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Germany and the United States are embarking on two drastically different energy policies, and these countries are reaping dramatically different results. In Germany, the government devised a top-down plan called Energiewende, a term meaning “turn” or “revolution,” intended to make Germany the renewable-energy center of the world. The United States has experienced its own energy revolution thanks to hydraulic fracturing, also known as “fracking,” which has transformed our nation into the largest producer of oil and natural gas in the world in spite of, not because of, the federal government.
Both these “revolutions” were supposed to result in growing economies, lower energy prices, and lower carbon-dioxide emissions, but only one has actually achieved these lofty goals. Surprise! It’s not the top-down, big-government policy.
Energiewende was born in the wake of the nuclear accident in Fukushima, where a major earthquake triggered a tsunami measuring over four stories tall, which disabled the power supply and cooling of three reactors. Germany responded by enacting a plan to phase out the use of nuclear and fossil fuel power, heavily subsidizing renewable energy projects. That policy has drastically driven up the cost of electricity and, ironically, increased the nation’s carbon dioxide emissions over the past four years.
Electricity prices have jumped by an average of 60 percent over five years for German companies, and the average German household now pays an extra €260 ($355) a year, largely because of costs associated with renewable energy subsides imposed by the government and passed along to consumers. These rising costs make German companies less competitive with companies in the United States, as the latter benefit from low energy prices thanks to the fracking boom.
How much is fracking saving the average American this year? Quite a bit. The average household in the United States will save approximately $675 dollars in 2015 because gas prices here are approximately $1 per gallon lower than in 2014, according to the Energy Information Administration. Additionally, the Brookings Institution estimates the average American family will save $181 to $432 per person on their natural gas bills, depending on the region where they reside.
Many environmental activists argue the United States should follow Germany’s plan to promote wind and solar to reduce carbon dioxide emissions from power plants, but Germany’s carbon dioxide emissions have actually increased in three out of the past four years because German electricity companies are burning significantly more lignite, the dirtiest form of coal, to make up for the loss of nuclear power generation.
In the United States, by contrast, low natural gas prices caused by fracking have encouraged electricity providers to switch from burning coal to burning natural gas. As a result, the United States has reduced its carbon dioxide emissions more than any other country, and in fact we’re the only nation actually complying with the Kyoto Treaty, which we never even signed.
Some environmental groups in the United States express concerns about potential environmental impacts of fracking, but these fears are unfounded. A landmark five-year study by the U.S. Environmental Protection Agency (EPA) found no evidence of widespread or systemic water contamination from oil and natural gas development using hydraulic fracturing. The report also stated the identified cases where drinking water resources were impacted involved a very small percentage of hydraulically fractured wells.
Energiewende may literally translate to “revolution,” but it is difficult to see exactly what is revolutionary about it. It has led to a switch from cleaner nuclear power to dirtier coal, and has raised energy costs for the German people.
Germany has large deposits of natural gas ripe for fracking. If it is truly seeking an energy revolution, Germany would be far better served by importing the one currently occurring here in the United States.