The German Election: Green Dreams In the Dustbin
in Energy Policy, Germany
Today’s election in Germany turned out as polls had predicted: the Christian Democrats, an ostensibly conservative party, had a 29% plurality; the Alternative for Germany, a genuinely conservative party, finished second with 21% of the vote; and the formerly ruling coalition was roundly repudiated, with Olaf Scholz’s SPD getting only 17%, while the Greens trailed with 12%.
At the Daily Economy, my friend and colleague, the economist John Phelan, predicted today’s result and attributed it to the futile pursuit of “Green Dreams.” See the original for many links:
The proximate cause of Sunday’s election is the collapse of the governing coalition of the SPD, Greens, and free-market Free Democratic Party (FDP) following disputes over economic policy. The ultimate causes are several, and a leading one is Germany’s stagnant economy. It offers a stark warning to the United States and any country tempted to sacrifice its economy in pursuit of “green dreams.”
For many years, Germany had a thriving economy and was a powerhouse of manufacturing:
Until recently, this would have seemed incredible. In the early 1990s, Germany’s per capita Gross Domestic Product (GDP), adjusted for inflation and differences in living costs, was equal to that of the United States, an incredible achievement for a country whose economy was obliterated during World War II. The jewel in West Germany’s economic crown was its manufacturing sector, which specialized in high-quality products made by a highly capitalized, highly productive, highly paid workforce. This accounted for 19.9 percent of German GDP in 1997 compared to 16.1 percent in the United States: By 2021, while manufacturing had fallen to 10.5 percent of United States’ GDP, it still accounted for 18.7 percent in Germany.
Things have gone downhill since then:
But German policymakers were determined to fight climate change; indeed, they opposed not only fossil fuels but anything that wasn’t wind or solar. In 2011, Chancellor Angela Merkel (CDU) accelerated the end of nuclear power. Those renewable sources of energy weren’t scaling up fast enough to fill the gap, but gas could be imported from Russia while the wait for renewables went on…and on.
Donald Trump was one of those who told the Germans they were on the wrong track:
In July 2017, Merkel denounced President Trump’s approach to fighting Climate Change at a meeting of the G20 while, at the same time, she was turning Germany into a Russian client state with her own energy policies. In September 2018, Trump hit back, telling the United Nations General Assembly that “Germany will become totally dependent on Russian energy if it does not immediately change course.” In response, the Washington Post reported, “German Foreign Minister Heiko Maas could be seen smirking alongside his colleagues.”
Russia’s invasion of Ukraine in February 2022 vindicated Trump and wiped the grins off the faces of Maas and his colleagues. Moscow cut off natural gas supplies to Germany and prices skyrocketed for gas and for electricity generated from gas, both key inputs for energy-intensive industries such as steel, fertilizer, chemicals, and glass.
That is what happens when you depend on a foreign power for energy. But let’s not laugh at the Germans: despite our vast reserves of oil and gas, the United States, because of appallingly bad policy decisions by liberals, depends on the Chinese Communist Party to keep our lights on.
So it was Germany’s pursuit of Green Dreams that brought Germany to its present state:
Germany’s political class thought that it could have an industrial economy based on pre-industrial sources of energy like wind and solar. For a time, Russian natural gas allowed them to live that fantasy and lecture those who did not share it. The fantasy is now over, and it turns out that switching your economy to pre-industrial energy sources switches you back to a pre-industrial economy. Germany’s energy-intensive industrial production is now at a level even below those it fell to during the pandemic.
The country hasn’t seen significant economic growth in five years and 2024 was the second year in a row where Germany’s economy actually shrank.
Hence the outcome of today’s election–while, to be sure, murders committed by “migrants” also played a significant part. There are lessons here for Germany, and also for the U.S. and other industrialized, or formerly industrialized, countries:
In recent years, policymakers across the West, including the United States, have argued for and enacted costly policies to shift from cheap and reliable energy sources to expensive and unreliable ones. Voters have been told that, if everything goes right, not only might this come at no economic cost, but it might even usher in some “Green Revolution.” The fate of Germany’s economy — its entirely self-inflicted crippling in pursuit of a fantasy — exposes the folly of this argument. No government should follow its example and anyone who says it should ought to be dismissed as a crank.
There is another lesson, perhaps a deeper one. The economic situation has created a situation where AfD can thrive. If they do well, Russia will be blamed and so will populists and populism generally. But it wasn’t populists who crippled Germany’s economy. It was its “moderate” elites, people like Merkel, who did that. If AfD performs well on Sunday, it is to those “moderates” and their disastrous, immoderate policies, that it will owe its success.
In Germany, as in the U.S., an “extremist” is someone who thinks the lights should go on when you flip the switch; who doesn’t want energy costs to triple or quadruple; who thinks it desirable for domestic manufacturers to be able to compete in global markets. If our elites continue to define the sensible as “extreme” and the absurdly fanciful as “moderate,” we will see more and more “extreme” results, as in today’s German election.
https://www.powerlineblog.com/archives/2025/02/the-german-election-green-dreams-in-the-dustbin.php
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