A maverick Germany suffers from a double whammy of energy shortages and external trends. Is that a bad choice?

Energy crisis, willing to burn coal why to retreat

The German government has been seeking to phase out nuclear power since the early 2000s under pressure from anti-nuclear protests following the Three Mile Island nuclear disaster, the Ukrainian Chernobyl Nuclear Power Plant Accident and the Japanese Fukushima nuclear accident, and starting in 2011 to accelerate this process. After 62 years of operation of German nuclear reactors, Germany achieved nuclear de-nuclearization.

Claudia Kemfert, head of the department of Energy, Transport and the environment at the German Economic Research Institute, said that only 5 percent of Germany's electricity currently comes from nuclear power, which can be easily replaced without the risk of blackouts.

However, some officials in the German government were reluctant to close the plant on December 31,2022, as originally planned, because of a surge in energy prices caused by the Russia-ukraine conflict last year. So Scholtz, the German chancellor, gave in and agreed to an extension, with a 2023 date of April 15th.

Still, that option has been met with a lot of skepticism because Germany has yet to get its coal back. Last June, the German government passed an emergency law to reopen mothballed coal-fired power plants to generate power, temporarily restoring 10 more gigawatts of idle coal-fired power plants for two years. That would increase Germany's use of coal for power generation by a third.

German List of Ministers-President of Bavaria Markus Sode called the shutdown “A mistake”. “While many in the world are even expanding nuclear power, the Germans are doing the opposite,” Sode said, “We need all possible forms of energy. Otherwise, we risk higher electricity prices and companies moving away.”

Prof. Dr. Pittle Pittel, Director of the Center for Energy, climate and resources at the Ifo Institute for Economic Research, told financial reporters that high energy prices will inevitably hurt the competitiveness of German industry. Some companies may pass on higher energy prices to their customers, but others find it hard to do so.

However, in the German coalition“Traffic Light” government, the Social Democratic Party, the Green Party, the Liberal Democratic Party agreed to insist on nuclear withdrawal. “The risk of nuclear power is ultimately out of control,” explains Steffi Loemker, environment minister from the Green Party. “The elimination of nuclear power will make Germany safer and avoid more nuclear waste.”

Leah Stokes, a professor of climate and energy policy at the University of California, Santa Barbara, says the big risk is that fossil fuels fill the gap left by nuclear power. According to a study published in 2022, Germany's decline in nuclear power since Fukushima has been largely replaced by an increase in coal power.

。Veronika Grimm, a German economist and member of the German Council of Economic Experts, agreed that keeping the plant running for longer would give more time for “Widespread electrification”, especially as growth in renewable energy remains subdued. 

“Give the neighbors some flexibility.”

Although Loemker said “The German government's position is clear that nuclear power is not green”, at the EU level it has given in to the use of nuclear power.

At the end of March, the European Council and the European Parliament finally agreed on new targets for renewable energy. Among other things, it agreed to designate“Low-carbon hydrogen” produced from nuclear power as renewable hydrogen for industrial use.

Earlier, some member states, led by France, pushed for nuclear power to be included in industrial goals. Last year, at least two-thirds of France's electricity came from nuclear power plants, and it plans to build at least six new reactors by 2035. But countries such as Germany and Austria oppose the inclusion of nuclear power, saying it would undermine efforts to expand solar, wind and other renewable energy sources. In the end, Germany compromised.

The French Energy Transition Minister, Agn ès Pannier-Runacher, said the compromise was an acknowledgement that Europe was developing renewable energy to eliminate fossil fuels, which should not lead to the replacement of nuclear reactors.

Jo Ël Ruet, head of the French bridge think-tank and a member of the G20 Energy Working Group, told financial journalists that he expected such compromises to happen more and more within the EU.

“The EU has long had a common norm that there must be a common product within a single market and that assumes a common demand, but that doesn't have to be real and we have to have a common, unanimous consensus. In other words, it has a veto on these energy issues. We are very much aware that there are special circumstances in the 27 member states, each of which is different. So when we get into a process that requires flexibility, if you expect your neighbor to give you some flexibility, you have to give your neighbor some flexibility to have a negotiation process,” he said.

Chou said that while the EU's negotiating process may seem chaotic, controversial and dramatic, in the end, the EU will get a result. “In the early days of EU Regulation and negotiations, we compromised and most member states were not happy. Now, while the result is not a consensus, it is at least an adult approach, and most are happy. That's meaningful collective action,” he said.