Posted 11:28 AM by Robert

Eurogases

The Christian Science Monitor reports:

The projected costs, as well as the likely loss of economic competitiveness with the United States, has the EU wondering if it can virtually go it alone in implementing the Kyoto Protocols on climate change. The protocol has yet to take effect as a binding treaty since the US and Russia won't sign on, and China and India were given a pass for now.

This news is slow in reaching the American media. The F.A.Z. reported back in the middle of February:

Industry representatives boycotted negotiations on upcoming emissions trading legislation ... The dispute revolves around a plan, spearheaded by German Environment Minister J?rgen Trittin, to use emissions certificates to force companies to reduce their carbon dioxide emissions years ahead of the European Union's 2012 deadline...

.... Germany has chosen to develop a formula for dividing the certificates up among existing plants rather than putting them up for auction. This route, however, has opened the door for all sorts of special exemptions. With just weeks to go, industry lobbyists are fighting for special privileges. .... Increased demand for natural gas from Germany would probably cause Russia to burn coal in its own plants to fill demand from Germany, since there are no taxes or other levies on coal in that country.

Affected industries may also move production to other countries. Experts say that emissions trading only makes sense if most producing countries are involved and if the trading includes all six greenhouse gases. It is unclear why the EU Commission has limited trading to CO2.

The steel industry, which in 2001 was responsible for 51.4 million tons of the 504.5 million tons of CO2 emitted by German industrial companies and power generators, fears that it will be the loser. Steel association VDEH said emissions trading could weaken Germany's steel industry, since it cannot reduce its CO2 emissions. .... The steel industry has the potential to reduce its emissions by 1 to 2 percent in the medium term, [a steel spokesman] said. Trittin is demanding a reduction of 1.5 percent by 2007 and another 6 percent by 2012. This could increase the price of steel by as much as 20 percent. ... In the past decade, Germany has reduced its emissions more than any other country in the EU. Since Germany signed the Kyoto Protocol in 1997, it has reduced its emissions of the six greenhouse gases by 19 percent. The target for Germany, set as part of a package with other EU countries, is 21 percent by 2012.

The bulk of that past German reduction was possible simply by closing unproductive, outdated Eastern German inductrial plants - most of which would have been closed on profitability grounds, anyway.

The German Kyoto problem is even worse than the above passages suggest, because the German (and, increasingly, European) instinct for economic suicide in the service of hi-sounding principles that any sensible person would know could not be reconciled doesn't end with Kyoto - but extends to elimination of nuclear power, too. As the F.A.Z. noted last November:

[L]ast Friday ... the first of Germany's 18 nuclear power plants due for closure in the next 20 years, was taken off line. That may be an appealing prospect to many, but we should not forget that atomic power is responsible for the generation of nearly half of Germany's electricity, a volume that cannot be easily replaced if both economic and ecological standards are applied. Even under the most optimistic assumptions, renewable energy sources will never replace nuclear energy in terms of their economic viability and reliability. Only gas and coal-fired power plants have the potential to replace nuclear power, but they produce greenhouse gas emissions that could easily push Germany over its emissions targets under the Kyoto accord. An exit from the "nuclear consensus" is thus inevitable.

"Inevitable" is the right word. I wish it were hard to understand why so many Europeans think that signing up for principles that they do not reasonably intend to respect amounts to a political virtue. That kind of posturing is not a virtue. It's juvenile. It's even politically senile.

As the German economy inevitably implodes in accordance with loopy pseudo-principles, the last refuge of the political scoundrel, pseudo-patriotism, is always available in Germany to Chancellor Gerhard Schröder as much as John Kerry in the US to criticise those who prefer not to join the implosion:

Chancellor Gerhard Schröder called the transfer of jobs to cheaper foreign locations “unpatriotic“ .... Germany's chief business lobbyist, BDI industry association president Michael Rogowski, added that companies were fleeing not only from Germany's high labor costs and taxes, but also the environmental policies pursued by Schröder's junior coalition partner, the Greens, that imposed unnecessary additional costs on companies, most recently, for example, through planned emissions trading regulations. Indeed many big German companies have shifted large parts of their assembly abroad in recent years. .... On Tuesday, the chairman of automotive supplier Leoni said at the company's financial press conference that he fears “it will be difficult to sustain the number of jobs in Germany.“ .... But not only jobs in production are at stake. Economics Minister Wolfgang Clement said on Wednesday at an OECD conference in Berlin that Germany will also not escape the “trend toward exports of qualified jobs.“ According to the head of IBM Germany, Walter Raizner, that trend is already under way. Raizner told the Financial Times Deutschland this week that 70,000 jobs in the information technology sector alone were lost in Germany over the past year. Although the industry association Bitkom has called that figure exaggerated, its own projections still assume a loss of 8,000 jobs in the German telecommunications and information technology sector this year. ... A DIHK study, however, last year put the number of jobs lost to cheaper foreign locations at about 50,000 a year. And according to a recent survey by DIHK, the export-based economic recovery this year will prompt German companies to invest more abroad than at home.

One might keep in mind that a good deal of German "outsourcing" comes to the United States.

In a certain sense it's interesting to see how so many disparate developments interact: global greenhouse gassy politics, nuclear energy hysteria, outsourcing madness. Too bad the interaction in this case may end up marking the grave of the German economy. But, heck, nobody expected those principles to last, anyway.