Anti-nuclear movement, helping the German economy go wrong

This week we have witnessed the incredible announcement by German Chancellor Angela Merkel saying Germany will abandon nuclear power totally by 2022, when it will shut down the last 3 remaining nuclear plants that will be in service on that date. Germany has a total of 9 nuclear plants providing energy to the grid as of now, accounting for 23% of the energy mix. Merkel's bet is to replace nuclear power with renewable energies, a move that is expected to harm the German industry greatly by increasing its energy bill. In fact this will be the second most important factor to hit Germany's industrial competitiveness in a row, the first one being the actual exchange rate of the euro against its clients' currencies. 

Neckarwestheim nuclear plant

Even though Germany is the world's 4th biggest economy and Europe's number one, it is not bullet-proof. The last thing the German industrial sector needs is its energy bill rising non-stop or being unpredictable. Because let's face it, whether you are pro-nuclear or anti-nuclear you know shifting from nuclear power to any other source of energy is an expensive move. 

In the case of Germany, the shift will be made towards renewable energies, which are expected to add up to 35% of the total energy mix in 2022 (up from 13% today). In a country where the industrial sector takes more than 50% of the total energy used, the main problem with renewable energies will not be their price, but its unpredictability causing blackouts. The sun not shining, the wind not blowing or simply a specially cold winter day could cause a blackout on peak-hours. When renewable energies are used to cover domestic demand, this unpredictable behavior can be covered with some natural gas power plants, which are fast enough to be plugged into the grid when needed and disconnected shortly afterwards. But industrial demand is far bigger and more important, so that could mean said natural gas plants have to be on most of the day to avoid power disruptions, which would probably kill Merkel's objective of slashing carbon emissions by 40% in 2022, meaning she would have hurt German industry for nothing.

So what are the reasons for such a sudden rush in leaving nuclear energy behind?

Crazy or genius ideas: Individual Carbon Emissions Cap (II)

On the previous post I put on the table an idea to help control carbon emissions at an individual level while at the same time creating a way for citizens to monetize from their energy efficiency. I named it the Individual Carbon Emissions Cap (ICEC for short). After explaining its inner workings on the first post, now is the turn to explain why I think it could be highly beneficial for the economy.

Motivation

I am fed up of seeing the utility companies promoting energy saving and efficiency (even though one could think, on first instance, it goes against their business) but governments doing nothing but subsidize renewable energies producers. Renewable energies, as of today, are not capable of covering our whole energy consumption and they will not in the short term either, at least if we follow our historical trend of growing consumption. For renewable energies to really become alternative energies, efficiency measures must be applied to our daily life.

That is where ICEC kicks in, by setting a comprehensible limit on individual carbon emissions it promotes energy efficiency while at the same time boosting non fossil-based energies as they do not emit any CO2.

Prize efficient people, punish wasteful spenders = Prize the economy

I do not want anybody to think about the ICEC as a tax, because it is not. It could only become a tax for someone who is not capable of living without wasting a lot of energy by doing so. If that was the case, then tax him like you would with a normal business... The ICEC limit is high enough to not disrupt you usual life habits, but at the same time giving you an incentive to be efficient. For those who find the way to be efficient, the prize could not be more obvious: cash. Well, apart from the peace of mind of helping the environment and such... This cash could be forced to be for consumption only (if needed), then it would give a much needed boost to our weak economic recovery by increasing goods consumption. The best part? it would come at zero cost for the government, no need to raise taxes to the already tax-massacred citizens and, collaterally, it would mean increased earnings from VAT and other already existant taxes on consumption.

Crazy or genius ideas: Individual Carbon Emissions Cap (I)

This marks the start of a new series of posts that, from now on, will share the blog's spotlight together with the habitual posts analyzing the situation of the global economy. These series will be far more subjective than the economic analysis posts, I will just expose some ideas that cross my mind. That means I could incur in some inaccuracies from time to time, so take it with a grain of salt. 

When there is so much talk about carbon emissions, lowering carbon footprints, global warming, the problem with fossil fuels, etc. what if  we began helping by setting a yearly CO2 quantity that people are allowed to emit? I am talking about creating an "Individual Carbon Emissions Cap", similarly to what it is done with industrial emissions as stated by the Kyoto Protocol but taking it a step further by making citizens part of it. 

What does this mean? Every participant country would set an Individual Carbon Emissions Cap (from now on I will call this ICEC for clarity's sake) for its citizens; a defined number of kilograms of CO2 that one person was allowed to emit to the environment over a year. For some people ICEC would instantly become an asset, for others it would mean a new tax, but in any case a tax you have control over... People would be able to trade part of their ICEC on a newly-defined public market (obviously with fixed prices per year to avoid the speculating vultures from spoiling the idea) and they could also make their cap grow by planting trees, sharing cars, installing or buying energy efficient devices and similar tree-hugger 'activities'.