Energy, populism and nationalism

Publication en français sur Les Echos Le Cercle

Multi-year energy programme in France, coal in Germany and Eastern Europe. Post anti-migrant populism, shall we have energy nationalism?

Germany is a pioneer in the response. In 1999, nuclear power produced 31% of Germany’s gross electricity while the new energy doctrine began. In 2005, Angela Merkel was elected; nuclear power was at 26%, then at 16% in 2013. In the meantime, renewable energies had increased by 400%, but lignite was still number one, and up by 15%.

In detail, the 2013 electricity production was distributed as follows:

  • 45% coal (lignite 26%, thermal coal 19%),
  • 5% renewable (wind 8%, biomass and waste 7%, solar 4%, hydro 3.5%)
  • 16% nuclear,
  • 11% gas,
  • Balance, other sources including oil-fired power plants.

After Fukushima, Angela Merkel pursued the same doctrine. Taking a part of the green philosophy. her target was 35% renewable electricity by 2030. Competitors aimed for 75% renewable electricity for SPD and the Greens demanded 100%. But neither one of them explained how to multiply the climatic electricity by 3 or 4 so the new wind turbines and solar farms would meet a land-overdensity on the narrow German territory. This imprecision would probably have been a future doorway to energy populism. Total, the Chancellor was re-elected and her target of 35% renewable energy by 2030, expressed in 2013, was reached… in 2017. Last year, the electricity production was distributed as follows:

  • 39.6% coal-based (lignite 24.4%, thermal coal 15.2%),
  • 38.5% renewable (onshore wind 14.7%, offshore wind 3%, biomass and waste 9.2%, solar 6.6%, hydro 3.5%)
  • 13.2% nuclear,
  • 8.4% gas.

In 2017, coal is 40%. Still no. 1, the objective not achieved is that of pollution. It is atmospheric, because the Co² emissions of about 120 lignite and coal-fired power plants are still present; it is visual with the new masts of wind turbines and high-voltage lines that connect producers in the north of the country to consumers in the south.

Another problem is the price of electricity. Whatever one thinks of the cost of this or that technology, the fact is that both the German and Danish consumers pay twice as much for their electricity as the French. In 2000 the average German paid 0.139 4 €/kWh compared to 0.10 €/kWh in France, in 2013 we compare 0.29 €/kWh to 0.14 €/kWh respectively and in 2018 about 0.30 €/kWh to 0.16 €/kWh. In Germany, this twice as high price includes about 55% taxes, the largest of which subsidizes the production of climate electricity. The latter is paid by households and SMEs, but more than 2000 large companies are exempted each year.

However, this climate tax never became a populist weapon because it was well explained, accepted and digested by German consumers.

Far from the commodity markets, however, there is a risk of a future political slippage for lignite. The March 2018 Great Coalition’s goal is to reach 65% renewable electricity by 2030, provided the electricity grid allows it. If so, the exploitation of lignite will become prohibited, and within 12 years the consumer will probably be taxed to subsidise the disappearance of mines and thermal power stations. Will this possible price increase be accepted by SMEs and medium-sized companies when they are already weakened by competition from countries where electricity is more competitive? Will this tax system be accepted by the population if no social shock absorber helps the inhabitants who will be deprived of mining employment?

Even further away from natural resource markets, after the Bavarian and Hessian elections of 2018, it appears that this “lignite” theme will become very political. Popular among the AFD and the Greens, they will be the vectors, but with opposite rhetoric: employment and social on the one hand, environment on the other.

Moreover, it is perfect to replace lignite by solar and wind power technologies (globalized electricity if we forget the strategic metals that compose them), but since intermittency will no longer be compensated by coal, will Russian gas, French nuclear power or American shale gas in the Polish LNG style make it up for Germany? Will there be a reaction from procoal, antinuclear, anti-Russian-gas or anti-GNL-US-shale-gas? Which messages will be the least populist: my sun is cleaner than your lignite, my nuclear is less intermittent than your wind turbine, my biomass is more local than your coal, my gas pipeline is cheaper than your LNG? Populist risks are identical for Poland and Eastern Europe, because while 40% of electricity is coal-fired in Germany, it is 78% in Poland and between 25% and 40% in Eastern Europe.

In conclusion, states build and renew their national energy doctrines (see the multi-year energy programme in France) to choose national energy dependence or independence options. This doctrine (but also those of mining and metals and agriculture) establishes and renews the special relationship between populations and the idea of nation. But in Europe, the coal barrier is still too high to develop a broader electrical doctrine common to the Union, in order to synthesise into policy wording the energy interdependencies between French nuclear power and German wind power, Polish coal and Russian gas, Italian solar and LNG, etc., and vice versa.

It would be much desirable to prevent indecision or failure of these national energy doctrines, otherwise it will drift towards populism or energy nationalism.

Naturally, the latter would take advantage of this opportunity to deliberately revive the geopolitical wounds of European history.

Is this the case when Poland and Denmark upset Germany over Russian gas ? A hot topic to which we may come back later. (this is now published here)

Is this the case if the European diesel industry, and its jobs, is killed by the revolution in electric cars, without saving the planet’s atmosphere if the increase in electricity production is neither 100% carbon-free nor cheap and hostage by Asian batteries?

Finally, will it be the case if the other European populist outpost, Brexit, demonstrate that an anti-migratory referendum can lead to a mad and nationalist closure of borders to energy trade?


Linkedin: Didier Julienne

Twitter:  @didierjulienne