The Rise and Fall of Energiewende: A Case Study in Horse Racing Syndrome

A dozen years ago, the New York Times introduced a new word into its vocabulary: Energiewende. Chancellor Angela Merkel’s government had accelerated the phaseout of Germany’s nuclear reactors after the Fukushima disaster in 2011, and building a new climate-friendly energy system was the order of the day. Moreover, German taxpayers were at the time paying billions of euros as subsidies for renewables. A few years later, the term began to disappear from the newspaper, and the few articles that still cite Germany’s Energiewende today often reveal skepticism toward the concept. This does not mark the end of the Energiewende. It does, however, provide an exemplary case for what I call the horse racing syndrome.

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Decarbonizing an industrial economy is a titanic task, and Germany’s long love affair with coal does not exactly reduce the challenge. Furthermore, Germany’s energy transition is essentially market-driven, and the dynamism of modern capitalism adds another layer of complexity. The Energiewende is the cumulative product of countless small steps in a quest that combines profit seeking and environmental sustainability and that makes it tempting to cut through the complexity by focusing on the bottom line. Many observers discuss which country is leading the race to carbon neutrality, which country is doing well in the race, and which country seems to lag behind. In the process, these observers reduce the energy transition to a steeplechase that began decades ago.

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This article proposes a different way to conceptualize the energy transition. The following comments will convey a measure of respect for the contingency of the future, as historiographic work is still in its infancy. However, the history of energy has thrived in recent years, as have the energy humanities of which it is a constituent part and many of these studies have identified different bottlenecks for each stage of the energy transition.¹ Focusing on these bottlenecks provides us with a better, more engaging narrative for the energy transition that allows for an alternative to the cheerleading tone of steeplechase narratives. With horses now long out of the energy business, it may also be time to retire them in our collective imagination of energy.

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Monopoly power

In the past, it was not difficult to identify the elements crucial to any renewable energy regime. In the 1980s, the then nascent Green Party in West Germany summarized them in less than half a page in its first party program: more efficient power plants, wind and geothermal energy, education for the consumer, and so forth.² Some of these elements proved more significant than others. Globally, rigorous curbs on consumer choices have been a nonstarter since the energy debates of the 1970s, fittingly symbolized in the US by the fallout from President Jimmy Carter’s infamous “malaise speech” in 1979.³ But as early as 1980 in West Germany, the Green Party was confident that the energy transition would require neither fundamental technological break-throughs nor a return to pre-industrial production modes or state-mandated restrictions on consumption. Gradual coordinated change at the level of production and transmission would do the job, albeit on a giant scale.

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In an open society, it would have been a matter of political will and the right tools to nudge the energy sector into the desired direction. Unfortunately, Germany’s energy sector bore greater resemblance to a closed shop. Like in most Western countries, utilities in Germany were categorized as natural monopolies. Thus, there was limited competition as well as limited interest in technological innovation, at least at a time when innovation primarily concentrated on moving beyond coal. German utilities managed a number of alternative energy projects in the 1980s, most famously the Growian wind turbine near the North Sea and RWE’s Kobern-Gondorf solar complex on the banks of the Mosel River.⁴ However, both projects brought meagre results that did not inspire subsequent investments. Moreover, there are indications that energy companies did not mind terribly that these projects were not greatly successful. Managers could henceforth cite the failure of renewable energy projects when they argued for the continued primacy of fossil fuels.

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It took a rare political maneuver to break the logjam. The original impulse came from the peculiar blending in Bavaria of personal and political interests known as Spezlnwirtschaft. The ambiguous hero of this event was Matthias Engelsberger, member of the federal parliament for the conservative Christian Social Union (CSU). Engelsberger pushed for a law that compelled energy companies to buy renewable electric power at fixed tariffs. It was a personal issue for him: his family owned a sawmill that had potential for hydropower and, in the sunset phase of his career, he was largely immune to electoral repercussions for self-interested policy making. The ecological implications were clear, however, and the law passed with support from the Green Party and the Social Democrats in 1990. With that, companies could finally be sure that utilities would buy renewable energy.⁵ 

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A climate for investments

Engelsberger’s law triggered a boom in wind energy investments. The market was still abysmally small by today’s standards, but it was enough to scare the German energy establishment. Company lawyers drafted legal opinions that curtailed the law’s enforcement. Less visibly, lobbyists sowed doubts about the legitimacy of climate policy. Much of that anti-environmental plotting is still waiting to be examined: while climate change denial in the US has been studied extensively, comparable research is still in its infancy for Germany, and certainly not for lack of deniers’ nefarious activities.⁶ Claudia Kemfert reported that she still heard the familiar climate denial nonsense in the halls of power in the 2010s.⁷

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These companies’ and lobbyists’ activities stalled the Energiewende, but a new coalition of Social Democrats and Greens came to power in Germany in 1998 and revived it. From 1998 to 2005, the charismatic chancellor Gerhard Schröder, whose energy policy achievements are now overshadowed by his incessant lobbying for Russian gas, led these efforts. Already in the early 1990s, following another Wende—the peaceful revolution that overthrew the communist dictatorship in East Germany—Schröder was eager to break the logjam that blocked new investments. “We ceased doing energy policy in the Federal Republic of Germany ten years ago,” Schröder wrote in a memorandum for the presidium of the Social Democratic Party (SPD) in 1993. The report took aim at the prevailing mood in leftist circles, where an anti-nuclear stance had overshadowed everything else (except coal subsidies) since the 1980s and thereby undermined the left’s ability to spark wider changes in environmental policy. The title of the report itself warned “not to take intentions as deed” (Nicht die Absicht schon für die Tat nehmen).⁸ Schröder understood that real change was about investments rather than convictions, and companies needed reassurance that there would be a market for renewable energy. When he became German chancellor in 1998, the share of renewables (excluding hydropower) was still below two percent.⁹

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Schröder’s government combined a planned phaseout of nuclear power with financial incentives for renewable energy projects and largely stuck to the general framework of the 1990 law. The government set prices for different types of renewables and gave them priority on the electric power market: utilities could not block the sale of renewable power at times of abundant supply. Subsidies were inevitably expensive, but they were set to decline over the years in the hope of stimulating innovation, and the marginal market share of renewables curtailed costs during the first years of the transition. Investments in renewables were finally attractive from both a financial and a sustainability point of view, and windmills, solar panels and reactors for biogas became familiar features of the German landscape.

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In retrospect, the most remarkable aspect of the red-green energy policy was that it was based on an agreement between the government and the utility companies on the gradual phaseout of nuclear power. West Germany’s reactors had permits without an expiration date, quite unlike nuclear power plants in the US, where utilities need to reapply for a license to operate after a specified time. In Germany, these permits were the chief obstacle for phaseout plans among anti-nuclear policymakers. Utility companies were certain to claim economic damages if a government imposed a time limit by law or decree, and estimates of potential costs amounted to staggering numbers. Anti-nuclear sentiment had spread through major parts of the German electorate, but it was less than certain whether taxpayers would welcome a nuclear phaseout when it came with a price tag in the range of tens of billions of euros.

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The consensus over nuclear energy was the result of intense negotiations that spanned an entire decade. But why did German utilities accept an agreement that placed a time limit on their investments? Many factors figured into their acceptance, but at the end of the day, it was simply good business. The pros and cons of nuclear power had been fixtures of German political discourses since the 1970s, but energy managers were not in the mood for endless debates. The energy business entails enormous amounts of fixed capital, and corporate captains cherish reliable parameters for investments. A time limit on permits would lead to a financial loss, but if it came with a legal guarantee that the plants could operate unchallenged for up to two additional decades, the proposition was worth discussing. Interestingly, it was the utility companies that talked about the need for a “consensus in energy policy” years before negotiations started in earnest. In May 1990, Hermann Krämer, CEO of PreussenElektra, presented a policy paper in the name of all German utilities operating nuclear power plants that included a pledge to be available for a “constructive dialogue.”¹⁰

Dynamic energy markets

The ensuing nuclear consensus was a product of the late “Deutschland AG.” Representatives of large German corporations spoke with each other and government officials on a regular basis. If interests converged, the companies were ready to strike a deal. These negotiations helped to reduce the uncertainties inherent in doing business, thus mitigating the risks of costly mistakes and nerve-racking conflicts. However, negotiations among a cartel of corporate captains required a reasonable degree of certainty that newcomers would not be able to dart ahead and sideline negotiations with bold initiatives. The electric power business had been the prototypical case of a market with limited competition as long as utilities were monopoly suppliers within designated regions by law. This situation, however, crumbled in 1996, when the European Union (EU) called for changes in the electric power sector in order to create the common market for energy. Private consumers gained the right to switch suppliers, and competition emphasized prices and sustainability pledges. The result was a dynamic market, something most utility companies had not experienced in decades.

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Despite the reintroduction of price competition, the new energy market was hardly a neoliberal dream. Regulators favored renewable energy projects in order to achieve climate policy goals, or rather to avoid missing these goals by even wider margins. The system of fixed prices for carbon-neutral electricity was inevitably at odds with free market utopias, and adjustments were part of the plan from the outset. But identifying the right price was a challenge: subsidies were meant to incentivize investments but not allow excessive profits. Relatedly, total expenses were supposed to remain within reasonable limits. In other words, the energy transition had become a delicate balancing act in regulatory politics, and not everyone was up to the challenge. The second coalition government under Angela Merkel failed in its management of subsidies in the aftermath of the Fukushima disaster in 2011, and rising costs provoked feverish attempts to reduce the costs of the energy transition. The government patched together a break on electric power prices (Strompreisbremse), and the new rhetoric focused on curbing costs, never mind that these costs were invariably linked to another stated policy goal. The net result was that the much-hyped Energiewende proclamation was essentially hollow by the next election in 2013. Energy policy remained a fudge during the remainder of Merkel’s tenure in office.

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In part, this is because Merkel’s governments dithered about the elephant in the room. Amidst all of this talk of adding renewables to the energy mix, no one produced a fitting plan for actually replacing fossil fuels. When and how would Germany phase out coal? Subsidies for domestic coal production were one of the sacred cows of German politics, and not just because of Social Democratic concerns about mining jobs. Helmut Kohl had intervened forcefully in 1997 when his fellow Christian Democrats were openly discussing a planned phaseout of coal mining, unequivocally declaring, “This will not happen as long as I am chancellor.”¹¹ Under Merkel, adopting a wait-and-see attitude, Germany was not among the founding members of the Powering Past Coal Alliance, an international coalition launched by Canada and Great Britain in 2017. When it joined in 2019, it did so after agreeing on an extremely costly phaseout policy. The price tag added up to a million euros for every job in coal mining. It was a debacle foretold.¹²  

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In 2021, Germans elected a new coalition government that includes the SPD, the Greens, and the neoliberal Free Democratic Party (FDP). Their early attempts to further the Energiewende were quickly overshadowed by Russia’s invasion of Ukraine, and while much points to a reinvigoration of the energy transition, it would be premature to provide an assessment at this point. However, the essentials ring familiar. At its heart, the energy transition is a business project, and everything revolves around investments, corporate strategies, and permits, which all have a measure of complexity. Moreover, few companies invite transparency about their business plans, and parameters such as load factors on power grids sound like the perfect issue for nerds. But for all the insider code, there are ways to communicate challenges beyond expert circles. There is even a decent slogan at hand for the name of the game: “it’s the economy, stupid.” But then, you can always shift into horse racing mode.

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A time for legends

Conversations do not end when the horses have crossed the finishing line. A big part of horse racing is about retrospective ruminations on who failed and for what reason. Maybe nuclear power would have rebounded in Germany after Russia’s assault on Ukraine if policymakers had read the right memo? This scenario was the essence of a May 2024 cover story in Cicero, a German self-styled “magazine for political culture”. The journal had sued the Federal Ministry for Economic Affairs and Climate Action for access to some of its files and found a memo that declared reactors safe with an extended lifespan. Maybe German reactors would still be on the grid if people had known?¹³

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The source base was flimsy at best, but post-race ruminations are rarely about sound evidence. They are about coping with defeat: if you have a penchant for nuclear power (or a job in the business), its demise feels a bit less devastating if it came about due to the shenanigans of faceless bureaucrats. It helps that Merkel’s turnaround on nuclear power came after the Fukushima disaster and that the rationale was framed in safety terms. Fears have been a prominent part of the critique of nuclear power since the 1970s, and energy pundits were glad to seize on the issue because it provided a distraction from nuclear power’s dismal economic performance. Ten years ago, I wrote an article that there was a new “stab-in-the-back” myth in the air: nuclear power as a successful technology, unfortunately killed by exceedingly timid Germans.¹⁴ It looks prescient now, except that the extent of pro-nuclear sentiment is staggering. Even the Christian Democrats ditched Merkel’s post-Fukushima stance: the new party program speaks glowingly of fourth- and fifth-generation nuclear power plants. It takes “new ideas” for a new age of energy, the party asserts, which glosses generously over the fact that Germany’s experiment with nuclear power is almost 70 years old.¹⁵

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The times are ripe for more mythmaking. After all, the race is basically over on the energy market. Global investments in climate-friendly energy sources have exceeded investments into fossil fuels for several years, and nothing points to a dramatic comeback of fossils at the expense of renewables in the foreseeable future. The latest news is that 59 percent of German electric power production came from renewable sources in 2024. However, speculating about when that share will reach 70 or 80 percent lacks the excitement of the days when the energy transition was still in its infancy. Furthermore, legends do well on social media, where the fracturing of our collective imagination is on display each and every day. Those platforms thrive on a stock of anger that seems to be the only thing in the world of energy that knows no limits. Horse racing syndrome is the perfect fit for a world with plenty of moral indignation and a nagging inability to connect the dots.

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Articles in this series

Introduction: Energy Humanities in Practice: Teaching, Technology, Transition

EH in Practice 1: Libraries and Laboratories: Teaching Energy Humanities in Literary Studies

EH in Practice 2: The World of Energy and The Myth of Containerization

EH in Practice 3: Museums and the Challenge of Cultural Decarbonization

EH in Practice 4: Preserving Oil: In Conversation with Educators at the Norwegian Petroleum Museum and Oil Museum of Canada

EH in Practice 5: Virtue Ethics and Ecosabotage

EH in Practice 6: The Rise and Fall of Energiewende: A Case Study in Horse Racing Syndrome

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Notes

1. This essay draws particularly on Stephen G. Gross, Energy and Power: Germany in the Age of Oil, Atoms, and Climate Change (Oxford University Press, 2023), and my own Atomare Demokratie. Eine Geschichte der Kernenergie in Deutschland (Franz Steiner, 2022). Credit is also due to the students who attended my courses at Ruhr University Bochum during the winter term 2023/24, where the following thoughts took shape.

2. Die Grünen, Das Bundesprogramm, 11, available online at https://cms.gruene.de/uploads/assets/1980_Grundsatzprogramm_Die_Gruenen.pdf (retrieved May 23, 2024).

3. Daniel Horowitz, The Anxieties of Affluence: Critiques of American Consumer Culture, 1939-1979 (University of Massachusetts Press, 2004), 238.

4. Matthias Heymann, Die Geschichte der Windenergienutzung 1890-1990 (Campus, 1995); Joachim Radkau, "Das deutsche Drama der Solarenergie: Zwischen Triumph und Tragödie," Geschichte im Westen 38 (2023): 131-155; 140.

5. Gross, Energy and Power, 234-236.

6. Naomi Oreskes, Erik M. Conway, Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming (Bloomsbury, 2010)

7. Claudia Kemfert, Schockwellen: Letzte Chance für sichere Energien und Frieden (Campus, 2023), 167.

8. Archiv der sozialen Demokratie Bonn, SPD-PV-Bestand 2/PVAS Präs. 25.10.93, Bericht von Ministerpräsident Gerhard Schröder zu den Energiekonsensgesprächen für die Präsidiumssitzung der SPD am 25.10.1993, 1.

9. Klaus-Dieter Maubach, Energiewende: Wege zu einer bezahlbaren Energieversorgung, 2nd ed.(Springer VS, 2014), 64.

10. Hermann Krämer, "Zur derzeitigen Situation und zukünftigen Rolle der Kernenergie. Positionspapier der kernkraftwerksbetreibenden Unternehmen der öffentlichen Stromversorgung," atw 35 (1990), 384.

11. "Die Machtfrage stellen," Der Spiegel no. 12 (March 16, 1997): 22-26; 25.

12. I wrote an op-ed column for Focus Online at the time, and I was pulling my hair out in real time. See: Frank Uekötter, Einfach war Gestern: Über Umweltpolitik in unruhigen Zeiten (Munich: oekom, 2021), 15-33.

13. Daniel Gräber, "Der Anti-Atom-Schwindel," Cicero no. 5 (May, 2024), 14-25.

14. Frank Uekötter, "Die neue Dolchstoßlegende. Fukushima und die Mythen der atomaren Geschichte," in: Jochen Ostheimer, Markus Vogt (eds.), Die Moral der Energiewende. Risikowahrnehmung im Wandel am Beispiel der Atomenergie (Stuttgart, 2014), 244-260.

15. CDU, In Freiheit leben. Deutschland sicher in die Zukunft führen. Grundsatzprogramm der CDU Deutschlands, 64, available at https://www.grundsatzprogramm-cdu.de/sites/www.grundsatzprogramm-cdu.de/files/downloads/240507_cdu_gsp_2024_beschluss_parteitag_final_1.pdf (retrieved 22 May 2024).

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Libraries and Laboratories: Teaching Energy Humanities in Literary Studies

The World of Energy and The Myth of Containerization

Museums and the Challenge of Cultural Decarbonization

Preserving Oil: In Conversation with Educators at the Norwegian Petroleum Museum and Oil Museum of Canada, graphics

Virtue Ethics and Ecosabotage