Business

Wake Up Call? EU Countries Realizing Energy Subsidies Are a Drain on the Economy

As a means of addressing its severely struggling economy, Spain eliminated subsidies to the “green” energy industry this year, The Heritage Foundation reported in February.

And now Germany is following suit.

“Germany’s parliament approved record cuts in aid for solar power, aiming to reduce the annual pace of installations by half in the world’s biggest market for the industry,” Bloomberg reports.

“Subsidies will be cut by as much as 29 percent starting April 1, depending on the size of the solar plant, according to the legislation posted on the parliament’s website.”

“The measure passed by 305 votes to 235 on the strength of Chancellor Angela Merkel’s coalition majority,” the report adds.

Of course, as Heritage’s Romina Boccia (a native of Germany) points out, Germany is just about the worst place to experiment with solar energy.

“The country is well known for its gloomy skies,” Boccia writes.

“This past August, I found myself vacationing in my home country under grey and overcast conditions, driving past endless acres of ground-mounted solar panels and thousands of solar-covered roofs that were waiting for a dose of sunshine to create energy.”

“The irony couldn’t be greater that the world’s largest solar power station is in Bavaria, Germany. After all, even the anthem of Germany’s Free State of Bavaria acknowledges that its skies are covered in clouds, ‘[the] sky, white and blue!’”

To put it plainly, to invest heavily in solar power in Germany is about as silly as moving to England to get away from the rain.

Germany to Cut Solar Subsidies | EU Countries Realizing Energy Subsidies Are a Drain on the Economy“Let’s go to Seathwaite to work on our tans!” said no one in the history of ever.

Yet, Germany moved forward at a breakneck pace to subsidize the “green” energy industry – all at the taxpayers’ expense, of course.

“Using the government’s generous subsidies, Germans installed 7.5 gigawatts of photovoltaic capacity last year, more than double what the government had deemed ‘acceptable,’” Bjørn Lomborg writes for Slate. “It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.”

And like every other country that has invested mountains of taxpayer dollars in “green” energy initiatives, Germany is finding out the hard way that government subsidized companies don’t stay in business for very long.

“Even prior to the announcement that subsidies would be cut sharply, Germany’s solar industry was already struggling,” Boccia writes.

“Following its three competitors—Solarhybrid, Solar Millennium, and Solon—who declared bankruptcy in past months, Q-Cells, once the world’s biggest solar cell manufacturer, filed for insolvency today. More bankruptcies are on the horizon, according to a Citigroup analyst,” Boccia adds.

It would appear that the idea of governments picking winners and losers in the markets is a practice doomed from the start.

Why?

“Lavish government subsidies in China, the U.S., and Europe have swamped markets with solar panels, resulting in overcapacity and many solar manufacturers going out of business,” Boccia explains.

“Subsidies and mandates also encourage crony capitalism, as companies lobby lawmakers for favors and handouts. In the end, taxpayers and electricity ratepayers are on the hook to pay for the government’s meddling in energy markets—through increased taxes today or in the future, and through higher energy costs.”

That is to say, if the U.S. is truly concerned with developing alternative sources of energy, the best way to do this would be to remove detrimental government regulations and let the markets grow. Obviously, blindly throwing other people’s money at fledgling projects hasn’t worked out so well.

“Only then will energy sources compete on their own merits, unleashed from government restraint and freed from government intervention,” Boccia concludes.

Comments (51)

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  • dnewton
    Posted on April 5, 2012 at 1:09pm

    If the oil company was not getting subsidies to explore for more oil, it would be a normal response to sit on what you know you have and try to maximize the price of known reserves. Every new oil discovery has the potential for lowering the cost of oil provided all other factors remain static. The subsidies for solar however are quite different in their economic impact because the area that would have to be covered with solar cells or even other high temperature means involving turbines running on exotic working fluids would be so extensive. The compact and concentrated energy density of oil does not compare with the low energy density of solar power. The cost of land to build enough capacity to have solar power on earth is beyond our ability to redistribute the cost without redistribution of the quality of life. Once again the Constitution is in the way. The government would either have to pay for the land to put solar cells, which would be trillions of dollars or it would have to go to the desert and redistribute the power over super cooled conductors to get it up to states like Maine. We are not running out of oil. Oil can be made without dead dinosaurs. Getting cheap oil is a problem because some of the cheapest oil has already been found and is contributing to the overall price of oil. The earth makes oil every day . It seeps into our oceans every day. The pressure temperature and common basic components are available and abundant.

    Report Post »  
  • dnewton
    Posted on April 5, 2012 at 12:44pm

    Oil cost nearly the same in Europe as it does in the US. The difference in the final price is the taxes.

    Report Post »  
  • Apple Bite
    Posted on April 5, 2012 at 10:08am

    Another stake in the Tree Huggers coffin….and hopefully Obama’s Administration too.

    Report Post » Apple Bite  
  • Bukirob
    Posted on April 4, 2012 at 9:13pm

    Liberal Teacher,

    Oil is traded in dollars. That has a major impact on our pricing vs the rest of the world. Secondly, How much oil does Germany produce? By 2020 the US and Canada will produce 25% of the worlds supply of oil making them the single largest producers of oil.

    People fixated on Oil are looking at a VERY short term problem. Excessive DEBT and spending is the USA problem. Fix those issues and our economy will take off like a rocket

    Report Post »  
    • Ruler4You
      Posted on April 5, 2012 at 6:15am

      FTA: “EU Countries Realizing Energy Subsidies Are a Drain on the Economy”

      You see, and all it took was a simple clubbing over the head.

      Right now, the worlds economy “IS” driven by oil. It HAS to be. You’re just not in touch with reality if you believe other wise. Hydrogen would be the next best fuel.

      There “IS” no “alternative” energy that can substitute for oil, right now. It can’t be done. However, augmentation of energy using alternative sources sources can be useful and diminish reliance on oil, in some cases by a considerable amount.

      Fundamental problem: ZERO infrastructure to support such energy or limited range of transmission or unreliable and unpredictable generation of energy become major stumbling blocks to modern society’s demand for power.

      Science, if properly applied can address each of these issues and the rest. But we don’t apply science in a fundamentally cooperative way any longer. Or even in a way that uses scientific method to drive the science itself. We use ideology today. I’ve been in a science based field for over 30 years. I understand what I’m saying.

      We are trying to FORCE a new industry into the main stream before it’s ready for prime time. I suspect because some influential people are interested in becoming wealthy(er) while ignoring the work that needs to be done first. You don’t create an industry and then invent the use for it. That’s stupid. But that‘s what’s being done.

      Ideology can’t create.

      Report Post » Ruler4You  
  • Bukirob
    Posted on April 4, 2012 at 9:05pm

    The problem is that Solar is still a long ways away from being a viable solution for much of the nation. I personally believe that these so called alternative energy solutions at BEST will contribute to the grid but never be a fully sustainable source of energy. Heck, the right way to approach this is for individuals who live in the right parts of the country to get off the grid by becoming energy independent… It takes a whole lot less to generate electricity for a single home than it does a town, city and country….

    Report Post »  
  • wvernon1981
    Posted on April 4, 2012 at 7:17pm

    Full estimated cost of coal based energy externalities borne by residents in the United States:

    9.42 ¢/kWh to 26.89 ¢/kWh

    http://solar.gwu.edu/index_files/Resources_files/epstein_full%20cost%20of%20coal.pdf

    Report Post »  
  • mauijonny
    Posted on April 4, 2012 at 6:47pm

    HI is trying to spend a 5 billion dollar grant to build a steel-on-steel (in HI = rust) rail to nowhere, but you still have to pay about $20K/home (with tax breaks) to get photovoltaics – in a state where photovoltaics work extremely well, but few buy them because the market isn’t allowed to be competitive / affordable. If this guy wanted a serious alt energy plan, he’d “get” that not all places fit into his narrow (and expensive) vision. But, I know, I know, I’m just trying to be logical in a complete & utter illogical political fantasy.

    Report Post » mauijonny  
    • marion
      Posted on April 4, 2012 at 7:57pm

      Not only are they realizing trying to force a product onto people because they aren’t as efficient as existing technology, they finally realize paying to do it is akin to social engineering and will break the bank not because it is new and people need a little help to get started, but that it is so inefficient it isn’t even funny. Why would I spend $20-45K on an electric system that will take 33 to 75 years to pay off?

      Report Post »  
  • agsb2
    Posted on April 4, 2012 at 6:39pm

    Germany learned the hard way that subsiding solar comanies diesn’t work. Well history tell us that that if lessons are ignored, then we repeat the same mistakes. Well The US government wants to repeat the mistake of Germany!

    Report Post »  
  • notreally
    Posted on April 4, 2012 at 4:15pm

    Demcrats/socialists are sick, and they can’t help how they “think”:

    -10/28/10 NBC news: University of California at Davis and Harvard University find “Liberal Gene” as partial answer as to why liberals think the way they do.

    Once they get a failed policy in their “brains” there’s no possibility of reasoning with them.
    -6/2/11 Gallup poll: 71% of democrats favor re-distributing wealth.
    -2/4/10 Gallup poll: 61% of liberals have a positive view of socialism versus 17% among Republicans.

    Report Post »  
  • BlackCrow
    Posted on April 4, 2012 at 4:11pm

    There will come a day when the lemmings will follow the leader off the cliff and those of us left will rebuild. Just never, never, never destroy an old technical manual or history book, they will come in handy when rebuilding.

    Report Post » BlackCrow  
  • progressiveslayer
    Posted on April 4, 2012 at 4:10pm

    Barry has a war on fossil fuels and he doesn’t care what we the America people or anyone else for that matter thinks about it.He believes in the BS of green energy and global warming BS lie,we have to fire the Marxist to have half a chance of saving our republic.We have enough oil here in the U.S to last two hundred years but we won’t exploit that natural resource until we have a change in government.

    Report Post » progressiveslayer  
  • rsanchez1
    Posted on April 4, 2012 at 4:03pm

    Of course, facts like the weather is no deterrent for progressives to force taxpayers to pay for green energy. Neither is the fact that many, many green companies financed by Obama have failed a deterrent for Obama to continue pushing the farce that a green economy will turn the country around.

    Report Post »  
  • HKS
    Posted on April 4, 2012 at 3:55pm

    This green energy is a novelty, not ready for prime time and may never be. It was all a financial rip off to start with but the smart money is out of that game and gone now. So it’s just a bunch of fools thinking they know what there doing and it will totally collapse soon, like the ponzi scheme it is. Energy needs to be left to the market place to decode as it will get done properly there. Another case of Obama lining some buddies pockets to payback his personal debts with your money.

    Report Post » HKS  
  • beffuddled
    Posted on April 4, 2012 at 3:38pm

    You can’t scrape together a billion dollar reelection campaign with food stamp participants alone. It‘s not hard to see who pulls Obama’s strings. By now, even Matt Lauer knows it’s not the American people. Americans,who he has no loyalty to, can only be avoided between election cycles and his golf game.

    Report Post »  
    • AvengerK
      Posted on April 4, 2012 at 3:47pm

      Spain bet the “banko popular” on “green energy” and has suffered for it. It has a 23% unemployment rate…around 50% for youth and has lost 2.2 good jobs for every “green” job it produced many of which are temporary. If they’re expecting pity…they won’t get any from me.

      Report Post »  
    • Bum thrower
      Posted on April 4, 2012 at 4:05pm

      Guess that ‘Hope and Chenge’ didn’t work out. No matter what color it is.

      Report Post »  
  • Mark0331
    Posted on April 4, 2012 at 3:21pm

    Yet Barry will still shill and beg to enforce this type of idiot policy in our Nation. Barry is the type of ‘man’ who ‘pushes’ on the door that needs to be ‘pulled open’….he is a deliberate traitor, as well as his moronic followers. Pathetic.

    Report Post » Mark0331  
    • Gonzo
      Posted on April 4, 2012 at 3:39pm

      It’s worse than just waisting money, he wants to increase subsidies for solar panels and stop “subsidies” for oil. It’s the exact opposite of what a rational human being would do.

      Report Post » Gonzo  
    • neverfinal
      Posted on April 4, 2012 at 3:46pm

      Well, duh….. I can;t believe how stupid the people in charge can think that we are as stupid as they are.
      This whole Green thing is only a way to rob us all blind. They become rich and we become slaves. How great for them.

      Report Post »  
    • Snowleopard {gallery of cat folks}
      Posted on April 4, 2012 at 3:48pm

      @Mark – indeed Kaiser Obama will continue with his plans to destroy this country; daily we see more and more the consuming madness that has its grip on Obama. The man is completely insane and will do all he can to destroy this nation.

      Report Post » Snowleopard {gallery of cat folks}  
    • old white guy
      Posted on April 4, 2012 at 3:52pm

      jeez gonzo you would think the big flush at solyndra would wake these aholes up. too bad their heads are so far up their ideology they can`t see daylight.

      Report Post »  
    • Gonzo
      Posted on April 4, 2012 at 3:55pm

      OWG, they don’t give a damn. They will wreck this country in order to prove a point!

      Report Post » Gonzo  
  • GoodCook
    Posted on April 4, 2012 at 3:11pm

    Well, Well Obama wants us to be mroe like Europe@ Well then scrap this over priced udner producing green energy nonsense. I hear anothe rgreen energy company is going down to the tune of 2 billion of our tax money. Can’t feed your family because of high taxes and prices then get some of those Obama bucks he promised. The Vice President is a gaffe-o-matic and the President the lie-o-matic. He speaks “facts” ex-cathedra yet when checked they are all lies. He’s now turning inside out everytime he speaks to show us the arrogant Chicago thug he really is. Scrap him too in November.

    Report Post »  
  • thegodfather
    Posted on April 4, 2012 at 3:09pm

    The big LIE…exposed more and more each day

    Report Post » thegodfather  
  • TheObamanation
    Posted on April 4, 2012 at 3:04pm

    The time it takes for people to understand the most basic principles is just excruciating … but … I’m still happy they finally get it.

    Report Post » TheObamanation  
    • db321
      Posted on April 4, 2012 at 3:12pm

      I hope your right Obamanation. Some how I don‘t think Al Gore will ever get it and I don’t think America will ever get the $500 Plus Million Obama wasted in Loans to these Solar Energy Companies.

      Report Post » db321  
  • RANGER1965
    Posted on April 4, 2012 at 2:58pm

    It’s always been a question of putting your money where your mouth is. People talk so much crap when there is no personal risk. But ask somebody to put some money down on somthing (skin in the game), “Oh! well er…thats different.”

    These politcians love to talk, and spend YOUR money on flights of fancy. But if they really want winning investments all they need to do is look at the markets. They pick the winners and losers consistently. Precisely BECAUSE they put their money where their mouth is.

    RANGER

    Report Post » RANGER1965  
    • The_Jerk
      Posted on April 4, 2012 at 3:03pm

      Half of our country have no skin in the game. They pay no federal income tax. What fool does not know the outcome?

      Report Post »  
    • jnobfan
      Posted on April 4, 2012 at 3:16pm

      Liberals never think things through. They only consider their good intentions.
      Lets take solar and wind power. Sounds great to everyone except society requires 365 days 24/7 power which is impossible to obtain from solar or wind. That means that if you have a city that requires 100 megawatts of power 24/7 and you even though build a 100 megawatts solar plant you still have to build a gas,coal,oil,nuke 100 megawatt power plant so whats the point?
      Emissions? OK I’ll give you that but is society equipped to pay for 2 power plants instead of one to save on emissions? Answer is no. Someday when battery technology makes a giant leap solar and wind will make sense. Today its a moneytrain for corrupt politicians.

      Report Post »  
  • SilentReader
    Posted on April 4, 2012 at 2:53pm

    Well, well! The German Chancellor showing some common sense for a change. Now if only she’d dismantle the corrupt and Nazi-fascist-founded EU. Then we could make some headway!

    Until the EU and the UN and their NATO enforcer-by-bombing is shut down we’ll just get more of the same from the criminal global manipulators whose agenda is tyranny over all of us!

    Report Post » SilentReader  
    • drbage
      Posted on April 4, 2012 at 2:57pm

      Guess the One and Sec Choo-choo will double down on their crony capitalism paybacks. This administration seems willing to run towards whatever the rest of the world is running away from. because the One knows he can do it better.

      Report Post »  
  • Liberal_Teacher
    Posted on April 4, 2012 at 2:51pm

    These kinds of articles always leave me scratching my head. It’s not as if conservatives would be happy emulating the Germany economy, which is highly regulated and has protections for workers that would be considered extremely excessive in this country. For instance: one year paid maternity AND paternity leave guaranteed by law and your job guaranteed for two more years (unpaid) after that. Nonetheless, the Germany economy is one of the strongest in the world. It turns out there are lots of economic models that are successful.

    Anyway, if we do want to follow Germany, we might well start with oil subsidies, since if we don’t get rid of those, there will be no hope for non-subsidized alternative energy sources because the market won’t be free.

    Report Post »  
  • BOGOTSTOGO
    Posted on April 4, 2012 at 2:47pm

    Duh!!

    Report Post » BOGOTSTOGO  
  • IndyGuy
    Posted on April 4, 2012 at 2:46pm

    Obama already knows this….That‘s EXACTLY why he’s pushing it…

    Report Post » IndyGuy  
  • CatB
    Posted on April 4, 2012 at 2:40pm

    But Obummer is using this very FACT to help take down the country …

    OMG 2012!

    Report Post »  
  • stoptheliesbho
    Posted on April 4, 2012 at 2:38pm

    The US should follow effing suit….

    Report Post » stoptheliesbho  
    • Exrepublisheep
      Posted on April 4, 2012 at 2:41pm

      YES! End oil subsidies NOW!

      Report Post » Exrepublisheep  
    • Anonymous T. Irrelevant
      Posted on April 4, 2012 at 2:51pm

      Ending OIL susidies will only raise gas prices, which in turn, will raise prices on everything else, not to mention that petroleum is used in almost everything from medicine to plastic.
      You greenies don’t seem to realize that the plastic parts to your iPads are made from oil.
      Ending “GREEN” subsidies will have NO effect on our econmy.

      Report Post » Anonymous T. Irrelevant  
    • sWampy
      Posted on April 4, 2012 at 2:52pm

      Yes, let’s stop all exploration, that should really drive up the cost of energy. Why do you liberals hate the poor so much? High price energy is the number one thing that keeps the poor, poor.

      Report Post »  
    • Liberal_Teacher
      Posted on April 4, 2012 at 3:01pm

      Look at it this way: the price of gas in Germany is double what it is here and their economy is still one of the world’s strongest.

      Report Post »  
    • deeberj
      Posted on April 4, 2012 at 3:07pm

      If you want to end tax “subsidies” for big oil, then also end them for nuclear industries, ethanol industries, farmers, green energy crap, everyone who gets a tax break from the largest complany down to the individual. Don‘t use the money to pay for subsidies for other stuff which is what Obama’s newest idea would have done. The bill would have killed several tax breaks taken by the five largest oil companies and use some of the proceeds to extend expiring energy tax provisions, such as tax breaks for renewable energy, electric cars and energy efficient homes.

      Report Post » deeberj  
    • seeker9
      Posted on April 4, 2012 at 3:10pm

      Exrepublisheep
      Subsidies or normal tax deductions that every company gets. Ending deductions would be singling out a specific industry for “punishment”. That is not the purpose of the tax code.

      Report Post » seeker9  
    • Blackhawk1
      Posted on April 4, 2012 at 5:20pm

      Liberal_Teacher

      That has to be one of the biggest LIES I have read from a liberal in awhile. Other than what spews out of Obama’s pie hole daily. Germany’s economy has been in trouble for decades. Have you ever lived there? I have and it is just another 3rd world hole that is about 40 years behind the U.S. culturally. They are still listening to Disco there wearing bell bottoms and leisure suits.

      Report Post » Blackhawk1  
    • Smoovious
      Posted on April 4, 2012 at 11:41pm

      what oil subsidies?

      Report Post » Smoovious  
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