German Chancellor Angela Merkel is anything but a left-wing greenie. The party she leads, the Christian Democratic Union, is the political equivalent of the Republicans in the U.S. Her coalition government is decidedly pro-business. Often described as Europe’s most powerful politician, Merkel’s top priority is job creation and economic growth.



Yet if the chancellor succeeds with her new energy policy, she will become the first leader to transform an industrialized nation from nuclear and fossil fuel energy to renewable power.



In mid-March, Merkel stunned the German public and other governments by announcing an accelerated phasing out of all 17 German nuclear reactors as an immediate reaction to the Fukushima disaster in Japan. The chancellor now says she wants to slash the use of coal, speed up approvals for renewable energy investments, and reduce CO2 emissions drastically. That means that the 81 million Germans living between the North Sea and the Alps are supposed to cover their huge energy needs from wind, solar, geothermal, and biomass within a few decades. Indeed, by 2030 green electricity could be the dominant source of power for German factories and households.



“We want to end the use of nuclear energy and reach the age of renewable energy as fast as possible,” Merkel said.



After the chancellor’s surprising announcement, opposition parties from the left decried it as a political stunt, an act of opportunism, and even panic, ahead of key regional elections in Southern Germany. But after these elections were lost by her party, Merkel soldiered on. In the past weeks, government officials have already offered details of the “energy turn,” as Merkel calls the change.



The plan makes Germany the world’s most important laboratory of ‘green growth.’

The numbers that circulate in Berlin’s government district at the moment are staggering. Merkel’s administration plans to shut down the nuclear reactors — which in recent years reliably provided up to a quarter of Germany’s huge needs as baseload electricity — by 2022 at the latest. It wants to double the share of renewable energy to 35 percent of consumption in 2020, 50 percent in 2030, 65 percent in 2040, and more than 80 percent in 2050. At the same time, the chancellor vows to cut CO2 emissions (compared to 1990 levels) by 40 percent in 2020, by 55 percent in 2030, and by more than 80 percent in 2050.

That makes Germany the world’s most important laboratory of “green growth.” No other country belonging to the G20 club of economic powers has a comparable agenda. In the U.S., President Obama is expanding state-backed loan guarantees for the nuclear industry to build more reactors, and Republicans are blocking measures to reduce CO2 emissions. Germany is Europe’s largest economy. Making such a country a renewable powerhouse would transform it into the undisputed mecca for everyone on the planet concerned with the environment and green-tech business.

But why would Merkel have Germany do what other big nations deem too risky and too expensive? Is she prepared to sacrifice Germany’s economic viability, which stems from manufacturing and technology export to a great extent?

Clearly, Angela Merkel has reacted to the Fukushima disaster completely differently from Barack Obama and other world leaders. In the past, Merkel too has been pro-nuclear. She was convinced that nuclear power was safe and clean, and that the Chernobyl accident was a result of Soviet inefficiency, not of the technology itself. Only last year, she fought to extend the operation time of Germany’s reactors by 12 years on average, against fierce opposition from the left and environmental groups.

Getty Images

In my view, the key to the chancellor’s radical turnaround lies deep in her past. In the 1980s, well before she became a politician, Merkel worked in the former East Germany as a researcher in quantum chemistry, examining the probability of events in the subatomic domain. Her years of research instilled in her the conviction that she has a very good sense of how likely events are, not only in physics but also in politics. Opponents of nuclear energy were “bad at assessing risks,” she told me in the 1990s.

Then came the March disaster at the Fukushima-Daiichi nuclear power plant, which made the chancellor realize that she had been terribly wrong about the probability of a nuclear catastrophe in a highly advanced nation. Merkel’s scientific sense of probability and rationality was shaken to the core. If this was possible, she reasoned, something similar might happen in Germany — not a tsunami, of course, but something equally unexpected. In her view, the field trial of nuclear energy had failed. As a self-described rationalist, she felt compelled to act.

”It’s over,” she told one of her advisers immediately after watching on TV as the roof of a Fukushima reactor blew off. “Fukushima has forever changed the way we define risk in Germany.”

Merkel’s conservative environment minister, Norbert Röttgen, recently echoed this line of thinking when he said that the Fukushima disaster “has swapped a mathematical definition of nuclear energy’s residual risk with a terrible real-life experience.” He added: “We can no longer put forward the argument of a tiny risk of ten to the power of minus seven, as we have seen that it can get real in a high-tech society like Japan.”

The new course is a huge challenge in terms of cost and feasibility. Of the current 82 gigawatts of peak demand, about half comes from coal, 23 percent from nuclear, 10 percent from natural gas, and 17 percent from renewables. That means three quarters of Germany’s electricity sources will have to be replaced by green technology within just a few decades, if the nuclear phase-out and the CO2 goals are to be accomplished.

Chancellor Merkel’s big hope for her ‘energy turn’ is offshore wind energy.

Germany is in a good starting position, though. Since the 1990s, the Renewable Energy Sources Act has paved the way for billions of Euros flowing to consumers and investors for green power projects. The law guarantees that each kilowatt hour of green electricity is fed into the grid and bought at a favorable statutory rate by operators. The rate varies between green energy sources, but is considerably higher than normal electricity prices. It is guaranteed for a 20-year period. This makes investment in renewable energy projects very attractive; witness Google recently pumping money into a German solar park.

As a result, the share of renewable electricity in Germany has jumped from 5 percent in the 1990s to 17 percent today. Traveling through the country, it is easy to see signs of this change. In the north, wind farms are now characteristic of many regions, particularly along the coastlines of the North and Baltic seas. In the south, which is richer in sunlight, photovoltaic cells cover the roofs of whole villages. The bright yellow of rapeseed is prevalent in many regions, as the plant is widely used for producing biodiesel. More and more farms are equipped with big tanks holding “biomethane” derived from maize or agricultural residues.

Merkel’s big hope for her “energy turn” is offshore wind energy. After a sluggish start, several new commercial projects are under construction. On May 2, Merkel proudly pressed a button at a ceremony on the Baltic Sea coast, setting in motion 21 huge offshore wind turbines 16 kilometers away at sea. Taken together, they can provide 50,000 households with renewable energy.

“Baltic 1” is Germany’s first commercial offshore windpark. The turbines have been constructed by Siemens, a company that until recently earned most of its money in the energy sector by building nuclear and fossil-fuel power plants. The wind farm is run by EnBW, a German utility that has so far produced most of its electricity with nuclear power plants. Nothing could symbolize the new policy better than this offshore wind farm.

Merkel’s big bet is that environmental technology will be one of Germany’s most important sources of income. Already, the country’s share in the green-tech world market is 16 percent, which means billions of Euros in business. Renewable energy has generated 300,000 `green collar’ new jobs in the past decade, Röttgen says. Big companies like Siemens and Bosch are determined to become “green multinationals.” Thousands of small- and medium-sized technology companies see green technology as an important part of their business and investment strategy.

Experts agree that the transition will be costly and carry economic risks for Germany.

Experts agree that the transition will be costly and carry economic risks. Already, consumers in Germany pay about 5 U.S. cents per kilowatt hour as a surcharge to finance the feed-in tariffs, which enable owners of wind turbines or geothermal installations to sell renewably generated electricity back to the grid at favorable rates. For an average family of four, this amounts to 220 U.S. dollars per year. And with investment needs in the hundreds of billions of Euros, consumers can expect a growing surcharge on their monthly bill. This will surely test Germans’ willingness to support Merkel’s plan.

But Röttgen, the environmental minister, points out that mass deployment of renewable energy technology will drive down costs. “When more people consume oil and coal, the price will go up, but when more people consume renewable energy, the price of it will go down“, he says. Röttgen argues that instead of sending billions of Euros to Russia and other sources of imported energy, Germany will now be able “to give that money to our green-tech engineers and local craftsmen.” Still, keeping the cost of the transition low and stopping energy-intensive companies from relocating to Romania or China will be very difficult.

In addition to the challenge of huge costs, a complete overhaul of the energy infrastructure is necessary. It is not enough to install wind turbines and solar panels. A new grid is needed, as are ways to store green electricity. As wind and sunshine are highly variable, electricity will increasingly flow intermittently. Power will have to flow from offshore wind farms in the north of the country over many hundred kilometers to the industrial centers in the west and the south.

Experts estimate that more than 4,000 kilometers of new “eco-electricity highways” are necessary to connect renewable power plants to consumers and avoid power outages. Storing green electricity when the wind is blowing strongly or when there is ample sunlight is an unsolved challenge.

But even if all technological problems are solved, it is not easy to roll them out nationwide. Many Germans don’t like the sight of wind turbines, which are called “asparagus.” New hydro plants and some wind power installations face fierce opposition. So do those “eco-electricity highways,” which still look like ordinary power lines to their neighbors. Local residents have yet to be convinced that they have to sacrifice undisturbed horizons for the greater good.

To the surprise of many, supplying an industrial nation with renewable energy also raises environmental concerns. The construction of offshore wind parks has been found to harm the ears of the harbor porpoise, a small whale species that is protected by law in Europe. Toxicologists are worried about dangerous level of cadmium, a heavy metal, in photovoltaic cells that might poison firefighters and create disposal problems in the future. And environmentalists are worried that the expansion of cornfields will dry out peaty soils, leading to greenhouse gas emissions, and be harmful for biological diversity. Germany would also have to rely more on natural gas, a fossil fuel, in the intermediate term if nuclear power will be phased out.

Despite the many problems and pitfalls, the chancellor’s new course is already attracting admiration from abroad. William Reilly, the former administrator of the U.S. Environmental Protection Agency, said on a recent visit to Germany that he was impressed by Merkel’s energy turn and the example it sets for the rest of the industrialized world. “It was breathtaking to see this huge change by a conservative government,” he told me for a report in Der Spiegel magazine after meeting German politicians, NGOs, and business representatives.

The Japanese are certainly watching. While Japanese Prime Minister Naoto Kan on May 8 reiterated his support for nuclear power, officials in the Japanese embassy in Berlin already wonder aloud how their government will justify sticking with nuclear energy when a country like Germany is taking bold steps to thrive without.