The physicist Niels Bohr once remarked that an expert is someone who has made every known mistake in a narrow field.
As if to prove his point, in early 2021, a team of German economists predicted that the coronavirus might finally kill off coal. In a paper published in Nature magazine they claimed that “the economic repercussions of the pandemic have led to a very pronounced reduction of fossil-fuel-based power generation, illustrating the risks of stranded assets in coal power generation.”
Their predictions have proven hopelessly wrong, most starkly by their own country’s situation in particular. A year ago Germany was shutting down nuclear and coal power plants. Now a German Green Government (in league with socialists and libertarians) is reopening old coal fired power stations and considering keeping nuclear plants open.
Germany’s green energy plans have been an abject failure. Germany is on track to spend almost $500 billion on green energy by 2025. The main impact of this spending has been to increase German electricity prices and reduce the reliability of German electricity.
Almost a third of Germany’s power now comes from solar and wind energy. This has delivered Germans the second highest power prices in the developed world. Denmark has the highest power prices and it also happens to have the highest share of wind and solar power.
We constantly hear that solar and wind energy are the cheapest form of electricity. Yet the proponents of this strategy cannot name one country that has a high share of solar and wind power and has low electricity prices. In contrast, there is a strong statistical relationship between the share of solar and wind power a country has, and the price it pays for that power.
The answer is simple but ignored. Solar and wind power cannot be relied on to run all the time. So countries with a high share or these unreliable sources of electricity have to maintain expensive backup alternatives just to keep the lights on. These extra costs increase prices for all consumers.
Other countries, less obsessed with climate change targets, have worked this out. Last year, India increased its coal fired power output by 145 terawatt hours – the equivalent of 14 coal fired power stations and more than the total amount of coal fired power Australia produces in a year. In comparison, India increased the amount of solar and wind energy by just 18 terawatt hours.
The story is the same across the Asia-Pacific region, where the increase in coal power is almost double that of solar and wind.
This continues the trend of the last two decades. The use of energy in developed countries has slightly fallen since 2000. In developing countries energy use has more than doubled.
The developed world is still consuming as much stuff – often financed by more debt – but the developing world is increasingly making this stuff. This leaves developed countries like Australia with a weaker manufacturing industry and more vulnerable in a time of rising global tensions.
Those German economists predicted that we will not see the peaks in coal and gas power ever again. In recent weeks, the International Energy Agency has concluded that we are likely to see a record amount of coal use this year and probably more again next.
It all just confirms that you should never put blind faith in experts.
