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Brooks Wilson's Economics Blog: Trade-offs: Germany’s Choice for Power Generation

Friday, July 22, 2011

Trade-offs: Germany’s Choice for Power Generation

(HT Watts Up With That)  In response to disasters at Chernobyl and throughout Japan, the German government led by Chancellor Merkel is replacing nuclear plants with coal and natural gas powered plants.  The phase out will be completed by 2022.  One small irony is that the government will finance the conversion using funds designated for projects promoting “clean energy” and “combating climate change” (“Germany to fund new coal plants with climate change cash”).

A spokeswoman from the Economics Ministry said that the new plants would not affect Germany’s goal of reducing greenhouse gas emissions by 40% by 2020. 

We all face trade-offs, including governmental officials.  Nuclear power plants are vulnerable to occasional releases of radioactive gasses into the atmosphere.  Coal, and to a lesser extent natural gas, release carbon into the atmosphere and many believe that these emissions dangerously warm the earth.  The damage of radioactive gas releases would largely be confined to Germany and her immediate neighbors but the damages of carbon releases would be shared with the world.  Wind and solar plants use vast tracks of land and German climatic conditions are not suited for their production.  Excluding external costs, coal and natural gas plants generate electricity most cheaply.  Cheap electricity is necessary for Germany to maintain its healthy manufacturing sector.

Reading the tealeaves, and with the understanding that I have no special insights into German politics, I conclude that the Merkel government has chosen jobs over the environment, but in a somewhat subtle manner. Government officials have chosen to discount the costs of global warming relative to a nuclear plant meltdown perhaps from a reassessment of the relative costs of each, perhaps from a heightened sense of nationalism that focus on national external costs rather than world external costs associated with global warming. 

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