| Willy Brandt School of Public Policy

Do high energy costs jeopardize Germany’s prosperity?

In this double episode of the Kapitalmarkt Podcast by investment firm Fidelity, Prof. Andreas Goldthau does a deep dive into contemporary energy and climate affairs. He argues that high European energy prices are there to stay, explains why nuclear energy will not help, and calls for integrating development aid and climate policy.

In his conversation with Fidelity’s capital market strategist Carsten Roemheld, Prof. Andreas Goldthau argues that the current level of high energy prices, specifically gas, is a function of many factors, including seasonal energy demand, and an energy-intensive recovery as economies woke up from the Covid-lockdowns. On the supply side, Germany’s largest gas supplier, Russia, faced higher demand at home and hence lower export capacity than anticipated. He makes the case for the liberalized European market being at work, with scarcity translating into price signals – rather than supply shortages. The EU, he says, is in competition with consumers in East Asia and elsewhere and in part priced out by them.

A nuclear energy renaissance, however, is not an option, Professor Goldthau believes. This is because of long lead times and high costs, and because of a decentralized energy system being at odds with centralized energy generation.

Touching on climate change, Professor Goldthau points to the need for developing nations to participate in the global energy transition. The Global South, he explains, is in dire need of investments, which ideally come with clean technology transfer. He calls for the EU to align its climate, development, and trade policies.