It may be overdone to say that the Obama administration aims to shove America in the direction of European social democracy, but there’s one domain where this is surely true: energy policy. Any number of administration diktats and subsidy schemes, from Solyndra to proposed EPA strangulation of coal, attest to this ambition, but the most significant sign of Euro-envy is Obama’s nomination of Ronald Binz to be chairman of the Federal Energy Regulatory Commission (FERC).
Binz is the former chairman of the Colorado Public Utilities Commission, where he regulated aggressively to suppress conventional hydrocarbon energy in favor of wind and solar power. He threatens to do more of the same at FERC, having gone so far as to assert that natural gas is a “dead end” for the American future, and that “policy and regulation,” rather than market forces, should be the key driver of our energy mix. Binz faced a rocky confirmation hearing last week, centered around some of the usual “gotcha” questions about whether he had been fully honest about the lobbying efforts on behalf of his nomination, and backtracking from his negative comments on gas. But the Senate should be asking more substantive questions about his philosophy, which relies on the usual fog of renewable energy hype and magical thinking about the transformative power of regulation.
Binz’s model is Germany’s aggressive approach to promoting renewable energy over the last two decades, known as Energiewende (“energy revolution”). He has the worst case of German-envy by an American policy maker since Woodrow Wilson read Hegel. (It is tempting to call him “Mercedes Binz,” since he favors exotic and expensive energy.)
The difference between Germany and the United States, Binz says approvingly, is policy, claiming that Germany leads the world on renewable energy, getting about 5 percent of its electricity from solar power, and 10 percent from wind. But this is all fun with eye-glazing numbers, which is how the renewable energy game works. In fact the United States actually produces twice as much total energy from non-hydro renewable sources as Germany. (Non-hydro renewables are wind, solar, biomass, and geothermal.) The lower total percentage share of renewables in the United States owes to our higher use of liquid fuels for transportation since we’re a more spread out country than Germany. BP’s 2013 Statistical Review of World Energy places Germany’s renewable energy production at 8.3 percent of its total energy consumption; for the United States the figure is 2.3 percent. However, if you add in our considerable hydropower production, our total renewable share rises to 5.2 percent, while in Germany, with few dams, hydropower brings their renewable total to only 9.9 percent.
Overall, Germany barely beats the United States in terms of using less hydrocarbon energy (coal, oil, and natural gas), which is the object of Binz’s sought-after policy exertions. BP’s figures show that the United States derived 86.5 percent of its total energy from hydrocarbons in 2012, while the figure for Germany was 82.9 percent. In other words, Binz and others in the Deutschland über alles chorus are touting the fact that Germany’s total energy mix is just 3.6 percentage points “cleaner” than that of the United States. And if you really want to rain on the renewable rally, note that coal consumption went up 3.9 percent in Germany last year, while coal consumption fell 11.9 percent here, owing chiefly to the availability of the cheap natural gas that Binz wants to put on a course of ultimate extinction. Likewise, German greenhouse gas emissions—the chief object of Energiewende—rose in Germany last year, while they fell in the United States.
The irony is that the environmentally correct enthusiasm for Germany among American greens coincides with second thoughts in Germany (and elsewhere in Europe) about the renewables fetish. German energy costs have almost doubled over the last four years. Germany has had to pay enormous subsidies for meager results, and the subterfuges by which the costs are spread and disguised are becoming harder to maintain.
By one estimate, German consumers have already spent $100 billion in renewable energy surcharges, and the cost is still rising fast. This year the renewable electricity surcharge may top $26 billion. The Breakthrough Institute in California, which conducts some of the best energy analysis from within the environmental camp, estimates that the German tab for solar power will reach $130 billion by the year 2030. (Germany’s irrational decision to phase out nuclear power deepens its challenge. Breakthrough calculates that Finland’s massively overbudget new nuclear power plant will still be four times more cost-effective than all of Germany’s solar power.)