WSJ: Germany and Spain Move to Curb Green-Energy Supports

This kind of news is definitely NOT what the anti-nuclear people (who are almost all pro-renewable energy) in Japan want to hear. My followers will most likely completely ignore my tweets on this, because to them, Spain and Germany are the role models on how renewable energy should be pushed by the national government - on the small rate payers, to save the earth.

From Wall Street Journal (2/14/2013; emphasis is mine):

Germany and Spain Move to Curb Green-Energy Supports

More than a decade ago, Germany and Spain created similar laws to aggressively promote the adoption of renewable energy. The two countries were again marching in step on Thursday—this time to fix a web of subsidies and compensations they created for green energy that had the unintended effect of driving up household electricity bills.

With Spain in the grips of recession, the government wants to lower consumers' light bills. In Germany, Chancellor Angela Merkel faces an election in September and hopes to win points with voters by putting a stop to rising electricity bills. The independent steps have been welcomed by German consumer groups, but have been slammed by businesses as German and Spanish politicians move to finance cuts for consumers by passing on the costs to companies.

Germany subsidizes producers of renewable energy such as solar and wind power in part by imposing a surcharge on household electricity bills. As the industry has grown, demand for the subsidy increased, driving the surcharge higher. In January, the surcharge, which amounts to about 14% of electricity prices, nearly doubled to 5.28 euro cents per kilowatt hour. Large energy-intensive industries are exempted.

That means ordinary consumers shoulder the lion's share of the costs for what the German government calls its "energy revolution."

Fearing a voter backlash from anger over the lopsided financing of green energy, Ms. Merkel's government on Thursday proposed putting a cap on the green-energy surcharge until the end of 2014 and then restricting any rise in the surcharge after that to no more than 2.5% a year. The government also plans to tighten exemptions, which would force more companies to pay, and achieve a cut in green subsidies of €1.8 billion ($2.42 billion). The plan is a quick fix pending comprehensive reform after the election, government officials said.

The proposal represents a compromise by the parties in Ms. Merkel's center-right coalition between taking small steps before the election and a more time-consuming comprehensive reform of the renewable energy law. The government now hopes to thrash out a bill with Germany's 16 states by the end of March, eliminating a potentially negative issue ahead of the election on September 22.

"We need a fundamental reform of the renewable energy law, but until we get there we don't want to make people wait and that is why there is this price cap on electricity," Economy Minister Philipp Rösler said Thursday after a meeting with representatives of the states.

The Spanish parliament took a similar step on Thursday, passing a law that aims to curb rising household electricity costs by cutting aid to the renewable-energy industry.

Renewable-energy producers "are going to receive less revenue, but these measures are better for consumers" said Energy Minister José Manuel Soria.

Among the changes in the Spanish system, the new law indexes certain subsidies and compensation to an inflation estimate that strips out the effects of energy, food commodities, and tax changes.

Until now, producers have been compensated using a full inflation estimate. The government said the law will cut the costs of the country's electrical system by €600 million to €800 million a year.

Renewable-energy companies said that the government was backing away from previous promises that it would ensure them a reasonable return on their investments.

"Spain's government is trying to smash the renewable-energy sector through legislative modifications," said José Miguel Villarig, chairman of the country´s Association of Renewable-Energy Producers.

Uh... The renewable-energy sector has been created and heavily subsidized by legislative modifications. But never mind that. Investors from the United States, Japan and the United Arab Emirates who have invested in renewable energy in Spain are already preparing to sue the Spanish government.

Tweet

Electricity Use to Fall for the First Time Since 1945

This is not your ordinary recession. The Financial Times article says [emphasis by me]:

"Global electricity consumption will fall this year for the first time since 1945, according to the International Energy Agency.

"The watchdog for developed energy consuming countries will tell energy ministers from the Group of Eight leading economies on Sunday that electricity demand will fall 3.5 per cent in 2009.

"In China, where power use is seen as a more reliable barometer of economic activity than official economic measures, consumption will be more than 2 per cent lower than 2008. Russia will see a fall of almost 10 per cent, while countries in the Organisation for Economic Co-operation and Development will see a fall of almost 5 per cent.

"Three-quarters of the global decline in consumption is accounted for by industrial rather than household demand, reflecting the fall in demand from China’s manufacturing-heavy economy. Consumption in India, by contrast, is expected to increase 1 per cent."

Still, IEA says that G20 nations are not doing enough stimulus spending on renewable energy.

"The agency will also tell ministers that its calculation of the stimulus spending required from G20 nations on renewable energy was inadequate and should rise by a factor of six if greenhouse gas emissions targets set by the United Nations were to be met."

???? This doesn't make any sense to my short-term thinking. This is probably the most severe recession since the 1930s. Governments run huge deficit, tax revenue down everywhere. IEA comes and tells the governments to spend 6-times more stimulus money on renewable energy. Where does the money come from? Thin air?

It's good to remember who IEA is. It was set up as intergovernmental organization for OECD member countries. It is not an outside, disinterested party advising the governments of developed nations, although news media likes to treat it as such. (My suspicious mind would say if the member governments want to promote renewable energy at all cost, IEA will produce recommendations to that extent.)

Don't confuse IEA with IAEA, International Atomic Energy Agency, which is an autonomous, independent entity under its own international treaty.

Tweet