No Minister

Archive for the ‘Germany’ Category

Learning from other’s mistakes

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I’m not talking about Labour and certainly not the NZ Greens. They’re committed to a path of insanity when it comes to renewable energy, as they are most other things in our society.

No, I’m looking at National and ACT. I understand that polling shows that Jacinda still has quite a grip on the female vote in this country, and that polling and focus groups show the same cohort as being the determining factor on things like wearing face diapers to ward off the dreaded Chinese Lung Rot – and saving the planet! I also get that this is backed by a wall of almost monolithic MSM propaganda 24/7.

But we surely now have enough examples from “leaders” in renewable energy around the world who have started to run into big problems with both the unreliability of these new power sources and the increase in power costs associated with them, as well as the failure to reduce CO2 emissions, (which is what this was supposed to be all about in the first place) to be able to argue back on the basis of sheer, basic, in-your-face reality and not join the insanity.

Here’s the latest victim of that reality, South Africans left in the dark after grid collapse:

South Africans are struggling in the dark to cope with increased power cuts that have hit households and businesses across the country.

The rolling power cuts have been experienced for years but this week the country’s state-owned power utility Eskom extended them so that some residents and businesses have gone without power for more than 9 hours a day.

Eskom has officially said that the blackouts are not a temporary situation and they estimate that it will take “years” to stabilise the power grid. The unstated assumption is that they can manage this feat at all in the face of the path their government has followed on trying to reduce CO2 emissions by building wind farms and closing some of their old coal-fired plants and not spending money on repairs and maintenance of the others because they anticipated their eventual closure.

Does this sound familiar? It should given that we’ve seen the exact same thing happening in Australia, Europe (especially Germany), Texas, and California:

  • Power blackouts (both rolling and sudden)
  • Massive increases in electricity costs
  • Little to no impact on reducing CO2 emissions

The biggest joke here is that we may be about to commit the same suicidal actions just as the rest of the world begins to turn away from it, despite all their hot air on the subject of Global Warming, because those energy realities are starting to bite:

World leaders at the Group of 7 summit in Germany signaled they will turn back to fossil fuels despite their commitments to a green energy transition thanks to the ongoing energy crisis.

“The G7 leaders are pretending that nothing has happened to the green agenda,” Benny Peiser, director of the Global Warming Policy Forum, told The Daily Caller News Foundation. “In reality, if you look at individual member states… it’s quite obvious that the green agenda will be sunk.

German Economy Minister Robert Habeck, a member of the Green Party, announced last week that the government was instituting a surge in the use of coal-powered plants.

Given the steady increase in German reliance on natural gas from Russia over the last few years, their €500 billion Energiewende project increasingly looked like a farce anyway, but it’s taken the Ukranian war to make that obvious.

Habeck is not the only such Green who is waking up, with other Euro Greens beginning to not only get the message that their favoured Renewables are actually better called the Unreliables, but that new – and previously forbidden – thinking is required:

Finland’s Green Party (Vihreät De Gröna) has voted by a large majority at its party conference to adopt a pro-nuclear approach. The party manifesto now states that nuclear is “sustainable energy” and demands the reform of current energy legislation to streamline the approval process for small modular reactors (SMRs). Finland’s is the first Green Party to adopt such a position.

There will be others, judging from this article by a guy who has started up or run companies dedicated to “clean energy technologies”, energy efficient homes and so forth – a True Believer in other words:

I wasted 20 years of my life chasing utopian energy.

Utopian energy is an imagined form of energy that’s abundant, reliable, inexpensive, and also clean, renewable, and life-sustaining. But utopian energy is as much a fantasy as a utopian society.

For years, I chased utopian energy. I promoted solar, wind, and energy efficiency because I felt like I was protecting the environment. But I was wrong! Feeling like you’re doing the right thing doesn’t mean you are. I just couldn’t admit it. My sense of identity was tied to my false beliefs about energy—myths that blinded me to what really does—and doesn’t—help the planet.

He puts forward eight measures of assessment that must all be used when looking at energy sources – emissions being just one of them. The other seven are: security, reliability, affordability, versatility, scalability, and land use.

Suffice to say that he’s realised that renewables don’t do very well when measured on all these factors, as he shows in that article.

Will National and ACT realise the same thing – and more crucially will they be intellectually and politically tough enough to make those arguments?

Written by Tom Hunter

July 4, 2022 at 10:22 am

Powerless Europe

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No, not powerless in the face of Putin over the Ukraine, although there is a link between the topic of this post and that.

Powerless in terms of energy, although there is both bad and good news.

The Bad News.

Electricity for delivery next year surged as much as 6.4 per cent to an all-time high in Germany, Europe’s biggest power market. France, which usually exports power, will need to suck up supplies from neighboring countries to keep the lights on as severe nuclear outages curb generation in the coldest months of the year.

The crunch is so severe that it’s forcing factories to curb output or shut down altogether. Aluminium Dunkerque Industries France has curbed production in the past two weeks due to high power prices, while Trafigura’s Nyrstar will pause production at its zinc smelter in France in the first week of January. Romanian fertilizer producer Azomures temporarily halted output.

That was in December when 10% of France’s nuclear was taken offline for various minor reasons, with 30% expected later in the winter. As a result French power was already trading at 1,000 euros a megawatt-hour for the month of February.

All of this has been a long time coming, driven mainly by Germany’s mania to appease the Global Warming Gods:

Germany continues its “disastrous” Energiewende transition to a low-carbon or net-zero future by shutting down reliable, resilient, and affordable natural gas, coal, and nuclear plants. In early 2021 German federal government auditors found the “country would need to spend over $600 billion between 2020 to 2025 to maintain grid reliability.” This is on top of the $580 billion already spent by the Germans on Energiewende while closing the Brokdorf, Grohnde, and Gundremmingen zero-carbon nuclear reactors on December 31, 2021.

That last was an especially stupid decision in light of the desire for a zero-carbon future – but it clashed with German politicians living in a 1970’s/80’s anti-nuclear past:

It was only 10 years ago that nuclear power made up almost a quarter of the electricity generated in the country. Following the impact of the 2011 Fukushima Daiichi nuclear meltdown – German Chancellor Angela Merkel took the decision that same year to phase out the country’s nuclear power stations by 2022.

It’s not surprising that France and Germany also ban fracking, as do several smaller western European countries, including Ireland. Britain has also joined the insanity:

Despite the ongoing energy crisis in Europe, the British Oil & Gas Authority (the same government department that banned fracking in 2019) has ordered resource company Cuadrilla to “permanently seal the two shale gas wells drilled at the Lancashire shale exploration site, with the result that the 37.6 trillion cubic metres of gas located in the northern Bowland Shale gas formation will continue to sit unused.”

British politics site Guido Fawkes points out that this self-sabotage is utterly insane since “just 10 percent of this volume could meet U.K. gas needs for 50 years [and] U.K. imports of Natural Gas are expected to skyrocket to over 80 percent by 2050.”

Moreover the emissions from all that imported gas will be greater than for domestically produced gas. To make things even worse the current British Conservative government has decided to follow in the German footsteps on renewable energy, with a goal of Net Zero-Carbon by 2050, with no detail on how CO2 emissions might be absorbed, leaving it all to a 100% production decrease by going all electric with renewable energy. In Britain (not the sunniest of places) that means wind farms – lots and lots of windfarms. How impractical is this?

Renewables just can’t carry this load, as is seen around the world, with this example from Alberta:

At the same time, Alberta’s entire fleet of 13 grid-connected solar facilities, rated at 736 megawatts, was contributing 58 megawatts to the grid. The 26 wind farms, with a combined rated capacity of 2,269 megawatts, was feeding the grid 18 megawatts.

The biggest joke of all of this is that the wind and solar (The Unreliables) result in nations like Germany having to burn more coal and import more gas to run the old parallel energy system, making them dirtier than nuclear-powered France.

But it gets even worse. Modern, industrialised countries that refuse to produce sufficient energy will not survive as independent countries and in the case of Europe it’s produced a geopolitical nightmare:

Gazprom [a Russian state-run energy company] supplied almost a third of all gas consumed in Europe in 2020 and will likely become an even more important source in the short term as the continent shrinks domestic production. Some of the biggest economies are among the most exposed, with Germany importing 90% of its needs.

Which is why Germany has been so keen on working with Russia to build the Nord Stream II gas pipeline (764 miles under the Baltic Sea and costing $11 billion). More Russian energy to the rescue! That pipeline will double the volume of gas pumped by Russian-controlled gas giant Gazprom directly to Germany. And Germany’s largest supplier of coal? Russia, of course.

No wonder Putin felt he could invade Ukraine, that seeming energy stranglehold on the dominant Western European power must have seemed like a trump card.

The Good News

The Ukrainian invasion has done to the Germans what Trump could not do: convince them of their strategic folly.

In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany’s energy needs: “We must change course to overcome our dependence on imports from individual energy suppliers,”

This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves… Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.

That’s great news, especially since the USA’s fracking revolution has unlocked vast reserves of gas in the last fifteen years. So much that it crushed LNG prices, resulting in a massive shift from coal to gas for electricity generation, enabling it to beat its Kyoto Treaty targets (a treaty it never signed anyway) and most of the rest of the developed world for CO2 emission reduction. It also caused the USA to convert numerous LNG coastal terminals from import to export capability – just in time to send huge LNG carriers across the Atlantic to Europe.

The Germans have also halted the Nord Stream II project.

But it’s not just gas, as the country’s economy minister Robert Habeck, a member of the Greens, said,

“There are no taboos on deliberations“.

Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country’s energy supply, the country’s economy minister Robert Habeck, a member of the Greens, said.

Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany’s ambitious exit from coal, which is planned for 2030.

A GREEN said that! Jesus! Talk about a Road To Damascus conversion. Amazing how war can do that. And it’s not just the Germans:

Italy will increase the domestic production of gas and may reopen coal-fired power stations under plans to ensure energy security, Prime Minister Mario Draghi said on Friday.

The news gets even better:

Soaring energy prices and a geopolitical crisis over Russia’s invasion of Ukraine are looming over the European Union’s attempts to agree a raft of tougher climate change laws, raising concerns that some could be delayed or scaled back.

That passive voice is just to make Global Warmist readers not feel too downhearted, but when you look at the impact even before the Russian invasion of Ukraine you can place a sure bet on “delayed or scaled back” – and not just “some” either:

A UN-backed green investment fund is on the brink of failure three months after its launch during the Glasgow climate summit because institutions including big banks never delivered expected seed funding.

Chuckle. Even the dark clouds of Vlad The Impaler have silver linings.

Written by Tom Hunter

March 3, 2022 at 6:00 am

A different economic starter motor

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Although Germany has lost her way occasionally over the last century she’s been in pretty good economic shape for some decades now. Possibly a little too good if you listen to some other members of the EU, particularly the likes of Greece, Italy and Spain, who grumble about the huge German trade surpluses and their tight control over the value of the Euro via the EU Central Bank.

Those nations relied for decades upon devaluation of their money as a key economic tool and since it has gone they’ve struggled to impose upon themselves the sort of economic discipline the Germans are famous for.

But you can hardly blame the Germans for their paranoia about the  value of money. Twice in the last hundred years they have suffered terrible bouts of inflation that wrecked their economy.

Let’s make paper machie out of it!

The most well-known of these is the hyperinflation that hit Germany just after World War I had ended. So much money was printed by the government that children played with it various ways.

To be worn only once

But there actually was a second period of inflation that is not as well known, mainly because it was not quite as bad, the goverment kept a lid on the pressures it created, and it was soon put in the background by World War II.

All of this is documented in an article first published in 1978, The German Non-Miracle, which looked at what Germany did to re-start it’s economy after WWII ended. It should be a valuable lesson as to how the world today gets out of our locked down economies.

Germany faced a similar problem to what we have now: it had suffered a supply shock, courtesy of having almost all its industries and business smashed in the war.

The advantage we have is to have not suffered physical destruction.

But the problem of re-starting the economy is similar.

Governments the world over are doing what they usually do – applying Keynesian solutions by printing vast quantities of new money and regulating the hell out of everything.

But Keynesian economics is really designed to deal with demand shock recessions like the Great Depression, where money seems to just vanish out of the economy and demand shrinks. In that situation having the government push money into the economy via a central bank, and to a lesser extent by increased spending, is a workable solution, within boundaries (all economic theories have boundaries).

The Keynesian approach has proved itself for things like the 1987 Stock Market crash, the Asian crisis of the late 90’s and, to a lesser extent, the GFC of 2008-09. But even with that last one there were signs that it had reached its limits. Economic growth barely recovered at all, despite all the trillions thrown around by governments. That likely had a lot to do with the fact that most Western economies were already heavily indebted both publically and privately. People were simply leary of taking on more debt to “recover”, even when it was being given to them cheap, or for free (no interest).

It should also be noted that – very much against Keynes own advice – when economic growth resumed, most governments did not get around to paying down all that debt from the credit they’d created. Keynes’s basic lesson was that you don’t try and balance the budget during a recession: you let it go into deficit but when the economy improves you run surpluses and pay it down. New Zealand was one of the few nations that did that after the GFC, and Michael Cullen and Bill Birch did the same in an earlier period, although I think Cullen went overboard, running huge surpluses even after the debt was largely paid down. All that did was increase private debt.

But Keynesian economcs has also failed, most notably with the smaller recessions of the 1960’s and 1970’s, when no amount of stimulation seemed to work. In fact we got “stagflation”, inflation while an economy was moribund or even in recession; something that Keynesian theory said could not happen.

This lesson had actually been learned by the Germans via their inflationary periods; sometimes just throwing money at the economy doesn’t work:

Under the Third Reich, the German government had financed a colossal industrial build-up to accommodate the designs of the Nazi war machine. The tremendous industrial expansion was paid for with rampant monetary expansion. All the screws of the Nazi State had to be tightened to their breaking point to suppress the resultant inflation; the guns of the Gestapo turned on black marketeers and others who sought to evade the officially posted prices of goods and services. The result of the effective price controls under Fascism was the explosion of liquidity after Fascism.

And that explosion of liquidity meant inflation after 1945 – lots of it. Worse, to combat this the Allied governments in charge of West Germany went for controls:

Government policy fluctuated among the vengeance of the French, the reformist zeal of the British (Labourites), and the bewilderment of the Americans. About the only consensus to be found anywhere was to rely on economic controls.

In an effort to forestall the inevitable realignment of money and prices, the Allied commanders of France, Britain, and the United States slapped on an extensive control network that fixed wages and prices at preinflation (1936) levels.

The victors attempted to administer the economy through a patchwork assortment of price regulations, allocation details, and rationing.

Setting prices back a decade might have sounded smart but the actual price of resources had moved on:

The economically obvious occurred: goods disappeared from legal markets and were sold illegally at prices far above the official prices. Severe misallocation of resources took place

The stupendous gap between the legal and illegal prices grew to such proportions that a general collapse of the currency ensued. People resorted to barter, and German cities typically saw a mass exodus on weekends as city-dwellers flocked to the countryside to trade with the farmers in kind.

In the fall of 1946 the mechanism had reached bankruptcy, the officially rationed food allotment being under 1,500 calories per person per day.

Clearly things could not go on like this, so a debate began inside Germany itself, rather than with the Allied controllers. The debate settled down into two predominant schools of thought: the Social Democrats and the “Freiburg School.”

The major SPD [Social Democrats] economic ideologue was Dr. Kreyssig, who in June 1948 told the 18th Bizonal Economic Council that, since the society had been under control for such a long period, any decontrol or currency reform would be ineffectual. To Dr. Kreyssig’s mind, not only would recovery not follow, but collapse was inevitable if prices were set free; the only course for the German economy was one of strong central direction. Another SPD spokesman was Herr Schoettle, who joined the argument against free markets by claiming that the task of reconstruction was too big for individual enterprise alone—massive State involvement was imperative if Germany was to recover.

And all of this would also be primed with lots of credit:

Not surprisingly, the Social Democrats favored an aggressive fiscal and monetary expansion policy and the “full employment” policies that had gained political popularity elsewhere. The SPD was joined in this expansionary position by the labor unions, the British authorities, most German manufacturing interests, and, in a slightly more moderate tone, by the Americans.

The Freiburg school – named after the University of Freiburg where a liberal resistance movement to the Nazis had started during the war, safely couched in talk of economic freedom – took a different approach: the Soziate Marktwirtschaft.

The idea of a “socially conscious free market,” as the translation goes, was that totalitarianism is the evil to be most guarded against and that the only way to prevent tyranny is to promote freedom. The theory spread freedom across political and economic lines and espoused a policy of noncontrol—by either the State or individuals—of individual choice. 

In other words it was philosophy first and the economics flowed from that.

The Freiburg approach was not laissez-faire: government was to be active in promoting competition and protecting free markets from monopoly, public or private. It also allowed for a small degree of wealth redistribution through graduated income taxation and social welfare programs, but it was insistent on keeping tax rates low enough to prevent economic disincentives to productive effort.

So not the cut-throat ruthlessness with which opposition to Keynesians and Central Big Government is always cast. Somewhat to their own surprise the Freiburg school won and although they had a lot of intellectual grunt it seems just as likely that the SDR side lost because the German people were psychologically scarred by the idea of printing money and creating credit. They didn’t need an economics degree and they knew it less intellectually than in their gut.

The Freiburgers did not just fight an academic battle. They had a specific plan which you can read in detail at the link but which summarised as:

  • Create a new currency, with a central monetary authority and held to what would nowadays be called a monetarist perspective.
  • Tight money policies would be pursued to create ‘buyers’ rather than ‘sellers’ markets.
  • Decontrol the economy by eliminating what they called “the strangling devices of economic repression … ‘directing,’ ‘licensing,’ ‘prohibiting,’ and what not.” One exception that should be noted was that rent controls were retained all through the 1950’s.
  • The German people would be allowed to produce. Looking at the destruction around them was a powerful incentive, but they had to be freed from controls to take advantage of that as well as giving incentives to saving, investment, and overtime
  • There would be expenditures on social welfare through transfer payments, and they would be comparable with those of other European nations.
  • However, the State would abstain from further economic intrusions via “full employment” policies, subsidies, and income redistribution.
  •  The government would push steadily and firmly for free(..ish) trade with the rest of Europe since exports would have to be a big part of the recovery. This would take years but it led to the European Commission on Coal and Steel and then to the EEC.

I did have to laugh at this comment about the price controls by the most prominent political member of the Freiburg school, Ludwig Erhard, when they were dumped in June 1948:

“It was strictly laid down by the British and American control authorities that permission had to be obtained before any definite price changes could be made. The Allies never seemed to have thought it possible that someone could have the idea, not to alter price controls, but simply to remove them.”

The effects were dramatic and almost instantaneous, as two non-German observers, Jacques Rueff and Andre Piettre, reported:

“Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled up with goods from one day to the next; the factories began to work. On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored on their faces while on the next a whole nation looked hopefully into the future.”

Industrial output increased 50 percent within the year, and national income, which had fallen 20% below that of 1936, was restored to that level in just over a year and continued to climb fast. Unemployment did climb and peaked at 10.4% by 1950, but steadily dropped for the rest of the decade.

Morever, this approach beat the publicised plans of the proponents of central planning. Their “Long Term Plan of 1948 predicted that by 1952-53 the industrial  production would reach 110 percent of the 1936 level and agriculture 100%. Another study done in 1950 by four German research institutes – which supposedly already took account of things like the Marshall Plan, the Korean War and the success of the Freiburg plan to that date – said that five years would be needed by government planners to hit their goals – and needed another $1.5 billion in US aid beyond the Marshall Plan.

Under the Freiburg plan all those targets were met and exceeded: Industrial production in 1952-53 averaged about 150 instead of 110. Net agricultural output was 111 percent of pre-war instead of 100. The overall balance of payments was highly favorable and even the dollar sector was approaching balance.

It should be no surprise that Ludwig Erhard would become Economics Minister in the Adenauer administration from 1949-57 and then Chancellor from 1963-66. Such are the fruits of success for politicians who don’t go down the path of centralised command and control route of their peoples but are willing to stand and argue for individual freedom in all spheres of life.

Written by Tom Hunter

May 20, 2020 at 11:42 pm