How the US Can Avoid Germany’s Energy Catastrophe
By Brian Gitt
The Inflation Reduction Act (IRA) will waste over $100 billion on lavish wind and solar tax credits that distort the price of electricity and erode investment in reliable energy sources. Such credits will result in higher energy prices, a less reliable power grid, and more frequent blackouts. While some IRA provisions are helpful—such as funding and loans for new innovative energy technologies like advanced nuclear—overall, the legislation will do more harm than good. Other articles critique the bill in detail, and I generally agree with those criticisms.
But the IRA is just one component of a larger problem: the US is not investing in the energy infrastructure needed to sustain our prosperity.
The lack of wise energy investments grows from the energy myths—false claims about energy—that many policymakers and investors have bought into. They believe, for instance, that nuclear energy is dangerous; that fossil fuels are destroying the planet; and that solar, wind, and electric vehicles are the alternatives that will save us.
German policymakers based their country’s energy transition plan on similar myths. Now they’re paying the price. German factories are halting operations in the face of soaring energy prices; families are paying 50% more for energy (or turning off their air conditioners in 100-degree heat); energy rationing has started; and Europe as a whole has destabilized its political position by making itself dependent on Russia for natural gas. These events in Germany could trigger the de-industrialization of German society and cause a deep recession in Europe. Millions of people could freeze in their homes this winter. Ironically, the root of Germany’s problems lie in its plan to reduce greenhouse gas emissions. But its shift to wind and solar power has actually increased emissions because Germany has been forced to burn more coal to keep the lights on.
Germany shows what happens when you restrict natural gas production, overinvest in renewable energy, shut down nuclear power plants, and rely on energy imports from adversarial countries. If the US wants to avoid a similar fate, we need to see Germany for what it is: a canary in a coal mine.
Shifting US energy toward wind and solar makes us dependent on an adversarial country, namely China. China currently has a chokehold on supply chains for wind turbines, solar panels, and batteries. For instance, China controls the production of 97% of solar wafers, 85% of solar cells, 79% of the polysilicon for making cells, and 75% of solar modules. Allowing China to supply the essential components of our energy system poses a threat to our energy security as dangerous as Germany’s reliance on Russia for natural gas.
If we don’t correct course and change our energy policies and planning processes, then we will soon face the same problems Germany is facing now.
But that bleak future doesn’t have to be ours. We have a choice.
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The US is blessed with abundant oil and natural gas resources. It’s also blessed with one of the largest fleets of nuclear reactors in the world—reactors that can be upgraded and extended. Above all, we’re blessed with a culture of innovation. We have the ability to move into a better future if we simply muster the will.
The shale revolution shows how quickly our nation can create and innovate in the energy sector. The US went from a net importer of oil and gas to the world’s largest exporter while revamping the global energy system in about a decade. From 2007 to 2019, innovation in shale production brought an eight-fold increase in extraction productivity for natural gas and a nineteen-fold increase for oil.
Instead of following nations like Germany, the US needs a coherent plan to ensure cheap, reliable, secure energy while also reducing air pollution and greenhouse gas emissions.
That plan must go beyond industry-specific silos to identify critical energy infrastructure: power plants, pipelines, refineries, and liquified natural gas (LNG) terminals. And it needs to be rooted in an honest and comprehensive evaluation of all the costs and all the benefits of every energy source: wind, solar, natural gas, coal, oil, and nuclear. And we need to encourage innovation in technologies like advanced nuclear power.
Addressing these eight principles for evaluating energy options will give us the best chance of reforming the US energy system to protect both people and the planet.
1. Security. Does an energy source enable the US to maintain its independence from foreign sources of energy?
2. Reliability. Can people and businesses access energy 24/7/365?
3. Affordability. Is the energy source easily affordable for households and businesses?
4. Versatility. How many different kinds of machines can the energy source power?
5. Scalability. How many people can use the energy source across how many places?
6. Emissions. What are the energy source’s effects on air pollution, greenhouse gas emissions, and water quality?
7. Land use. What are the energy source’s effects on wildlife, habitat, farmland, viewsheds, and coastlines?
8. Lifespan. How many years can the source produce energy?
I’ve used these criteria to evaluate different energy sources in other writings, which you can read here. To better utilize our energy resources, we need to start by taking the following steps.
- Reform regulations to support nuclear power plants.
- Build new, efficient natural gas plants and hydro- and geothermal plants where possible.
- Eliminate renewable energy subsidies that distort the price of power and are parasitic on the economics of thermal power plants.
- Accelerate the transition from coal to efficient natural gas and nuclear power.
- Build pipelines that support domestic oil and gas production and distribution.
- Build LNG export facilities that encourage trade in natural gas.
- Upgrade and expand refinery capacity.
- Invest in energy R&D.
We need to stop fighting each other in endless political squabbles over our energy supplies and sources. Instead of fighting, let’s start identifying the critical infrastructure that needs to be built or upgraded to move us into a better future. Identifying and producing that infrastructure can give all of us a chance to thrive.
It’s time to build!