Tuesday, July 27, 2010

Germany’s love hate relationship with nuclear energy

Greens want to close them. Government wants to tax them.

myopiaIn 1998 the German government in a fit of political myopia agreed to a truly dumb plan to close its 17 nuclear reactors which provide about 25% of all the nation’s electricity.

The agreement was presented as a victory for green groups which promised renewable energy source like wind and solar, and energy efficiency, would provide the needed electricity.

Clearly visible to German’s political leadership was the issue of using natural gas from Russia to keep the lights on during long, cold northern European winters.

Bear on power lineIn 2005 former German Chancellor Gerhard Schroder accepted a job as board chairman for a $4.7 billion, 745 mile long Russian-German gas pipeline that he promoted while in office. The energy security issue was brought home to Germany in winter 2009 when Russia cut off gas supplies to the Ukraine over a political dispute.

Since then current German Chancellor Angela Merkel has worked on reversing the decision to close the reactors. Part of the reason for her decision turns out to be the reactors’ status as fully depreciated cash cows. Merkel wants to tax their profits to soften the blow of her government’s austerity budget which involves [E]81 billion in program reductions.

What am I offered for 17 reactors?

On July 13 German wire services reported that the government doesn’t just want to tax the reactors, it wants to get them to pay for the right to stay open with an auction. It turns out the auction could bring in a lot more revenue than a straight forward tax on fuel rods. The government got the idea from auctioning wireless phone licenses in 2000 which raised a reported [E]50 billion.

An auction of nuclear power plant licenses might not bring nearly so much money but its still revenue. According to the author of the proposal, one Manuel Frondel who heads an economic think tank, the auction might raise [E]40 billion. The idea Frondel says is that the utilities are gaining windfalls taxes by being allowed to keep the reactors operating past the original 2020 deadline.

All this is speculative so far and sounds like Merkel’s minister ran the idea up a flagpole to see who would salute. Apparently, not many did so. Bloomberg wire service reported July 21 that Environmental Minister Norbert Roettgen (right) said the idea isn’t on the front burner right now. It could come back if solutions are found to some problems with the auction idea.

A key issue is who might buy the licenses. Russian state-sponsored energy companies might be able to outbid Germany’s private sector investors. This would put Germany back in the arms of the Russian bear. Also, the auctions could be too complicated or easily gamed by speculators. What happens if the Greens raise enough money to buy the licenses and then close the reactors?

Green groups blow a fuse

electronics_fuse_blownGreen groups were understandably upset by the plan which repositions the reactors as too valuable to shut down even leaving aside the issue of energy security. The Green Party told Der Speigel July 26 it will press for judicial action to stop Merkel’s plan to extend the lifetime of the 17 reactors beyond 2020.

Also, Green party leader Claudia Roth told the wire service recent elections in May in the state of North Rhine-Westphalia show Merkel’s coalition is losing political steam. Her political ally Sylvia Loehrmann, deputy premier, told the wire service the Green Party and the Social Democrats will “bitterly oppose” the reactor plan.

In response Environmental Minister Roettgen said nuclear energy was the only alternative open to Germany given the lack of alternatives to meet base load demand and the threat of carbon emissions from new fossil power plants.

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SteveK9 said...

If there is a country on Earth that you would think would have fantastic nuclear reactors, it is Germany. The land of the engineer. Industrial equipment from Germany always looks terrific. What have the Greens wrought. Germany could have superbly designed and built reactors, achieve energy independence and clean air to boot. German policy has pushed exports for decades. They could be gearing up to sell reactors around the world and give the French, Russians, Japanese and Americans(?) a run for their money, but ....

DocForesight said...

What Germany needs is the equivalent of Nuclear LASIK surgery. (Having been a recipient of the procedure, I can attest to its benefits - and I was a 4D on that chart! Freedom.)

And Germany's problem is the radical environmentalists don't care about the quality of the engineering or the energy facts - their religious dogma won't allow it.