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Germany to close nuclear reactors despite energy crisis

Germany will shut down three nuclear power plants on Friday even as Europe faces one of its worst ever energy crises, following Angela Merkel's timetable for phasing out atomic energy.

Published: 31 December 2021 11:37 CET

The Gundremmingen nuclear power plant, southern Germany

The Gundremmingen nuclear power plant in southern Germany. Germany will shut down three nuclear power plants amid one of the worst European energy crises in history. LENNART PREISS / AFP

With energy prices already on the rise and tensions higher than ever between Europe and key gas supplier Russia, the closure of the plants in Brokdorf, Grohnde and Gundremmingen could well tighten the squeeze.

The move will halve remaining nuclear capacity in Germany and reduce energy output by around four gigawatts — equivalent to the power produced by 1,000 wind turbines.

Protests over the Fukushima nuclear disaster in 2011 prompted former chancellor Merkel to set the wheels in motion for abandoning nuclear power just over 10 years ago.

Germany is planning to completely wind down atomic energy by the end of 2022, when it will shut its final three plants in Neckarwestheim, Essenbach and Emsland.

But with energy prices soaring across Europe, the timing of the plans coming to fruition could hardly be worse.

Europe’s reference gas price, Dutch TTF, hit 187.78 euros per megawatt hour in December — 10 times higher than at the start of the year — and electricity prices are also soaring.

The spike has been fuelled by geopolitical tensions with Russia, which supplies one third of Europe’s gas.

Western countries accuse Russia of limiting gas deliveries to put pressure on Europe amid tensions over the Ukraine conflict.

Moscow also wants to push through the controversial Nord Stream 2 pipeline, set to ship still more Russian gas to Germany.

Price hikes
The end of nuclear power in Germany will likely push prices up even further, according to Sebastian Herold, a professor of energy policy at the Darmstadt University of Applied Sciences.

“In the long term, the hope is that an increase in renewable energy will balance things out, but this will not be the case in the short term,” he told AFP.

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Until Germany can really ramp up renewables, it will remain dependent on fossil fuels to plug the gap left by the nuclear exit.

“This will make Germany more dependent on natural gas overall, at least in the short term, and thus also a little more dependent on Russia,” Herold said.

The transition may also take longer than Germany would like, with progress on renewables slowed in recent years by opposition to energy infrastructure projects.

The proportion of energy generated by renewables is expected to fall in 2021 for the first time since 1997 — to 42 percent, compared with 45.3 percent in 2020.

As well as driving up prices, the nuclear plant closures will also remove a key source of low-carbon energy in a country that is already struggling to meet ambitious climate goals.

The new coalition government under Social Democrat Olaf Scholz has pledged to bring forward Germany’s planned coal exit to 2030 and wants Germany to generate 80 percent of its electricity from renewables by the same year.

Second thoughts?
But Robert Habeck, the co-leader of the Green party and head of a newly created super-ministry for the economy and climate, admitted this week that Germany is already on course to miss its climate targets for 2022 and probably also 2023.

Other EU countries, including France, are continuing to push nuclear energy and campaigning for it to be included on the EU’s list of sustainable energy sources eligible for investment.

Even in Germany, public opinion towards nuclear seems to be softening.

In a recent YouGov survey for the Welt am Sonntag newspaper, around 50 percent of Germans said they were in favour of reversing the planned nuclear shutdown due to the recent sharp rise in energy prices.

Monika Schnitzer, a member of the German Council of Economic Experts, told the Rheinische Post newspaper that it would make sense “economically and ecologically” to delay the shutdown.

But the government is sticking to Merkel’s plan, with Habeck this week defending the nuclear shutdown.

Any politician calling for the reintroduction of nuclear energy “would also have to say, I would like to have the nuclear waste in my constituency,” he said. “As soon as someone says that, I will revisit the issue.”

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Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.