German Energy Giants Face Tough Future
Energy is a hot topic in Germany today. Germany's giant energy concerns are taking a hard look at their future investments, weighing the costs of building coal-fired plants that may be increasingly taxed down the road while struggling to come up with ways to replace the shortfall that will hit the energy sector when -- and if -- the country's nuclear plants are taken off-line in 2020, as the government has promised.
The issue was pushed into the headlines this week as German energy companies promised a fierce PR and lobbying push directed at the government and public. At issue, in part, are the fees imposed by the government on foreign energy companies trying to compete in the German market. Power producers like Essen's RWE want them kept high, while consumers -- and antitrust officials in Brussels and Berlin -- are mounting pressure on the companies to open the market to competition and drive prices down.
The contrast between complaints by the energy companies and their soaring profits has focused attention on the sector in general. The debate has also sparked a wave of hand-wringing over the long-term future of German energy and how it will be affected by long-term efforts to make the sector greener through climate protection measures and by drawing an end to the nuclear power generation.
The Financial Times Deutschland wants honest answers from the government:
"'The house always wins' is an old saying. It holds true for the German energy market: There will soon be shortages: old power plants are being taken off-line faster than new ones can be built. The economy will suffer, but energy companies will profit -- a tighter market means higher energy prices."
"From this perspective, the decision by (German energy giants) RWE and Steag to freeze construction on two mega-power plants until their profitability can be guaranteed is rational."
"The growing problems with coal-fired power plants act as an indirect advertisement for the continued use of nuclear energy. But they're supposed to be phased out in Germany by 2022. If emissions from coal plants are to be reduced at the same time, that will place the energy supply in danger. The government must finally come up with some answers to the problem -- and until then, the only ones to profit will be the energy companies."
Süddeutsche Zeitung, Munich's center-left daily, takes a contrarian view:
"It's not true that Germany is running out of power. In 2007 -- the year of the reactor breakdowns -- alone, there was enough energy to export even without the contribution of nuclear plants. And just as in the past, new power plants will be built -- 17 huge sites by 2012 alone. Even after that it should still be profitable to build new plants. Indeed, the EU climate protection rules were drafted so they would promote more efficient (and hence more profitable) designs. If energy firms were smart, they would help by building new plants. But if they keep messing around with blackouts, they will risk what they've worked so hard to earn -- the trust of their customers."
And center-right Frankfurter Allgemeine Zeitung writes:
"The German Environment Ministry has calculated the cost for each German household of reducing greenhouse gas emissions by 40 percent by 2020 to be almost €25 per month...While those calculations sound like they're based on solid data, they're not at all. In reality, the cost models of economists are based on lots of variable data, which could be full of hidden surprises. There's no way to know for sure what the real costs will be."
"So will Europe be cleaner, but poorer? Climate protection isn't free, but for Germans it's still pretty cheap. Here it only costs about a half of a percent of GDP, but in other Central and Eastern European countries it could cost up to two or 3 percent of GDP. How expensive it will ultimately be for everyone depends on what happens to oil prices. If they rise, climate protection measures could ultimately get cheaper. It's worth pointing out that the EU (has based its climate protection plans) on an estimated 2020 oil cost of $61 (40 euro) per barrel. If it were to surpass the $100 mark, as it almost has recently, the climate protection costs borne by citizens would drop by one-third.