Wednesday, March 5, 2014

The Poverty of the Energiewende

by Vaclav Smil

The Poverty of the Energiewende:

What I find really remarkable is that so little attention has been given to an aspect of die Energiewende that is no less perverse than increased greenhouse gas emissions: indeed, that curiously overlooked reality is inimical to the animus of left-leaning green and socialist parties (the latter one now in the government) — and yet both of them chose to promote the shift, and they still keep silent in this critical regard.
The matter has been overlooked because most people are not aware of some surprisingly large differences in the rate of homeownership among high-income economies. The aggregate U.S. rate is about 65 percent, the UK rate is nearly identical, and the rates in Spain and Italy are about 80 percent — but the latest statistics show that only 43 percent German families own their home. What is even more noteworthy is the distribution of homeownership according to disposable income. In the United States, nearly 90 percent of households in the last quartile own their homes, and the rate is still 50 percent in the lowest quartile, while the corresponding German rates are just over 60 percent and barely over 20 percent. Of course, homeowners have been able, for two decades, to take advantage of state subsidies and a guaranteed high price for electricity generated from their homes, essentially an effortless income for homeowners with enough initial capital to plaster their roofs with PV panels.
Renters (without roofs and often with no initial capital) cannot enjoy benefits available to their richer compatriots, but they are not exempt from paying rising electricity prices. All households pay them, but the richer ones can offset them in part by selling their surplus electricity to the grid. Large companies, however, are exempt from the burden of rising prices — a decision taken to keep Daimler, Volkswagen, Siemens, Hoechst, and ThyssenKrupp competitive. Thus we have a nearly perfectly socially regressive scheme in which the poorest segment of the society bears a disproportionate burden of an innovation that benefits many wealthier citizens and that leaves corporate accounts largely intact.
Read Vaclav Smil's full article at The Breakthrough Institute:

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