Category: Points of Information

After spending $130 billion on solar power subsidies, Germany has found the effort to be a monumental waste of money.

Despite the massive investment, solar power accounts for only about 0.3% of Germany’s total energy. This is one of the key reasons why Germans now pay the second-highest price for electricity in the developed world (exceeded only by Denmark, which aims to be the “world wind-energy champion”). Germans pay three times more than their American counterparts.

Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly eight million metric tons – or about 1% – for the next 20 years. When the effects are calculated in a standard climate model, the result is a reduction in average temperature of 0.00005oC (one twenty-thousandth of a degree Celsius, or one ten-thousandth of a degree Fahrenheit). To put it another way: by the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.

Using solar, Germany is paying about $1,000 per ton of CO2 reduced. The current CO2 price in Europe is $8. Germany could have cut 131 times as much CO2 for the same price. Instead, the Germans are wasting more than 99 cents of every euro that they plow into solar panels.

Rather than invest in the pie-in-the-sky pipe dreams of politicians, wouldn’t it be smarter to let the market figure out the most efficient form of energy? At first glance that efficiency might not appear “green-friendly”, but if it is more efficient I suspect it is almost certainly going to have the least overall effect on the environment.