President Obama, Please “Cede Wind and Solar” to Germany and China

Back in March, 2012 President
Barack Obama declared in a speech on “American-Made
Energy” at the Ohio State University that …

…I am not going to cede the wind and solar and advanced
battery industries to countries like China and Germany that are
making those investments. I want those technologies developed and
manufactured here in Ohio, here in the Midwest, here in America. By
American workers. That’s the future we want.

That’s not the future we want, as the recent turmoil over
Germany’s failed solar and wind policies clearly shows any
dispassionate non-ideological observer. The Frankfurter
Allgemeine Zeitung newspaper is reporting a new study by
Germany’s government-appointed Expert Commission on Research and
Innovation that finds Germany’s aggressive renewable fuels policy
under its Renewable Energy Resources Act (EEG) is near complete
failure. The commission concludes that the renewable fuels subsidy
programs under the EEG neither protects the climate nor spurs
innovation and therefore should be entirely abolished.

The Britain-based Global Warming Policy Foundation
summarizes the newspaper report:

The expert commission lists a number of reasons for their
radical advice: There is the spiraling cost of 22 billion euros in
green energy subsidies last year; there is also the over-estimated
impact of climate change and especially the threat posed by the
promotion “very low technology-specific innovation impact in
Germany ” . The technology argument in particular plays an
important role in the political debate. […]

The EEG stipulates the subsidies for the sale of electricity
from renewable energy sources. This enlarges the market for
renewable technologies. The result is that the subsidies
incentivise companies to exploit market potential rather than
invest in research and development. Due to the rapid expansion of
old technologies, accompanied by cost reductions, barriers to entry
for new technologies could also emerge. The conclusion of the
expert committee is devastating:  ”The EEG can not be
justified in its current form, not least from the perspective of
innovation policy.”

“For both reasons, therefore, there is no justification for the
continuation of the EEG ,” concludes the report which will be
presented to German Chancellor Angela Merkel on Wednesday.

The result of Germany’s drive to make energy more expensive is
that companies are fleeing Europe to make investments elsewhere. As
the
Financial Times reports:

BASF, the world’s biggest chemical maker by sales, will make the
most of its capital investments outside Europe for the first time,
as it responds to the continent’s higher energy costs and growing
demand in North America and emerging markets such as China….

“In Europe we have the most expensive energy and we are not
prepared to exploit the energy resources we have, such as shale
gas. We have relatively high wage costs and we have a stagnating
market,” said Kurt Bock, BASF chief executive. 

Mr Bock has been a prominent critic of German and European Union
climate and
energy policies, arguing these are ineffective, raise costs for
industry and cause job losses.

President Obama, please cede failed subsidy and industrial
policies to Europe. Steeply rising energy prices and further
deindustrialization is not the future you should want.