The German Greens, with its economics minister Bobby Habeck at the forefront, have jettisioned their election promises regarding a clean energy transition and more.
Hauke Benner is a former journalist and decade long activist against climate change.
Translated and edited by BRAVE NEW EUROPE
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In France, 50% of the nuclear power plants are currently shut down, partly for maintenance reasons, partly because the rivers such as the Loire or the Rhone cannot provide enough cooling water, partly because the outdated nuclear reactors have been taken off the grid for months due to cracking and corrosion. France is therefore dependent on increased imports within the European electricity network. Germany has therefore ramped up all its available power plants. These include gas-fired power plants.
Although the Economics Minister from the Green Party, Bobby Habeck, announced in the spring that he would further reduce the use of gas for power generation, the opposite has occurred. Never before have German energy companies used so much gas for power generation as in the months of May and June. In May alone, the scarce and very expensive natural gas was used to generate more than 4000 gigawatt hours (GWh) of electricity in German power plants. These gas quantities could have in themselves filled the half-full gas storage facilities for the winter.
Why did the energy companies such as RWE or Uniper not comply with Habeck’s warnings about this?
There are three reasons for this:
1. the sharp increase in electricity exports, partly because of the shutdown of the French nuclear power plants.
2. because many coal-fired power plants in Germany have been shut down (as a first climate protection measure) and too little coal could be procured from abroad (Russia is no longer the main supplier), coal-fired power generation could not be increased in the short term.
3. The prices on the Leipzig electricity exchange are determined according to the so-called “merit order procedure”, which means that the price is based on the last power plant needed to satisfy the demand for electricity, which is usually one of the most expensive gas-fired power plants. The gas price on the most important European futures exchange for gas in Amsterdam has rocketed from 20-40 € to currently 190 € within one year – and there is no end in sight.
The advantage for the power plant operators, however, is that all the cheaper ones, especially renewables such as wind or photovoltaic, but also the coal-fired power plants, receive this more expensive gas price for their electricity. This is currently providinging the power companies like RWE billions in additional profits. For an electricity price increase of 10 cents per kWh, RWE alone would receive an additional 30 billion euros if all consumers had to pay it immediately.
These billions in profits are called windfall profits in technical jargon; Germany’s green economics minister, Bobby Habeck, populistically calls them “war profits”, which he wanted to tax a few months ago. To date nothing has been done about it.
This is still another in a long list of policy announcements by Habeck’s Ministry of Economics, but is not implementing. In general, the Greens are currently in the process of abandoning all, but really all, of the climate protection projects they promised their voters. Thus, lignite-fired power plants continue to run at full load, LNG gas is being imported on a massive scale, even nuclear power plants are to continue supplying electricity, as the Habeck’s Ministry of Economics claims is necessary “in order to help France” and replace the energy French nuclear power plants are not producing.
When it comes to the super-profits of the energy industry, Great Britain or Italy do not stand idly by. In particular, the recently resigned Prime Minister Draghi, who knows a thing or two about finance, has developed an intelligent model to at least partially cash in on these windfall profits. In Italy, the companies’ sales, which have risen sharply due to the price increases, are taxed at a higher rate, thus circumventing a complicated excess profits tax or a price cap as in Spain.
As a consequence, the electricity companies are thumbing their noses at Minister Habeck. Instead of filling gas storage facilities, they prefer to rake in profits by selling energy to other nations such as France. This is going too far even for other German business factions. A few days ago, the trade association of the steel and metal industry demanded a cap on electricity and gas prices: “The EU Commission has spoken out in favour of limiting the price of electricity produced with natural gas. What is the German government waiting for? Our small and medium-sized members cannot understand why they should take out loans to finance the windfall profits of the electricity industry,” reads a position paper of the association.
Instead, the federal government is subsidising Uniper, the largest gas company facing bankruptcy, with over €10 billion. Energy-intensive industries are also to be helped with €5 billion in government KfW loans. Germany’s Liberal finance minister, Christian Lindner, on the other hand, refuses to support poorer households and low-income earners with an energy subsidy. Instead, he wants to lower income tax next year.
This is typical FDP: Everything for the corporations and the rich; nothing for the real victims of energy price speculation, many of whom do not pay any or very little income tax. They will have to pay an estimated €3,000 more per household for gas and electricity next year.
In terms of economic policy this is a further redistribution in favour of the rich and big corporations. It is also reducing the consume and travel expenditures of normal citizens. Thus the German government is driving the economy even deeper into a recession that they have created.
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