China and Germany not proper energy models for the US

Oct. 29, 2012
In the Oct. 16 debate, US President Barack Obama clarified his energy hopes instructively. Criticizing challenger Mitt Romney for promoting a plan he said would "let the oil companies write the energy policies," the president pointed abroad for guidance—to China and Germany.

In the Oct. 16 debate, US President Barack Obama clarified his energy hopes instructively. Criticizing challenger Mitt Romney for promoting a plan he said would "let the oil companies write the energy policies," the president pointed abroad for guidance—to China and Germany. Obama wants America to have what he said Romney's plan lacks—"the clean-energy part"—because "China, Germany, they're making these investments."

But are the Chinese and German appealing models for the US?

China does invest heavily in renewable energy—a world-leading $52 billion in 2011, according to the United Nations. It invests even more heavily in oil and gas.

Unlike the US, China mostly owns the companies through which it invests all this money and has financial surpluses sufficient to cover the spending.

The German experience applies more relevantly to the US. Germany has implemented the framework Obama pursues: subsidizing renewable energy while discouraging the production and use of commercial energy deemed unappealing. In US, the discouraged energy form is hydrocarbon; in Germany, it's nuclear.

The day before the US debate, Germany's main suppliers of electric power said the charge on consumers to subsidize renewable energy will increase next year by 47%. With rising taxes and network fees, retail prices of electricity, already among Europe's highest, will rise by more than 10%. These costs are materializing even though the German government has been cutting renewable-energy subsidies, recognizing that its generosity with consumers' money has overstimulated the industry.

Meeting Germany's aggressive targets for renewable energy was always going to be expensive. Meeting them without nuclear power, which fell into disfavor after the Fukushima disaster in Japan, will be even more so. So would Obama approve a 10% increase next year in the electricity bills of Americans to support clean-energy investments such as those he so admires in Germany? Americans might want an answer to that question before they vote Nov. 6. All but the most gullible probably know Romney wouldn't really let oil companies write energy policy.