Germany needs to stop imposing its failed energy policies on the rest of the EU

By
Pieter Cleppe
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German Chancellor Olaf Scholz (SPD) (Copyright: By Chancellery of the Prime Minister of Poland - https://www.gov.pl/web/premier/premier-morawiecki-po-spotkaniu-z-kanclerz-merkel-solidarnosc-unii-europejskiej-jest-bardzo-wazna, CC BY 3.0 pl, https://commons.wikimedia.org/w/index.php?curid=113072246)

Just hours before midnight on New Year’s Eve, the European Commission sent its long awaited draft delegated act on whether natural gas and nuclear energy projects can be considered “green” investments to EU member states. For its proposed “taxonomy” rules, it states that “it is necessary to recognise that the fossil gas and nuclear energy sectors can contribute to the decarbonisation of the Union’s economy.”

To label natural gas and nuclear energy projects as “green” investments, subject to certain conditions, was met by fury among green groups, who claim that this “counters necessary investments in green energy in Central and Eastern Europe”.

The announcement was not a surprise, however. Already in October, EU Commission President Ursula von der Leyen had said that “the EU needs nuclear power and gas as stable sources of energy while it manages the transition to a low-carbon economy.”

Renewable Energy simply won’t be sufficient

In this regard, it’s important to note that despite years of subsidies, wind and solar energy still only account for less than 10 percent of global energy production – not to be confused with electricity production, which is only a part of the former. There are other renewable energy sources, like biomass. The latter amounts to good old fashioned burning up of wood and many do not consider it to be “renewable”.

This should make clear to anyone that the “transition” to a world where we can do without coal, gas and nuclear may well be far away in the future. Green groups apparently want to bring that ideal scenario, with fully decentralized energy generation, closer by simply banning any other form of energy. It’s puzzling why this stance is been taken seriously, but largely thanks to French President Macron, who’s up for re-election this year, the EU Commission has now conceded not to discriminate nuclear, which emits almost no CO2, unlike natural gas.

France versus Germany

Natural gas is what is being favored by Germany, which is shutting down three more nuclear power plants — almost half of the nuclear capacity the country has left. Amongst many critics is the Washington Post, which slams this decision as a “disaster”, noting:

“Though Germany has invested heavily in renewables, it nevertheless has had to burn massive amounts of coal since 2011 to keep its economy running. Absent nuclear, Germany also depends more on Russian natural gas, a deep geopolitical vulnerability that gives leverage to Russia’s authoritarian government.”

The dangers of greater dependence on Russia are not something the social democratic party of new Chancellor Olaf Scholz will convince. Scholz just stated he wants to seek a “qualified new start” with Russian President Putin, thereby openly going against the EU as well as his green coalition partner.

The new German government is also showing signs of a split in its reaction towards the EU Commission’s new proposals to consider both nuclear and gas investments as environmentally friendly.  Green economy minister Robert Habeck dismissed it as “greenwashing”, whereby his liberal colleague, Finance Minister Christian Lindner welcomed the Commission’s lenient stance on gas, as “Germany realistically needs modern gas-fired power plants as a transitional technology because we are giving up coal and nuclear power.”

The German government’s anti-nuclear stance was backed up by Austria and Luxembourg. Austria’s climate and energy Minister Leonore Gewessler warned that Vienna would consider suing the EU Commission over this – an initiative Germany will not follow, while Luxembourg’s energy minister, Claude Turmes, called the inclusion of nuclear power a “provocation”. 

At the end of the day, however, diplomats think anti-nuclear EU member states do not have the power to veto the taxonomy in the EU Council. Then also the European Parliament will get a say over this, however.

Nuclear still faces discrimination in the context of EU state aid

Somewhat underreported is that despite the Commission’s concessions, its policies are still anti-nuclear when it comes to state aid.

As Michel Gay and Dominique Finon write on Contrepoints, on 21 December 2021, the EU Commission – in particular Competition Commissioner Margrethe Vestager – presented the new regulatory regime covering subsidies for technologies contributing to the energy transition. Here, nuclear power is excluded from the “guidelines on state aid for climate, environmental protection and energy” aimed at achieving Europe’s climate objectives in 2030 and 2050, despite the fact that it emits no CO2. Gas-fired power plants are however included.

The authors note that while the attention was on the taxonomy, “DG Competition was concocting on its own, without any real consultation of governments, the reform of these “guidelines” which until now only covered renewable energies…. Although subtle and technical, there is a big difference between the state aid regime (which applies to climate and energy) and taxonomy. The taxonomy concerns the financing of projects by green funds from banks at reduced rates, whereas the guidelines concern state aid and “contracts for difference” which are particularly relevant to nuclear.

Under the new guidelines, contracts for nuclear power plant construction projects can only be authorised on a case-by-case basis, leading to a cumbersome negotiation processes, longer deadlines and high additional costs.”

They warn:

“The issue of coverage by the state aid regime is much more important than that of being included in the taxonomy because the financing of the construction of nuclear power plants represents a significant part of the initial investment and therefore of the cost price of the electricity produced.”

They conclude that the European Commission hereby “rejects nuclear power from the state aid regime in order to suppress its financing, which amounts to killing it. Surprisingly, this state aid document never justifies the exclusion of nuclear, while it is precise about the justifications for including a wide range of sustainable technologies. Germany is clearly at the helm behind all these inconsistencies” as it “would benefit from this measure when it comes to gas, to compensate for the shortcomings of its energy transition based on capricious wind turbines and solar panels. [Germany] is thus trying to impose its anti-nuclear policy on the other Member States.”

Furthermore, they point out that the new state aid regime is not something EU member states can have a say over, urging France to use its EU Presidency to change EU Commission policy.

In a proper market, subsidies should not be permitted for nuclear energy, but when the EU allows subsidies for specific energy sources, it should not discriminate against nuclear energy, certainly not on the basis of shady criteria.

Micromanaging energy policy should not be the EU’s business

Even if nuclear would come unscathed through the EU regulatory machine, given the stakes for EU member states, it is questionable that these kinds of decisions are being made at the EU level. Germany should realise that it is playing with fire to try to deprive other EU member states from the ability to opt for nuclear power.

This is unrelated to whether to pursue ambitious CO2 reduction programmes at the EU level or not. Even if one supports an ambitious CO2 reduction target at the EU level, this should not mean that the EU level should also dictate how to achieve that target.

Especially Germany, which saw the use of coal increasing as the use of renewable energies remained almost stagnant in recent years, is particularly badly placed to lecture other EU member states on how to secure a stable supply of energy and on reducing CO2 emissions.

If the massive European increase in gas prices – up to an annual 800% increase at one point – will not bring governing greens in Austria and Germany to reason, nothing will. In this regard, it should be mentioned that greater dependence on imported gas is obviously part of the reason for the increased price of it, again a consequence of the EU’s ever greater support for unreliable energy sources that are in need a backup and Angela Merkel’s failed “Energiewende”. Thankfully, gas prices have receded again from their height, thanks to warmer weather but also due to the import of American shale gas, something else greens hate.

Then, ultimately, if a majority in German and Austrian democracies think this is the most optimal way forward in terms of energy, good luck to them. In fact, let’s hope they will prove right, as it would indeed be wonderful to see energy being produced in a decentralized manner, liberated from big government and no longer dependent on authoritarian governments in the Middle East and Eurasia.

Then, as explained, wind and solar still only form a tiny part of the world’s energy mix. The European Commission is putting its hopes on hydrogen, assuming this can serve as some kind of a storage facility for energy generated by wind mills and solar panels – which would then take away the need for a more reliable form of energy, like gas, coal or nuclear. However, this is a bet on an “inefficient” technology, former longtime EU Commission official and ULB Professor Samuele Furfari explains in a book on the subject.

Nuclear renaissance

To scrap nuclear, gas and coal amounts to a massive bet. Some greens have understood that. In Finland, they support nuclear energy. A new nuclear plant has just been activated in the country. Given how the three big stable energy sources are coal, gas and nuclear, any serious attempt to cut down CO2 levels, should therefore include the only one of those three energy sources that is CO2 – neutral: nuclear energy.

Nuclear energy is heavily regulated and suffering from a hostile political climate, given the sway green NGOs have over public opinion. Despite this, a poll has shown that in Belgium, which is also about to shut down its nuclear plants, due to the presence of greens in the government, not less than 85% of the population is opposed to shutting them down already. A new nuclear renaissance seems to be emerging from the bottom up in Europe, with the new Dutch government and French President Macron all announcing the construction of new nuclear plants and the Dutch government extending the life of a nuclear plant which is older than the ones in Belgium.

Time for the European Commission and Germany to take a step back

The European Commission has now folded for French pressure, but this is clearly not something it is happy with, which is evident from its new state aid regime favoring gas and discriminating against nuclear. The Commissioner responsible for the “European green deal”, a set of extreme proposals to deal with climate change, Frans Timmermans, has been railing against nuclear, before conceding to Macron.

More than 15.000 people have now signed a petition urging the renown – but also strongly EU-funded – Dutch University TU Delft not to award an “honorary doctorate” to Timmermans, with some of the alumni that initiated the petition saying they’ll hand back their degree if the University persists with its plan. The petition notes that “Frans Timmermans is an advocate of biomass power plants and he claims that nuclear power is too expensive and that it takes 20 years to build a plant.”

Again, the problem here is not so much that Timmermans is not sufficiently knowledgeable about something as incredibly complex as energy policy or even that his policy ideas are wrong. The problem is that energy policy should not be dictated top-down by Brussels, certainly not given the complexity of the technological and scientific debate which should ultimately drive energy policy.

Behind the scenes, Germany is pushing the EU to counter nuclear, in a desperate bid to save its own “Energiewende”, apparently believing that even more subsidies for renewables and bans on competitive CO2 neutral energy sources like nuclear may help it survive. Germany may have lost on taxonomy, but the battle is still long. It is time for other EU member states to tell the German government that it is all fine for Germany to engage in risky experiments with energy provision, but that it should cease its attempts to impose its failing energy policies on rest of the EU.

The EU policy level should focus on making sure member states allow each other’s energy companies to enter each other’s markets and that they refrain from handing out subsidies or from state involvement in energy companies. In that regard, there is no justification whatsoever for the European Commission to start classifying investments as “green” or not, based on murky assumptions that have now once again proven to be deeply politicized. If only the EU Commission would focus on weeding out protectionism and cronyism from national energy markets, it would have enough work already.  

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