Thursday 11 October 2012

powerhouse or conundrum

There is political and business consensus that the Energie-Wende, Germany’s planned transition away from nuclear dependency and towards more ecologically sustainable energy sources, will demand sacrifice and see a dearer cost placed on utilities, probably a truer reflection of the impact our accustomed lifestyles have on the environment. The recently passed bundle of regulations championing renewables, das Erneuerbare Energie Gesetz (EEG), is expected to propagate an increase in electricity costs of up to two fold in the coming year, which will of course having ripples through out the marketplace, and not ending with the average 50 € annual increase per household. That does not seem like too great of a price to pay but it may continue to climb by the same percent or higher in the following years, and does not take into account other fuels and knock-on prices.

Consumers are not bearing all the costs associated with the greening of the of the energy sector, but a significant contributing factor to the rate hikes households will see is the subsidizing of energy intensive industrial activities with reduced rates and tax exemptions. In some cases, the breaks have probably overreached their intent, places like golf courses beneficiaries of the same savings as factories, but however one feels about this reserved advantage to manufacturing, the lower rates help keep jobs and production in Germany and keep costs for finished goods competitive. Discounts for businesses means that the public have to pay higher rates to keep on track with targets, but should these cuts go away, there will be a certain threshold beyond which it is more economically sensible to relocate production and/or have domestic consumption and exports suffer by higher end-costs. Perhaps a two-tiered, public and corporate standard for carbon-swaps and emissions controls is not far behind, to ensure reforms are not damaging to important businesses.  Germany’s stewardship and aims are admirable, though in this economic environment, such behaviours do not seem to be courting many imitators, and while consumers aren’t exactly footing the entire bill for corporate influentials, but I do feel that a better equilibrium should be struck between commerce and ecology to keep all sides viable and not dishonour those ambitions by merely propping an artificial and hollow sense of affordability, competitiveness and real, overall progress on protecting the environment.