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Why Germany’s decision to phase out nuclear power is smart economics via RenewEconomy

Germany has made a formal commitment to phase out the use of nuclear power by 2022. Erik Gawel and Sebastian Strunz write on the implications of the strategy for Germany’s future energy mix and whether the approach adopted in the country could function as a model for other European states. They argue that while the target is undeniably challenging, long-term it is economically sensible and feasible to phase out both fossil fuels and nuclear energy in favour of renewables.

Political responses to climate change and other negative consequences of conventional energies within Europe (e.g. oil spills, radioactive waste, open pit coal mining) are highly diverse. While the UK is promoting nuclear as a carbon-free energy source, for instance, Germany has embarked on a completely different path with its plan to phase out nuclear energy altogether. What is the background of Germany’s phase-out decision and how sensible is it from an economic point of view?

In order to fully answer this question, several aspects need to be acknowledged. First, the phase-out is no impulsive reaction to the Fukushima incident, which came out of the blue. Germany’s powerful anti-nuclear movement dates back to the 1970s; it bred the Green Party which entered the Parliament in 1983 and ascended to the government in 1998 by forming a coalition with the Social Democrats. In 2000 this centre-left coalition put a nuclear phase-out into law for the first time. The early 2020s were identified as the target date for a nuclear free energy system. While subsequent revisions of the law have changed the specifics, the currently stipulated year for the last plant to be shut down, 2022, is well in line with this original perspective. Thus, the phase-out project has always been crafted as a long-term and step-wise process.

Second, the Fukushima disaster effectively killed the narrative that nuclear power was necessary as a ‘bridging technology’ toward a renewables-based energy system. While conservatives had previously argued in line with this logic (and the government led by Chancellor Merkel in 2010 diluted the first phase-out law from 2000 by extending the running times of nuclear plants), they reversed their position after Fukushima. The most immediate consequence of Merkel’s shift on nuclear was the prompt shutdown of seven nuclear power plants in spring 2011. Due to overcapacities, this drop has neither proven to be problematic for the security of supply (contrary to the conservatives’ claims before 2011) nor has it led to an enduring increase of wholesale prices or a requirement to import foreign nuclear power. In fact, Germany is still a net exporter of electricity.

Third, Germany is not alone in phasing out nuclear power. As can be seen from Table 1, there are several countries in Europe that do not rely on nuclear power or have also declared their intention to stop nuclear energy production. While some of the countries without nuclear are smaller EU member states, it is noteworthy that Italy, another highly industrialised economy and member of the G7, has never used nuclear power. The highly diverse picture of nuclear energy in Europe becomes complete when the huge differences in nuclear-shares among countries are considered, as well as the fact that countries such as Poland intend to enter this form of energy.

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