Germany and the Nuclear Future

Lets start with the bottom line, or what I usually call ‘The Message’

While Germany might temporarily abandon nuclear facilities located in Germany, they will never abandon electricity generated in nuclear reactors – at least as long as German voters prefer a higher to a lower standard of living. Put another way, for every kilowatt of nuclear-based power lost because of temporary nuclear closures that might take place in the largest economy in Europe, another will probably be obtained from somewhere else in Europe, sooner or later.

Notice the two words temporarily and probably in the above paragraph. “Temporarily” means that in the long-run the massive disinformation campaign that Chancellor Merkel and others have launched – or will launch – in order to influence voters in her country, will eventually cease to generate politically acceptable results. As for “probably”, this has to do with some logic that you may or may not have absorbed in the course in Economics 101 that you should have taken, because an increase in electricity/energy imports by Germany will likely bring about a welfare loss in all of Europe, with the catalyst for this misfortune being a general rise in energy prices.

I look forward to the day when Chancellor Merkel provides modest teachers of economics like myself with a description of how her energy ambitions were thwarted by impatient voters, who will eventually reject her absurd intentions to find a replacement for nuclear-based electricity. In such a book I hope that I will also encounter a reference to rogue economists, know-it-all nuclear shills, and busybodies who fail to share her grotesque vision of the optimal strategy for increasing Germany’s “competitive advantage”, and who in addition reject the nuclear (and energy) gospel preached by true believers such as engineering Professor Neven Duic of Zagreb University (Croatia).

Not long ago I was informed by Professor Duic that nuclear was a lost cause, and the energy future was going to be wind, solar thermal (PV), and natural gas. I mention these items because they are evidently high on the wish list of Dr. Merkel and her foot soldiers. Of course, wind and PV have been on energy menus for decades, but even so – globally – they hardly come to  three or four percent of the aggregate energy supply.

Here I want to emphasize that without large subsidies they may never exceed the above percentage, although I am ready to accept that subsidies are justified in order to bring wind and PV up to their equilibrium level, whatever that happens to be. However, while I am unable or unwilling to argue for nuclear subsidies in every country, I am quite willing (and very able) to insist that although the comparatively large nuclear energy output in Sweden was initially subsidized, when the final ‘social’ accounting was made by the few of us who understand this issue, the Swedish reactors did not cost Swedish taxpayers – as a group – a penny. (Some very important observations on  topics relevant to this discussion have been made by Lindvall (2011).)

As for the natural gas that has caught Professor Duic’s fancy, this sounds to me like a ‘bet’ on shale gas, because if the promise of shale gas is not fulfilled – which is definitely possible where Europe is concerned – then German or other European politicians with a genuine recognition of energy needs should closely examine the history of natural gas prices and expectations before sounding off about how natural gas (together with wind and PV) will be able to  keep the energy wolf away from their doors.

I’ll conclude by confessing that there are no questions that I would like to ask Professor Duic, even though he sent me a diagram showing the development of wind, PV natural gas and nuclear that is completely and totally and unambiguously without any scientific value. I might though consider asking Angela Merkel two questions that I intend to ask my students the next time I teach energy economics. (1) Denmark is the promised land of wind energy, and yet wind apparently supplies less than twenty five percent of that country’s electricity. Please explain why it does not supply fifty percent, and tell us where the rest of Denmark’s electricity comes from! (2) The wires between Sweden and Germany carry electricity from Sweden to Germany. If the situation in Germany becomes as wonderful as Frau Merkel and her experts say that it will become when Germany’s reactors have been liquidated, will my electric ‘bill’ (and yours and theirs) be reduced? 

REFERENCES
Banks, Ferdinand E. (2011). Energy and Economic Theory. Singapore, London and New
      New York: World Scientific.
Lindvall, Per (2011). Dyrt experiment ska ge ny energi. Svenska Dagbladet, 7 March.

By. Professor Ferdinand E. Banks, Uppsala University (Sweden)