Germany: looking grim - energy policy doomed

We’ve often said hereabouts that Germany is never to be underestimated for the things it does strongly.  That, of course, includes vigorously digging deep holes for itself: Es irrt der Mensch so lang er strebt  – and there’s no striver like a German who’s got religion.  Prior to Ukraine Germany was already embroiled in a nonsensical ‘energy transition’ policy - Energiewende – that we’ve written about here several times.  Formerly I took a simple & cynical view on this: they can probably afford it; and it’s better to watch them do the experimentation on moonbeams from cucumbers etc, than do it ourselves.

Since Putin kicked off in 2022, they’ve bizarrely doubled down on what was at the time an embryonic policy, namely to become a hydrogen economy.  The (natural) gas sector in Germany had been privately working on this for a while, using its own funds (always a good sign) , wishing to have a lifeboat for its vast sunk-cost infrastructure against the scenario of natgas falling as far out of favour as have nukes, lignite and hard coal in their turn.  Quite fairly, the entire German state doesn’t favour UK-style deindustrialisation as an alternative approach to ‘green’.  In some kind of arm-waving fantasy, hydrogen seemed to be the answer – first ‘blue’ H2, swiftly to be followed by ‘green’ H2, and getting started with imports (another fantasy; but a lot of countries from Australia to Saudi keep saying they’ll be big exporters any year now).

Being Germans with a Policy, they’ve now zoomed past the sensible ‘private experiment’ stage and have erected a complex system of targets and subsidy structures for hydrogen projects, both upstream and downstream.  (I have tried to get to grips with it in all its byzantine complexity, but it’s not easy – and indeed may not represent anything you can understand rationally at all.)  Every German firm that might conceivably participate in the putative H-economy is dabbling in this, all hoping someone else will jump first.  Along the whole length of the putative H2 supply chain, every single major scheme that was more-or-less on the starting blocks at the start of this year has either foundered already or suffered major setbacks.  

A key player in the German economy – until a couple of days ago – was Federal Minister of Finance Christian Lindner.  I have a very good friend who knows the man, and tells me Lindner was a lone voice of sanity in a cabinet of lunatics.  Lindner’s overarching view is that his fellow countryman have too much in the Manic Enthusiasm department, and little instinct on the matter of value for money.  These two things he saw coalescing to baleful effect in the hydrogen policy.

What now?  Ploughing on regardless would be very German, but maybe even they are beginning to see it for the nonsense it is.  Perhaps everyone hangs on until after COP29, and then the ructions really begin.  However much we might mock, we’ll all feel the impact if the bicycle topples over. 

Es irrt der Mensch so lang er strebt.  Yes, Goethe had it right: and as he also suggested, they just can’t stop striving …

ND