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Energy and Power
Energy and Power
STEPHEN G. GROSS
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DOI: 10.1093/oso/9780197667712.001.0001
To Rachel, Duncan, and Lucy
CONTENTS
An Energy Miracle?
On June 1, 2004, before 3,000 delegates from over 150 countries,
Germany’s flamboyant environmental minister declared that “the age
of renewables has now begun.” Jürgen Trittin, a stalwart of the
Green Party known for his acerbic wit, was presiding over an
international conference on renewable energy in his nation’s former
capital of Bonn. Reflecting on Germany’s recent achievements, Trittin
saw a model for the world. Energy efficiency and solar and wind
power, he proclaimed, were the key to fighting global warming and
bringing prosperity to the world. No more were these technologies a
“niche market,” he concluded. “They are our future.”2
Trittin had good reason for optimism. Since 1998 he had helped
craft a groundbreaking political experiment: the first coalition of the
Left in a large country that combined a Social Democratic Party with
a new political force, the Greens. Between 1998 and 2002 these
former rivals passed a remarkable array of legislation that aimed to
rebuild their nation’s infrastructure on an ecological foundation. “The
end of the oil age,” so they hoped, “is in sight.”3 After 1998 this Red-
Green government began placing solar panels on 100,000 roofs. It
levied an ecological tax on energy use. It reformed the power grid
by guaranteeing profits to anyone who produced electricity from
renewables. Its development bank aggressively financed energy
efficiency enhancements in Germany’s buildings and homes. For
Hermann Scheer, Trittin’s Social Democratic partner, known as the
“solar king” by his allies, this was “an economic revolution of the
most far-reaching kind.”4 Its architects aspired to smash the power
of fossil fuel conglomerates and erect a more democratic economy.
They aimed to turn Germany into a “global leader” of green
technology, where the “export markets are huge.” And they
promised to liberate the nation from the “energy conflicts” that
loomed as the world burned through its conventional petroleum.5
When Trittin addressed the renewable conference on the banks of
the Rhine, these promises seemed on the cusp of realization.
Germany boasted a third of global wind power capacity. Solar was
growing even faster. By 2004 the Federal Republic accounted for 80
percent of all solar photovoltaics in Europe. And by 2006 it was
installing nearly half of all new solar panels in the world, despite a
cloudy climate that gets as much annual sunlight as Alaska. New
production techniques developed by Germany’s Mittelstand
companies made them global leaders in solar and wind technology,
unleashing a revolutionary fall in the cost of renewables and bringing
carbon-free energy into the realm of the economically possible. The
country, moreover—the third largest manufacturer in the world after
the United States and China—had taken great strides in reducing its
energy footprint. While America, France, and Britain were all
reaching a new historical peak in the total volume of energy they
consumed, Germany’s energy use had fallen by 15 percent from its
1979 height even as its economy expanded (see Figures I.1 and
I.2).6
Figure I.1. Total primary energy consumption in the Federal Republic, 1950–2008.
Indexed from 1950 = 1.
Source: European energy data from Energy History: Joint Center for History and
Economics. https://sites.fas.harvard.edu/~histecon/energyhistory/; American
energy data from U.S. Energy Information Administration. www.eia.gov; GDP and
price index from the OECD. https://data.oecd.org/.
Figure I.2. Energy intensity of the Federal Republic’s economy (primary energy
consumption divided by real GDP), 1970–2008. Indexed to 1970 = 1.
Source: European energy data from Energy History: Joint Center for History and
Economics. https://sites.fas.harvard.edu/~histecon/energyhistory/; American
energy data from U.S. Energy Information Administration. www.eia.gov; GDP and
price index from the OECD. https://data.oecd.org/.
German Divergence
This book shows how the Federal Republic walked a different energy
path than other large, industrial countries like the United States,
Britain, and France. Yet that very difference can help us understand
patterns common to energy transitions. The story that follows is a
mixture of peculiarities and general developments, with Germany’s
energetic road both an inspiration and a warning.
As in other countries, policy in the Federal Republic was informed
by two distinct energy paradigms. The first, older paradigm held that
energy must be cheap and abundant for growth, and that these
goals were best achieved through markets. But gradually a new
energy paradigm arose to question this, suggesting that societies
could achieve welfare without consuming ever more energy; that
energy prices should be forcefully guided by the state; and that the
very concept of growth must be reimagined.
The history of German energy is the history of the struggle
between these two paradigms. The idiosyncratic thread in Germany’s
story are those decisions that led the new paradigm, during crucial
moments, to overcome the older one, in contrast to the United
States, Britain, and France. Strikingly, the new paradigm
strengthened just when neoliberalism as a philosophy of governance
advanced around the world and decried the very policies that might
kickstart a green transition. Even as climate change was creating an
urgent need for decisive state action, faith in the efficiency of free
prices, skepticism of government action, and a desire to insulate
markets and private capital from democratic politics, voters, and
parties spread through powerful global institutions, from the US
Treasury to the European Commission and the World Trade
Organization. That a newly reunified Germany bucked the global
trend toward market fundamentalism to pursue a state-guided drive
into renewables stands out as a puzzle.31
Germany’s idiosyncratic energy trajectory grew partly from the
distinctive circumstances it faced after World War II. Whereas the
United States pioneered high-energy society in the early twentieth
century, powering growth with its rich endowment of all fossil fuels,
Germany had preciously little hydrocarbons in its own territory. Nor,
after their failed bid for continental hegemony under the Nazis, did
Germans own any of the multinational companies that held
commanding stakes in the great oil fields of the Middle East, in
contrast to Americans, British, and French. The Federal Republic
came to depend on foreign-owned hydrocarbons, and this would
make the possibility of a new, greener energy system seem
attractive and viable earlier in Germany than elsewhere.
But more importantly, Germany’s unique path grew from specific
decisions made after 1945. Both the United States and Britain
responded to the economic malaise of the 1970s with market
fundamentalism and the construction of a “neoliberal order.” Under
Margaret Thatcher and Ronald Reagan, both great powers shifted
energy ever more into the hands of the market, their leaders
believing that deregulation, low taxes, privatization, and market
pricing would revive growth and enrich key stakeholders, while also
managing challenges of energy scarcity and environmental damage.
Even the European Union, through its Commission in Brussels,
began gravitating toward neoliberal ideas as it tried to reinvigorate
growth through energy market reform. France, meanwhile, followed
a dirigiste policy that prioritized nuclear power for reasons of
national prestige, which eventually made it an alternative model for
combating global warming.32
Germany, by contrast, chose a different energetic route from that
of the United States, Britain, or France, a route that historians often
explain by pointing to the country’s powerful environmental
movement. What Paul Nolte has called Germany’s Green Sonderweg
—or special path—is embodied in the rise of an influential Green
Party far earlier than in these other nations.33 The product of an
anti-nuclear grassroots movement in the 1970s, the Green Party
broke into national Parliament in 1983 and altered West Germany’s
political culture. This narrative explains Germany’s energy pathway
as the product of outsiders—citizens’ initiatives, left-wing student
groups, renewable enthusiasts—who hoped not only to reform the
energy system, but to transform West German political culture by
building a small-scale, more democratic, and decentralized society.
In the words of Craig Morris and Arne Jungjohann, “Germany’s push
for renewables stems from the people, not the government.”34
This story, however, shades into triumphalism and disregards the
energy problems that this movement from below itself created.
Equally important, it overlooks a broader political economy in the
Federal Republic whose internal dynamic generated powerful
reasons—often reasons quite different from those of the Green Party
—for favoring a transition off fossil fuels or nuclear power. This
Green Sonderweg narrative juxtaposes its protagonists against a
technocratic, closed-door style of governance hell-bent on
consuming ever more energy at the expense of both the demos and
the environment. But by rendering a monolithic image of the
establishment against which the Green Party reacted, it overlooks
elements of change that came from political and economic insiders,
above all from the reform wing of the Social Democratic Party (SPD),
unions, some domestic companies, and mainstream experts.
Rather, Germany’s distinctive approach to energy emerged from a
synthesis of outsiders and insiders, who saw the benefit of working
through market devices to shape energy consumption and
production, but who accepted that energy markets were inherently
political. This was corporatism in matters of energy, which brought
various and often competing stakeholders together during inflection
points and crises to negotiate the energetic future of the nation.
Instead of trying to “encase markets” and protect them from politics,
as neoliberals did elsewhere, German policymakers embraced the
fact that social actors and politics should determine the basic
orientation of the energy system.35 But in contrast to dirigiste
systems, as in France, the Federal Republic deployed market
mechanisms that it guided with a strong hand.
Figure I.3. The Federal Republic’s mixture of primary energy consumption, 950–
2020. Percentage of total energy consumed.
Source: Data from AG Energiebilanzen e.V.
This first postwar transition, moreover, led the nation into great
dependency on a foreign-owned hydrocarbon supply chain over
which the Federal Republic had little control because it lacked a
multinational oil company. From an early stage, this supply chain
proved susceptible to crises: closures of the Suez Canal in 1956 and
in 1967, and coal crises in 1950, 1958, and 1966. Well before the
pivotal oil shock of 1973, during the very Economic Miracle that is so
often described as an era of stability, the nation suffered no less
than five energy crises.
This turbulence turned energy into a politicized arena in West
Germany much earlier than in North America, and shaped policy in
several ways. First, as energy became politicized, West Germans
began paying closer attention to how it was priced. Beginning with
vitriolic debates in the 1950s, politicians, experts, and the public
came to view the price of energy not only as something that the
market could not determine, but as something that it should not
determine. Miners, environmental activists, and others began calling
on the state to guide the price of energy to achieve specific goals.
These goals would change with time, and eventually most groups
came to accept that energy was a political market, and many argued
for a high energy price to stimulate conservation and encourage
alternative energies.
Second, because of energy’s politicization, West German
economists began studying it as a coherent field of knowledge
earlier than elsewhere. On the one hand, energy economics became
a pillar of West Germany’s closed-door technocratic governance,
which would spark a backlash that demanded a more democratic
energy system. On the other hand, this field of knowledge did not
dematerialize the economy in theory, as did mainstream economics
in the United States. Because energy was so crucial to their models,
German economists grappled with the effects of energy crises more
than their counterparts across the Atlantic. This eventually led them
to advocate an active government agenda instead of leaving energy
to the market, and to champion the new energy paradigm.
Third, the politicization of energy made security a major issue in
West Germany well before 1973, as politicians, the coal industry, and
nuclear advocates criticized the foreign-owned hydrocarbon supply
chain already in the 1950s and 1960s, to be joined later by
environmentalists and natural gas boosters. Conservation could gain
more traction among political insiders than in the United States or
Britain because it was presented as a solution to the long-standing
problem of security. So too did natural gas from the Soviet Union.
West Germany’s shift to oil, in other words, created a fertile
landscape in which the seeds of a green energy transition might
later take root, even if these were planted for reasons that had little
to do with ecology or climate. But other developments contributed to
this landscape, above all West Germany’s self-understanding as an
export nation. With an economy powered by energy-intensive
exports, like steel and chemicals, after 1950 Bonn worked to keep
fuel prices low. But as the global economy transformed and exposed
these older industries to foreign competition, German leaders began
seeking new sectors that could excel in the global marketplace,
which it assisted with an “entrepreneurial state” that guided
research and created new markets.36 In the 1960s Bonn kick-started
nuclear power because experts believed reactors would be the next
great export engine. As the prospect for nuclear exports withered,
some looked to the construction of natural gas infrastructure across
Eurasia as a new engine for export contracts. But others fastened
onto technologies that could either conserve energy or produce it
from new sources, redirecting the entrepreneurial state toward
renewables in order to stimulate exports, creating avenues for
collaboration between business elites and environmentalists.
After 1980, in sum, many West Germans wanted to overhaul their
nation’s energy system. But calls for a transition were coming from
two different directions. The Greens hoped to democratize the
energy economy through a decentralized, citizen-run power grid.
Meanwhile, insiders—the SPD, some unions, conventional experts,
and key business groups—wanted to forge a new energy system in
the name of security and sales abroad.
What brought these strands together were the languages of
Ordoliberalism and Ecological Modernization. The former shared
similarities with neoliberalism in calling for a strong state to set
ground rules for competitive markets. But its early theorists never
sought to extend market logic to all walks of life, and they fixated on
economic concentration as the root of most problems. This
philosophy profoundly influenced West German politics after 1950,
and it provided a common language for parties—even the Greens,
eventually—to justify their programs to a public proud of the social
market economy. Over time, however, its formal ideas became
hollowed out, and by the 1990s, Ordoliberalism meant different
things to different groups. But this was its strength as a language of
politics, which the Red-Green coalition would use to sell its energy
agenda after 1998.
Substantively more important was Ecological Modernization, the
bedrock of the new energy paradigm, which highlighted the social
costs of production not included in market prices. After 1980, West
German economists integrated ideas about the social cost of energy
with new theories of technological change to create a novel
justification for state-guided prices and investment. When global
warming became a burning issue in the 1980s and 1990s,
policymakers thus had a language that was well-suited for
integrating economic and environmental goals, for building alliances
across parties, and for justifying robust state action in an era defined
by market fundamentalism.
In 1998 these two strands—insiders and outsiders: Greens on the
one hand; Social Democrats, traditional experts, some unions,
portions of the business community on the other—came together to
pass groundbreaking legislation that envisioned a holistic
transformation of Germany’s energy system. And while the
immediate spark for the Red-Green agenda came from anxieties
about global warming, it arose, in fact, from ideas and from a
political economy that had been in gestation for decades, and for
reasons that initially had little to do with climate.
The German story that culminates after 2000 shows how the
history of energy is essential for understanding the twentieth
century. The rise and subsequent revolt against high energy, carbon-
intensive society is entangled with the pivotal, conventional
moments of postwar history; we cannot understand one without the
other. The Economic Miracle; the emergence of consumer society;
the rise and the faltering of Social Democracy; the integration of
Europe; the Cold War and the collapse of Communism—all of these
events have shaped, and in turn been shaped by, Germany’s rapid
succession of energy transitions since 1945. In the Federal Republic,
the politicization of energy began well before the 1973 oil shock, the
emergence of climate change as a global issue, or the rise of the
Green Party. This timing helps explain the nation’s idiosyncratic
energy trajectory, which was made by a tense interaction between
political insiders and outsiders. And it explains as well the intensity
with which Germans approach matters of energy today.
But the story that follows also shows how energy transitions are
multilayered historical processes shaped not only by technology and
prices, but also by human agency and the ability of individuals and
organizations to mobilize for or against particular fuels. Alternative
paths abound throughout history: the essence of the discipline is
excavating these alternatives to understand why some triumphed
and others failed. Germany’s energy path hinged on the interaction
of global and domestic markets, political parties, experts, and
grassroots mobilization, and it was determined by those actors who
effectively built alliances, linked energy to other issues, deployed
powerful visions of the future, exploited crises, and ultimately,
overcame their opponents. As Hermann Scheer poignantly observed,
transitions have spawned some of the most intense social conflicts in
history, precisely because energy touches so many aspects of life.
Germany’s postwar history illustrates just this point: how energy has
been a battlefield in the twentieth century, and will continue to be so
in the twenty-first.
PART I
AU LECTEUR
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