Angela Merkel Green Square

Angela Merkel’s green legacy

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AN EARTHQUAKE on 11 March 2011 caused a tsunami to hit the northeast coast of Japan. 18,500 people are believed to have died following the natural disaster.

Japan’s Fukushima Daiichi nuclear power plant was hit by a 46ft wave of water which caused three nuclear meltdowns. It was the greatest nuclear disaster since Chernobyl in 1986. Yet, just as fears over the results of Chernobyl were and still are hugely exaggerated (only 100 deaths  and no known birth defects have been attributable to radiation there) so, too, have the fears over Fukushima proved false.

After ten years the UN Scientific Committee on the Effects of Atomic Radiation (Unscear) has reported that ‘no adverse health effects among Fukushima residents have been documented that could be directly attributed to radiation exposure.’ It added that any future consequences for health ‘are unlikely to be discernible.’ Finally, it found ‘no credible evidence of excess congenital anomalies, stillbirths, preterm deliveries or low birthweights related to radiation exposure.’

Just three days later, however, on 14 March, with little more than television reports to go on, Angela Merkel, the German Chancellor, announced a three-month moratorium on nuclear power in Germany and the closure of all its nuclear plants by 2022. A commission was quickly thrown together supposedly to weigh the options, but by 3 June the decision was confirmed. The turnabout – die Atomenergiewende – was official. Before this Merkel had been planning to extend the operating licenses of German nuclear power stations.

The decision only made sense on a political level. It won the approval of three quarters of the population at a time when there were huge antinuclear demonstrations and provincial elections were due. In 2014 Merkel duly had a huge success in the federal election winning 42 per cent of the vote and almost 50 per cent of seats (only five short of an overall majority), although almost immediately after the turnaround the Greens had managed to elect their first minister-president of a federal state, Baden-Wurttemberg, when, on 12 May 2011, the now extremely conservative former Maoist, Winfried Kretschmann, became state premier. Nonetheless, in the words of one wit, Merkel had shown a flexibility not seen since the King of Prussia in 1848.

On the other hand, like her spur of the moment decision in 2015 to allow 1.2 million Muslim migrants to enter Germany, the decision was not rational and no other state on the face of the earth gave any thought to copying it.

In the words of Dominic Lawson who wrote a typically excellent article on Fukushima and Chernobyl in the Sunday Times recently: “few in Germany pointed out that none of its own nuclear power stations lay on one of the planet’s biggest geological faults or was at risk from a tsunami.”

German economists, however, could see the dire implications of her decision with regard to energy costs. One of her fiercest critics was Professor Justus Haucap, founder and head of the Institute for Competition Economics at the University of Düsseldorf and between 2008 and 2012 head of Germany’s Monopoly Commission. In 2017 he contributed a chapter to an excellent book of revisionist essays on Merkel (‘Merkel   Eine Kritische Bilanz’, edited by FAZ journalist, Philip Plickert). It was entitled ‘Germany’s Expensive False Path in Energy Policy—Dangerously Rising Electricity Costs with No Effect on Climate Change’. He also referred to the turnaround as a ‘Sonderweg’ – a controversial term in Germany, alluding to a unique but peculiar path of development. He could not understand Merkel’s thinking: “Why Merkel, who as a physicist and intelligent person” did not see the failings in the policy as it developed, he wrote, “is one of the greatest puzzles.”

His criticisms focused on the enormous costs of expanding renewables, expanding the grid, meeting expanding demand, finding  offshore sequestration sites and much else. Moreover, only one third of these costs would be borne by households, leaving two thirds to be borne by industry, commerce and agriculture, all of whom would pass their costs on to consumers. Merkel promised in 2011 that energy costs would not rise above 3.5 cents per kilowatthour but by 2013 this was already nonsense since costs had already almost doubled.

Another criticism was that energy policy was planned by government with little or no role for the market or for competition, while finally there was the baleful role of European Energy Policy to consider. If Germany reduced greenhouse gas emissions, other states could increase theirs. Critics, however, were not listened to and instead of reform there was ‘bungling and tinkering’. Companies were starting to stop investing in Germany and investing elsewhere. Energy taxes were 50 per cent higher in the Federal Republic than elsewhere in Europe.

In 2020 the International Energy Association did a review of the situation in Germany. Coal is to be phased out by 2038 but at present it still supplies a quarter of Germany’s energy needs. And the coal used is lignite which is especially polluting and must cause thousands of deaths each year. Meanwhile Germany is missing its targets for reducing greenhouse gas emissions. By 2018 these had been reduced by 31 per cent, far off its 40 per cent target for 2020. There is a good chance, if better results are not recorded soon, that Germany could lose its S&P AAA rating and fall to AA-.

Wind has replaced nuclear and natural gas since 2017 as the country’s second source of electricity generation but most wind capacity is located in North Germany and most demand comes from the South and West. Northern states therefore have power surpluses, Southern one’s power deficits. But connections to carry electricity from North to South are insufficient and public opposition to high voltage transmission lines has slowed down construction of these considerably and forced the construction of costlier underground connections. Public opinion remains an impediment to the siting of necessary infrastructure and delays to grid expansion have created significant congestion management costs.

German household electricity prices meanwhile are the highest in Europe. According to Eurostat figures for January 2021, for all households including taxes and levies in cents per kWh the figures were Germany 30, Denmark 28, the UK, Spain and Italy all 22, and France 19. The margin for industrial costs was presumably much higher.

Another aspect of energy policy considered by the 2020 Report was ‘energy security’.  Some 93 per cent of natural gas in Germany is imported, overwhelmingly from Russia. Phasing out of both nuclear and coal will increase demand for natural gas – including as a back-up source for renewables. The Report states: ’The security of national gas supply is a top concern for the government.’ And, it adds,  increasing use of natural gas in electricity generation – especially to meet peak electricity demand – will also increasingly tie electricity security to gas supply.

Could this concern for security lie behind that other peculiar German policy associated with Merkel, her determination, despite the opposition of America and much of Europe, to complete the building of Nord Stream Two, a second gas pipeline directly between Germany and Russia?

This seems unlikely since Ukraine’s Brotherhood Pipeline is operating far below capacity and can meet any plausible gas needs. Besides there is no shortage of gas since the USA has become a mega exporter of liquified natural gas extracted cheaply from shale by fracking and LNG can go anywhere. In the words of Ambrose Evans-Pritchard of the Telegraph, “it trades like crude and has destroyed Russian pricing power in Europe” and, as he points out, after Lithuania opened its ‘Independence’ LNG terminal, Gasprom cut its prices by 23 per cent.

It is quite clear why Russia wants to complete the pipeline. It enables Russia to circumvent the Ukrainian pipeline, destroy its main source of revenue and thus give Russia strategic leverage. It also damages Poland by diverting flows from its Yamal pipeline. Hence in Eastern Europe Nord Stream Two is known as ‘the Molotov-Ribbentrop’ pipeline. Since it also increases German dependency on Russia, Trump abominated it and threatened to put sanctions on Western companies working to complete it. Biden threatens the same and has sent a senior emissary to Berlin to make his views clear.  There are now five big companies liable to be shut out of world money markets if they continue work on the pipeline.

So why is Berlin so determined to have the pipeline?

Its relationship with Russia, despite toothless sanctions over Navalny and cybercrime, is a very curious one. And a rather cosy one. For a start, Germany is basically a pacifist country. Always a land of extremes, it has swung from being extremely nationalist and militarist to being extremely ‘post-nationalist’ (European) and pacifist. It contributes only 1.2 per cent of GDP to NATO, its armed forces are an embarrassment in terms of equipment and efficacy, its citizens tell pollsters they will not fight for Poland, Ukraine or the Baltic States while their politicians tell them they will not need to. They also tell pollsters that they feel as close to China as America and that Israel is the greatest threat to world peace. They are therefore no threat to Putin.

Russia meanwhile does economic deals with Berlin. In 2018, for example, a leaked EU report revealed that Gasprom was selling gas to Germany at €200 per 1,000 cubic metres while Poland was being forced to pay €350. Needless to say, the EU Competition Commissioner covered this up.

Ever since Brandt’s celebrated Ostpolitik, the SPD has had close links with Moscow. Indeed, the last SPD Chancellor, Gerard Schroeder, took up the post of chief executive of Gasprom on leaving office. And the latest German President, Frank-Walter Steinmeier says that Germany should complete the pipeline from a ‘moral imperative’ to compensate for Nazi crimes in the Soviet Union during the Second World War. Yet the Ukrainians suffered probably even more at the hands of the Nazis than the Russians.  This is the same Steinmeier who previously as SPD German Foreign Secretary under Merkel, according to the Financial Times, secretly offered to establish a Greater Eurasian Co-Prosperity Sphere with Russia.

But what of the CDU? Does Putin have information that gives him some kind of hold over Merkel from her East German days? Who knows? It may just be a German mindset. Or the influence of businesses with growing investments in Russia. The present leader of the CDU and possibly its next Chancellor, the very dull Armin Laschet, is also a Putin apologist who justified Russia’s annexation of the Crimea and backed her over the Skripal poisonings. He claims that there are 1,200 companies in his home state of North Rhein Westphalia which have dealings with Russia.

It seems however that Biden is serious in ending the Nord Stream Two project. Ted Cruz in the Senate is threatening to block his nominees there until it has been killed off. So transatlantic relations at present, given Merkel’s rush to complete a China-EU investment deal before Biden took office, are rather cold.

The situation could resolve itself ironically in another manner. Thanks to Merkel’s loss of control over the vaccine programme and the third wave of Covid in Germany, her party is doing badly in the polls and is split over which man, Laschet or Soder (the leader of the CSU, the CDU’s Bavarian sister party) should be its candidate for Chancellor. Only 3 per cent of Germans think Laschet would make a good Chancellor while Soder gets 36 per cent.

Meanwhile at 23 per cent the Greens are only four points behind the CDU in the polls and have nominated their female leader, the 40-year-old Annalena Baerbock, as their candidate for Chancellor. Moreover, the German Greens have now matured into a serious, mainstream party with policies more aligned to their Western allies. They also have distinct economic policies. They would end the ‘fiscal break’ that mandates at least a balanced budget for Germany and would probably look more favourably on European Fiscal Union. In the present context, however, they are opposed to Nord Stream Two and would put an end to it. (They are also more critical of China and less business friendly.)

So despite her politically opportunistic Atomenergiewende of 2011, Merkel’s green legacy may end up being precisely the opposite of the sort she tried to avoid – the  advent to power of a party that could put an end to key elements of her policy and consolidate the decline of her party which started with that other of her unfathomable spur of the moment decisions in 2015. Although she is often described as a politician who symbolises stable, moderate leadership, she will probably be remembered for the two key moments when stability and continuity were abandoned by her almost as if on a whim.

Truly bizarre.

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