyway, All, newer, bigger , important nuclear plants will operate for a decade at least.

Whatever; as things stand, nobody cares much for the opinion of the rest of the world in Germany now, at least regarding energy.

by IM on Fri Jun 3rd, 2011 at 05:14:50 AM EST
[ Parent ]
nobody cares much for the opinion of the rest of the world in Germany now
Ain't that the truth?
Frédéric Lemaitre warns of a German Sonderweg

Writing in Le Monde the paper's Berlin correspondent Frédéric Lemaitre warns of a German Sonderweg (exceptionalism) for which he cites three examples: The country's decision to abandon nuclear energy by 2022, the German stance on the euro rescue programs and the security policy such as Libya or the decision to massively reduce the number of German troops without having consulted with its neighbours. Lemaitre complains Germany engages into those unilateral decisions which have obvious consequences for many and sometimes all other EU countries without even realizing those consequences.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 05:25:53 AM EST
[ Parent ]
I should have known better then to feed your addiction.

On the merits, ending nuclear power is different. The other positions mentioned have a lot of support around the world. (Doesn't mean they are correct)  

by IM on Fri Jun 3rd, 2011 at 05:39:25 AM EST
[ Parent ]
Easy on the ad-hominems, Mensch.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 05:46:38 AM EST
[ Parent ]
Exasperation, nothing more.
by IM on Fri Jun 3rd, 2011 at 06:24:52 AM EST
[ Parent ]
Yes, I find 16-month-long slow-motion trainwrecks exasperating.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 06:41:22 AM EST
[ Parent ]
And what does that have to do with the subject of my diary?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Jun 3rd, 2011 at 05:00:25 PM EST
[ Parent ]
I guess I should't get my news from that self-hating German, Münchau.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 05:48:11 AM EST
[ Parent ]
And that has to what exactly with energy policy?

Furthermore the geram stance in the euro crisis, right or wrong, is shard by the other core countries. So it can hardly be a sonderweg.

And stop bringing nationality into everything, that is ad hominem too.

by IM on Fri Jun 3rd, 2011 at 06:21:28 AM EST
[ Parent ]
And please don't use me as a stand in for others, e. g. Merkel, Weber or Stark. I never said anything about self-hating and wuold prefer you only engage my actual words.
by IM on Fri Jun 3rd, 2011 at 06:35:58 AM EST
[ Parent ]
"The German position" on the creditor bailout does not enjoy widespread support. Germany is unique in the insistence and vehemence of their IMF-style conditionalities.

Everybody else I've seen voice an opinion is either of the opinion that the creditors should go whistle for their money, or that the creditors should be bailed out as smoothly as possible. German insistence on conditionalities even the IMF can tell are impossible to meet (and would be insane even if they were possible) is Unhelpful in the latter regard. So is the German deference to Bild Zeitung on matters of foreign policy.

And then, of course, there's the people who actually understand basic national accounting, who insist that the only viable solutions are to either force the ECB to monetise the debt, default and force the ECB to monetise all new debt going forward, or impose export controls. But we are Unserious.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 05:57:36 AM EST
[ Parent ]
You mean outside the Netherlands or Finland or France or Austria?
by IM on Fri Jun 3rd, 2011 at 06:23:03 AM EST
[ Parent ]
I must no admit to be confused as to what are exactly the positions of "Germany," the ECB and the IMF.

What you seem to hear most on the debate are the (often needlessly provocative) outbursts of semi-dissidents within official entities or the (usually unhelpful) meta-commentary of various officials.

What entities do, what they official say, and what they unofficially think seem to be 3 different things - which you need to multiply by the number of parties involved.

Result = confusion and thus the ever-worsening perception of crisis by outsiders.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Jun 3rd, 2011 at 07:21:28 AM EST
[ Parent ]
Germany is unique in the insistence and vehemence of their IMF-style conditionalities.

Eh? If only that would be the case. But, from Juncker's privatise-national-heritage call to Bini Smagi's utterances, too many seem to sing the same or similar songs.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Fri Jun 3rd, 2011 at 04:58:31 PM EST
[ Parent ]
German deference to Bild Zeitung on matters of foreign policy

Eh²? Bild is reliably Atlanticist.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat Jun 4th, 2011 at 04:41:11 AM EST
[ Parent ]
Ignoring the confirmation bias and the Atlanticist whining usually behind the Libya thing, it's interesting how this is spun even in a center-left paper in pro-nuclear France. Germany isn't simply standing accused of going it alone in the nuclear phaseout, but of offering an example to follow to Switzerland (where a much slower phaseout by 2034 was proposed by the government) and Italy (where a referendum is upcoming on 12-13 June, which the opposition treats as another opportunity to defeat Berlusconi, who first proposed a nuclear revival) – and even France's reluctance to go ahead with a second EPR (no, cost overruns have nothing to do with it). The dependence on Russia thing also comes up, renewables don't.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Jun 4th, 2011 at 04:37:06 AM EST
[ Parent ]

nobody cares much for the opinion of the rest of the world in Germany now, at least regarding energy.

And rightly so. Most of what Germany hears is the "Serious" position that renewables can never take up a meaningful chunk of generation, that dealing with Gazprom is short-sighted and that closing down nukes is backward and ayatollahesque, when

  1. large scale renewables are already a reality today, and plans towards their extension are well under way;

  2. Germany (like France and Italy - no conflict between these countries on this) has been dealing with Gazprom for 40-odd years and they know how to do this. The 3 countries have needed to import close to 100% of their gas all along, so import dependency is not something new or scary like it seems to be for the UK

  3. Germany has been debating its exit from nuclear for more than a few years, so it's not like this is new. The fundamentally different approach of France and Germany on nukes is precisely one of the reasons why there is no EU-wide policy on energy, so Germany going its route there is not exactly an unexpected snub of its euro partners (and on this topic, it's not even like Germany is isolated in Europe, with Italy and others having also suspended plans to go back to nuclear)


Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 3rd, 2011 at 07:16:22 AM EST
[ Parent ]
We have a euro currency crisis, but the problem is that the euro is too strong!

Yes, that is why there is a euro crisis. Currency too strong => deflation => depression.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 05:35:22 AM EST
[ Parent ]
You are obsessed too.

More energy imports should if anything weaken the euro. That is the obvious contradiction in FT article Jerome pointed out.

by IM on Fri Jun 3rd, 2011 at 05:42:23 AM EST
[ Parent ]
If a working understanding of elementary Keynesian currency policy qualifies as "obsession," then I'm guilty as charged.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 05:44:10 AM EST
[ Parent ]
Nuclear power in Germany has nothing to do with Keynesianism. And your thesis that more imports of energy will let the value of a currency rise is quite original and has nothing to do with Keynesian currency policy, basic or otherwise.
by IM on Fri Jun 3rd, 2011 at 06:17:26 AM EST
[ Parent ]
But that is not the contention. I was objecting to Jerome's complaint that a currency cannot simultaneously be in crisis and overvalued. My retort is that a currency can only be in crisis when it is overvalued.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 06:38:27 AM EST
[ Parent ]
Fine. But the Reichsmark between 1920 and 1923 was undervalued and in crisis.

An extreme example (hyperinflation not that common), but that is apossible crisis too.

by IM on Fri Jun 3rd, 2011 at 06:50:16 AM EST
[ Parent ]
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 06:58:57 AM EST
[ Parent ]
  1. Hyperinflation can only occur in a currency collapse.

  2. Whether the Reichsmark was undervalued or not is a philosophical question - there was no exchange rate at which Weimar Germany could have achieved structurally balanced current accounts, given the Versailles reparations.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 07:03:07 AM EST
[ Parent ]
That is neither here nor there. The reparations, I mean. The war debt alone would have made inflation tempting.

And you need a "currency collapse" for a hyperinflation is a bit tautological; a currency collapse is surely a currency crisis.

And there are other hyperinflation examples, so it is a possibility to get a currency crisis without overvaluation.

by IM on Fri Jun 3rd, 2011 at 09:26:43 AM EST
[ Parent ]
You're confusing inflation with hyperinflation.

The war debts could be inflated away with mild inflation and that wouldn't have caused runaway inflation.

War reparations was external debt denominated in foreign currency. You cannot pay that by inflating, and attempting to do so can lead to runaway inflation.

Hyperinflation crises always have to do with trying to inflate to pay debts that cannot be inflated away, be it because they debt is itself inflation-indexed (a relatively recent but dangerous development) or because it is denominated in foreign currency.

In the 1980s there were at least two Eastern European countries which had currency crises as a result of too much foreign debt. Romania went the route of imposing a depression domestically in order to pay the debt, Yugoslavia went the hyperinflation route.

Debt in your own currency can never cause hyperinflation.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 09:39:17 AM EST
[ Parent ]
Migeru:
Hyperinflation crises always have to do with trying to inflate to pay debts that cannot be inflated away, be it because they debt is itself inflation-indexed (a relatively recent but dangerous development) or because it is denominated in foreign currency.

Hm, does the French revolution inflation and the US revolution inflation fit this pattern? My assumption would be that the weakness of the states caused it, and rightfully so as fiat money backed by a defeated state in general becomes worthless.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Sun Jun 5th, 2011 at 01:14:53 PM EST
[ Parent ]
A very readable summary of how hyperinflation can come about is contained in Can Central Banks Go Broke? by Willem Buiter. On page 8, there's
even if the resources needed to recapitalise the central bank are less than the maximum amount that can be appropriated through seigniorage (given by the peak of the seigniorage Laffer curve at A in Figure 1), the extraction of these resources may involve an unacceptably high rate of inflation.
Up to here we're talking about politically unacceptable inflation, but still inflation.
Worse than that, even the maximum amount of real resources the central bank can extract though seigniorage may not be enough to close the central bank insolvency gap. This could happen if the central bank had a large stock of foreign-currency denominated or indexlinked liabilities. In that case, without a capital injection from outside the central bank, the central bank cannot meet its funding needs from its own resources. The result would be hyperinflation and/or central bank insolvency.
Weimar experienced hyperinflation because it had unsustainable debt reparations to pay in foreign currencies (or in gold, which under a gold standard regime amounts to the same thing). Domestic debt can always be paid through seigniorage, albeit at a possibly politically unacceptable rate of inflation falling short of hyperinflation.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 09:47:55 AM EST
[ Parent ]
the EU is in crisis, not the euro. At the end of the day, the euro will still be there... EU institutions, we don't really know.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 3rd, 2011 at 07:02:22 AM EST
[ Parent ]
"But the currency was sound" will be the EU's epitaph.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 07:15:59 AM EST
[ Parent ]
Well, with a little IMF/central bank help, it can be in crisis even when it is no (more) overvalued: by choking the economy with expensive credits and cash-strapped consumers after an initial devaluation. (This was the standard route to high inflation in former East Bloc countries.)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Jun 3rd, 2011 at 05:06:33 PM EST
[ Parent ]
Jerome:
We have a euro currency crisis, but the problem is that the euro is too strong!
Presumably you find a contradiction there? Let Krugman clear it out for you: The Strength of a Failing Euro (Wonkish)
So what about the European periphery? Well, those are economies in big trouble -- but they also offer very high interest rates. And more to the point, the relevant arbitrage in the foreign exchange market is between bunds and Treasuries; if the euro zone does splinter, the question is what the value of the remaining core will be, and it's presumably quite high.

The only situation in which you would expect the troubles of Greece et al to mean a weak euro would be if you expected the ECB to help resolve the problems by pursuing an inflationary policy. There's actually a pretty good case for doing that -- but the Germans would never allow it.

So the euro is strong even as the euro system, the euro as a project, turns into a train wreck.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 06:45:14 AM EST
[ Parent ]
debate.

I think this is not a "euro" crisis, but a political crisis about how much solidarity and commonality there should be between the "core" and the "periphery." The core is currently strongly tempted to go it alone and put the responsibility of the breakup on the periphery.

There will be transfers from the core to the periphery, whether it's organised cleanly or whether it's triggered by a serious depression in the periphery which drags down the core.

I don't think we disagree too much on this.

I think we only disagree on what the focus for the solution should be - ie how the transfers should take place - via the monetary framework and policies or the broader political deal on what the EU is about.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Jun 3rd, 2011 at 07:01:08 AM EST
[ Parent ]
The two are complementary.

At the risk of sounding like a broken record, if you do not remove the threat of punitive policy rates against defaulting €-zone economies, you will have a better than even chance of not having a European Union to implement fiscal policy in by this time next decade.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 3rd, 2011 at 07:06:14 AM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 3rd, 2011 at 07:17:25 AM EST
[ Parent ]
Meanwhile, Trichet proposes an EU finance minister without a budget whose only role would be to IMF member states. Some European construction, that.

Incidentally, I think we should start calling this "ECB riots" and "to ECB a country". Smearing the IMF is getting old.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 07:22:40 AM EST
[ Parent ]
The cause of the current crisis is the macroeconomic nonsense that makes up the Euro institutional framework and fills the heads of the EU economic policy apparatus. That's a crisis of the Euro, the "asymmetrical shock" that was predicted by its critics in the 1990s.

The EU's political crisis makes it impossible for the EU to deal with

  1. the immigration crisis stemming from the Arab revolutions - EU solution: scrap Schengen
  2. the E.Coli crisis - EU solution: import bans and nationalistic chest thumping about produce quality
  3. the Euro crisis - EU solution: let's cause IMF riots in the periphery.

The fact that the Euro trades at a high exchange value doesn't make the Eurozone healthy.

So there may not be a Euro crisis, but there is a Eurozone crisis.

And an EU crisis.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 07:20:36 AM EST
[ Parent ]
There may be a strong Euro, but there isn't a strong Europe.

Member states are acting as if membership is an inconvenience rather than obligation - and in the case of Ireland and Greece, that's certainly not untrue.

There is no political crisis because there is no politics.

There's a currency, and there's a parliament, and there's a constitution, and there's an impressively large number of apparatchiks and commissioners. But there's no plan, no strategy, no momentum, and no leadership - and that has left a power vacuum which has left the lunatic wankers running the ECB the de facto European sovereigns.

The irony here is that the main British criticism of Europe - that's it fundamentally undemocratic - has turned out to be correct.

Of course the UK isn't any more democratic itself. But it's become obvious that in its current form the EU is now a project by bankers, industrialists, and billionaire investors, for same.

The only way ordinary people can influence it is it by turning up in tens or hundreds of thousands, shouting, and setting fire to things.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jun 3rd, 2011 at 07:57:06 AM EST
[ Parent ]
I think we only disagree on what the focus for the solution should be - ie how the transfers should take place - via the monetary framework and policies or the broader political deal on what the EU is about.
The ECB, in concert with the markets, can shoot down any broader political deal through recalcitrant monetary policy.

Hey, when Ireland was claiming they could hold out for 9 months on a cash basis without resorting to the bond markets the ECB threatened to crash their banks, and Ireland folded. They are doing the same with Greece as we speak: "any debt writedowns for private investors and we'll instantly crash the Greek banks by refusing to discount their Greek bond holdings for liquidity".

There is truly no hope whatsoever here, politically.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 08:21:08 AM EST
[ Parent ]
Yesterday, Merkel met the heads of the 16 states of Germany, and gave significant concessions on two issues: simultaneous shutdowns and on-shore wind. Though, neither change is all that promising:
  • Instead of six reactor shutdowns in 2021 and three more in 2022, reportedly, there will be one each every two years from 2015 onwards, three in 2021, and again three in 2022. That's still six shutdowns in as short as 3 months.
  • A criticism I didn't mention in the diary was the focus on off-shore wind only, while another coalition working group preparing a revision of the feed-in law was advocating more roadblocks to on-shore. Now there is a vague promise to balance off-shore and on-shore development.

There was no positive change on the coal front, but nor was one expected from the regional PMs. The media seems to 'agree' that it will be more difficult for the Greens to vote against the 'consensus'.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Jun 4th, 2011 at 04:11:32 AM EST


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