Germany Denies Reality to Avoid Admitting Trump Was Correct and Now It's Paying the Price in Deindustrialization

Guest Post from the Institute for Energy Research.

Germany’s foreign ministry recently claimed on X that “Germany’s energy system is fully operational, with more than 50% renewables. And we are shutting down – not building – coal & nuclear plants. Coal will be off the grid by 2038 at the latest.”

However, this statement refers specifically to Germany’s electricity generation, not its overall energy system. While it is true that renewables account for over 50% of Germany’s electricity generation, the broader energy system remains heavily reliant on fossil fuels.

During the 2022 energy crisis, Germany reactivated several coal plants and has since constructed new natural gas facilities, contrary to the ministry’s claims. As of 2023, Germany’s primary energy consumption is still 75% dependent on fossil fuels, and its electricity generation sector relies 41% on fossil fuels.

Although Germany achieved a 49% share of non-hydroelectric renewable energy, primarily from wind and solar, in its electricity generation in 2023, renewables would need to comprise 80% of power generation by 2030 to meet rising demand.

Furthermore, Germany’s overall energy consumption is declining, suggesting a trend towards deindustrialization. This data supports President Trump’s criticism, as illustrated by the graph below.

Source: Our World in Data

“Clean” energy projects, however, are being slowed by extensive bureaucracy and not-in-my-backyard resistance. In the southern Bavarian region, spacing limits from homes keep annual construction of wind turbines in single digits.

A 10 billion-euro ($10.68 billion) electrical line bringing wind power from the north to industry in the south has faced costly delays from political resistance to unsightly above-ground towers. Burying the line means completing the project in 2028 instead of 2022, as well as increased costs.

High Energy Prices Have Resulted in German “Deindustrialization”

For much of this century, Germany was a dominant force in global markets, excelling in high-end sectors like luxury automobiles and industrial machinery. The country’s strong export performance fueled half of its economy, leading to abundant job opportunities and a growing government surplus.

However, Germany now finds itself as the worst-performing major developed economy. The sudden loss of inexpensive Russian natural gas has delivered a severe blow to its energy-intensive industries, threatening its status as Europe’s manufacturing powerhouse. With high energy costs driving new factories and high-paying jobs away, Germany faces the risk of “deindustrialization.”

Additionally, a slowdown in its key trade partner, China, is further straining Germany’s economic prospects.

The reliance on cheap Russian natural gas, vital for powering its factories, has exposed flaws in Germany’s economic model. Russia cut off most of its gas supply to the European Union in response to Western sanctions, leading to an energy crisis within the bloc, which had depended on Russia for 40% of its gas. Germany has admitted that its dependence on Russian gas via the Nord Stream pipelines — now damaged due to the war with Ukraine — was a critical error.

Germany also made a significant misstep in 2011 when it decided to shut down its nuclear power plants, which produced no greenhouse gas emissions. This decision was part of the “Energiewende” or “energy turnaround” strategy aimed at replacing nuclear and fossil fuel-based energy with intermittent sources like wind and solar.

Critics argue that this choice has contributed to rising electricity prices and potential energy shortages. Keeping nuclear plants operational would have reduced emissions four-and-a-half times more effectively than the current non-nuclear strategy.

In response to the gas supply crisis, the German government has now asked Evonik to extend the operation of its 1960s coal-fired power plant. Evonik had planned to transition to gas-fired generators, eventually running on hydrogen, in line with its goal of becoming carbon neutral by 2030.

From 2003 to 2005, Chancellor Gerhard Schroeder instituted reforms that lowered labor costs and increased competitiveness, resulting in a “golden decade” of economic growth in Germany that lasted the decade from 2010 to 2020. 

That growth and a perception of Germany’s underlying strength may have brought on complacency that resulted in the misguided decisions to exit nuclear energy, ban fracking for natural gas, and bet on ample natural gas supplies from Russia.

Germany is now paying the price for those energy decisions after they failed to listen to President Trump’s warnings about growing dependency.

The Biden-Harris Energy Transition

The Biden-Harris administration is adopting several strategies reminiscent of Germany’s approach to energy policy. Through regulations, standards, and executive orders, the administration is promoting a transition similar to Germany’s, characterized by heavy investment in clean energy.

The Inflation Reduction Act, passed by Democrats, is driving the integration of intermittent wind and solar power into the grid, supported by substantial subsidies. These subsidies also cover the cost of expensive batteries needed to store energy for times when the sun isn’t shining and the wind isn’t blowing.

U.S. residential electricity prices have surged by over 20 percent since the Biden-Harris administration took office and are projected to rise further.

Utilities are seeking approval from public utility commissions for additional rate increases to cover the costs of transitioning to cleaner energy sources. The Environmental Protection Agency (EPA), under the Biden-Harris administration, is implementing regulations aimed at closing existing coal plants and blocking the construction of new natural gas plants unless they incorporate carbon capture and sequestration technology, which is not yet commercially viable.

The EPA is also expected to introduce regulations affecting existing natural gas plants later this year, though these are anticipated to be announced after the upcoming election.

The Biden-Harris administration’s Energy Department standards are set to phase out natural gas technologies for heating and cooking, leading to increased electricity demand.

Combined with efficiency standards for vehicles and EPA regulations on vehicle emissions, these policies will likely push Americans towards purchasing electric vehicles, which are projected to double current electricity demand. The substantial investment required for retooling, as well as the need for new generating capacity and expanded transmission and distribution infrastructure, is expected to significantly raise energy costs for consumers.

If adequate capacity is not developed in time, Americans may face blackouts and brownouts due to power shortages, alongside escalating electricity prices. The growing demand for electricity to support artificial intelligence and other high-demand sectors is exacerbating the situation.

These sectors often secure deals with existing nuclear plants to ensure reliable, around-the-clock power, further straining the energy supply. As a result, ordinary Americans could become increasingly reliant on intermittent wind and solar power and costly battery storage, compounding their energy challenges.

Further, Americans will become dependent on China for its energy as China controls the supply chains for green energy and electric vehicle parts and batteries. Americans will be four times as dependent on China, who dominates 80 percent of the “clean energy” markets, as it was on OPEC for oil.

Germany, for example, purchases most of its solar panels from China with 87 percent of its panels coming from there in 2022. The United States, likewise gets most of its solar panels from China.

Conclusion

President Trump used Germany as a means of communicating what could result from a continued Biden-Harris energy policy in his debate appearance.

Despite Germany’s foreign ministry claiming that President Trump was wrong, he was basically right.  Germany’s energy policies have sky-rocketed its energy prices causing deindustrialization and having its utilities continue to use coal plants and build new natural gas plants to supplement its use of renewable energy.

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