Merkel Chides Trump on Climate and Energy, but Germany Will Benefit from His Policies

Published August 23, 2017

German Chancellor Angela Merkel used her closing speech at the recent G-20 summit as a pulpit to chide President Donald Trump for his decision to withdraw from the Paris climate accord. However, Merkel chastising Trump on energy and environmental policy is rather ironic, because the German people will benefit far more from Trump’s focus on facilitating U.S. energy production and boosting exports than from Merkel’s climate policies, which have done little to reduce Germany’s dependence on fossil fuels, drastically increased residential electricity prices for German households, and failed to achieve any meaningful reductions in carbon-dioxide emissions.

Germany has a reputation for being a green-energy superpower, but in many respects, this claim is exaggerated. It is true Germany generated approximately 29 percent of its electricity from renewables in 2016, but wind and solar made up a very small proportion of the total energy consumed.

In 2016, 34 percent of all the energy used in Germany came from oil, 23.6 percent from coal, 22.7 percent from natural gas, 7.3 percent  from biomass, 6.9 percent from nuclear, 2.1 percent from wind power, and 1.2 percent from solar. Waste, geothermal, and hydropower were rounding errors that brought the total to 100 percent.

All told, Germany derived 80.3 percent of its total energy consumption from fossil fuels. This is bad news for a country that is dependent on imports for 97.2 percent the oil, 88 percent of natural gas, and 87 percent of the hard coal it consumes.

The good news for the German people is they stand to benefit tremendously from a U.S. president who encourages domestic energy production and the exporting of American energy resources abroad.

By championing oil, natural gas, and coal production in the United States, lifting regulations imposed by his predecessor, and streamlining the permit process for liquefied natural gas terminals, Trump is taking important steps to ensure these sources of energy remain inexpensive and accessible for the future. Because Germany is so dependent on energy imports, lower prices will be a boon to the German people.

For example, the German people spent  $73.5 billion on imported oil in 2013, when the price of Brent Crude Oil averaged approximately $108 per barrel. Since then, hydraulic fracturing in the United States has resulted in a surge of American crude oil on the market, causing global oil prices to fall to about $47 per barrel. Some back-of-the envelope math suggests Germans might now pay $29.3 billion per year for their oil imports, constituting an average savings of around $1958 (at current exchange rates) for each of Germany’s 37.5 million households.

By contrast, the climate and energy policies enacted by Merkel have caused residential electricity prices in Germany to increase by approximately 47 percent since 2006, which now cost the average German household about $380 more per year. The higher prices are largely due to a tenfold increase in renewable-energy surcharges that guarantee returns for the wind and solar power industries. These surcharges now comprise 22 percent of the residential electric bills paid by German families.

Even though the German people have paid tens of billions of dollars in higher electricity prices, they have little to show for it because there have been zero meaningful decreases in carbon-dioxide emissions. Since 2009, when  because annual CO2 emissions over the past six years have been about the same or higher than emissions in 2009 when Germany began to aggressively pursue renewables.

Meanwhile, the United States has experienced year-over-year reductions in CO2 emissions in 2015 and 2016, and CO2 emissions have fallen 14 percent since 2005, which was mostly made possible by hydraulic fracturing, commonly called “fracking”—a practice banned in Germany under Merkel’s tenure. Fracking has allowed the natural gas industry to compete with coal in a way that wasn’t previously possible, lowering costs for everyone.

Merkel may score political points by chiding Trump, who is deeply unpopular among the German people, but German households stand to benefit far more from his policies that promote American energy production and exports than from the expensive and ineffective policies enacted by Merkel.

[Originally Published at the Wall Street Journal]