In 1929, G.K. Chesterton articulated a principle that bears his name. If you encounter a fence across a road, he wrote, do not tear it down until you understand why it was erected. The reformer who removes it simply because he sees no use for it is precisely the person who cannot be trusted with the decision.

Germany’s energy transition offers the most expensive lesson in Chesterton’s Fence the modern world has seen.

For decades, nuclear plants were fences across Germany’s electricity system. They provided roughly 25% of generation, ran around the clock regardless of weather, and emitted virtually no carbon. They were not glamorous. They were not politically popular. But they were load-bearing.

Post-Fukushima, Germany decided these fences were ugly and dangerous. It tore them down—all seventeen reactors, the last three closing in April 2023—without fully understanding what they were holding back. What they were holding back, it turned out, was coal. Europe’s self-proclaimed climate leader now burns more lignite than any nation on the continent, paying the highest electricity prices in the developed world for the privilege.

Chesterton would have had questions.

The Energiewende Promise

Germany’s Energiewende—literally “energy turn”—was once the world’s most admired energy policy.

Launched in 2000 under Chancellor Gerhard Schröder’s Red-Green coalition, the Renewable Energy Sources Act (EEG) guaranteed fixed prices for renewable electricity fed into the grid. The mechanism provided investment certainty that neither markets nor carbon prices could match.

The buildout that followed was extraordinary:

• 2000: Renewables provided 6% of German electricity
• 2010: 17%
• 2020: 45%
• 2023: Approximately 52%

Germany became the world’s leading solar market, installing 7.6 GW in 2012 alone. Onshore wind turbines spread across the northern plains. The feed-in tariff model was copied by dozens of countries. For a decade, the Energiewende was the template.

The costs were substantial—over €250 billion in cumulative EEG surcharges by 2023, according to the Bundesrechnungshof (federal audit office)—but proponents argued the investment would pay off through energy independence, industrial leadership, and climate benefits.

Then the sequencing went wrong.

The Nuclear Exit

Germany’s nuclear phaseout predates Fukushima, but the Japanese disaster accelerated it dramatically.

The original timeline, set in 2000, planned for gradual retirement over roughly two decades. In 2010, Merkel’s coalition extended plant lifetimes, citing climate concerns. Then, in March 2011, a tsunami triggered meltdowns at Fukushima Daiichi.

Within three months, Merkel reversed course entirely. Eight reactors closed immediately. The remaining nine would shut by 2022.

The decision reflected German public opinion—anti-nuclear sentiment had deep roots in the country’s Green movement—but it defied energy logic:

• Zero deaths: Germany’s reactor fleet had operated for decades without fatal accidents
• Low carbon: Nuclear emitted roughly 12 grams of CO2 per kilowatt-hour, comparable to wind
• Firm capacity: Reactors ran at 80-90% capacity factors, providing baseload regardless of weather

The phase-out removed roughly 96 TWh of annual low-carbon generation from the system. Something had to replace it.

Renewables grew, but not fast enough. The gap was filled primarily by two sources: Russian gas and domestic coal.

The Coal Paradox

Germany’s coal dependency is the Energiewende’s most awkward fact.

The country operates Europe’s largest lignite mining complex—vast open-pit mines in the Rhineland and Lusatia that scar the landscape for kilometres. Lignite, or brown coal, is the dirtiest fossil fuel: high in moisture, low in energy density, catastrophic for emissions.

The numbers tell the story:

• 2023: Coal (hard coal and lignite combined) provided approximately 26% of German electricity
• Lignite alone: Roughly 17% of generation—more than any other European country
• Emissions intensity: Germany’s grid emits approximately 380 grams of CO2 per kilowatt-hour, versus 45g for France and 180g for the UK

The phase-out of nuclear made coal essential. When wind and solar output drops—as it does for days or weeks at a time during winter—lignite plants ramp up. They are the system’s backstop.

Germany has committed to exiting coal by 2038, possibly 2030. Given current progress, scepticism is warranted. The coal commission’s timeline assumed gas would serve as a bridge fuel. That bridge collapsed in September 2022.

The Gas Trap

Germany’s Russia dependency was not an accident. It was policy.

For two decades, successive governments deepened ties to Russian gas. The logic seemed compelling:

• Cheap supply: Russian pipeline gas was significantly cheaper than LNG imports
• Reliable partner: Gazprom had delivered through the Cold War without interruption
• Industrial base: Germany’s chemical and manufacturing sectors were built around low-cost energy

Nord Stream 1 opened in 2011. Nord Stream 2, despite American sanctions and Eastern European objections, was completed in 2021 (though never certified). At peak dependency, Russia supplied roughly 55% of German gas imports.

Then Russia invaded Ukraine.

The energy shock of 2022 was not merely a price spike. It was an existential threat. Germany faced the genuine prospect of industrial shutdowns and winter heating shortages. The government:

• Commissioned floating LNG terminals in record time
• Extended coal plant operations
• Briefly considered restarting nuclear (ultimately rejected)
• Imposed gas consumption reduction mandates

Wholesale electricity prices briefly exceeded €700 per megawatt-hour in August 2022. Industrial gas prices quadrupled. The cheap energy model that underpinned German manufacturing evaporated within months.

The Industrial Exodus

Germany’s energy costs are now an existential threat to its industrial model.

The evidence is accumulating:

• BASF: The world’s largest chemical company has announced capacity reductions at its flagship Ludwigshafen site and is shifting investment to China and the United States
• Volkswagen: Announced factory closures in Germany for the first time in the company’s history, citing energy costs among the factors
• Steel and aluminium: Production has declined 10-15% since 2021; multiple facilities on reduced operations
• SMEs: The Mittelstand—Germany’s mid-sized manufacturing backbone—reports energy costs as the primary threat to competitiveness in survey after survey

The numbers are stark. German industrial electricity prices in 2023 averaged approximately €180 per megawatt-hour, according to Eurostat. The equivalent in France: €120. In the United States: €70-80. In China: €60-70.

For energy-intensive industry, these differentials are not survivable over time. Companies are not closing German plants for political reasons. They are following the economics.

The Price Reality

Germany’s retail electricity prices tell the story most clearly.

German households in 2023 paid approximately €0.40 per kilowatt-hour—among the highest rates in the developed world. The breakdown:

• Generation and wholesale: Roughly 35-40%
• Network charges: 20-25%
• Taxes, levies, and surcharges: 35-40%

The EEG surcharge—used to fund feed-in tariff payments to renewable generators—was suspended in 2022 to provide relief. Prices remained elevated anyway, because wholesale costs had risen even faster.

The irony is painful. Germany built more renewable capacity than almost any country on Earth. Renewables have near-zero marginal cost. Yet German electricity remains among the most expensive globally.

The explanation lies in system costs:

• Grid expansion: North-south transmission lines needed to move wind power to industrial centres in the south have faced decades of delay
• Backup requirements: Maintaining coal and gas capacity for windless periods costs billions annually
• Balancing: Managing intermittency requires constant intervention by grid operators

Building renewables was the easy part. Integrating them affordably was the hard part—and Germany has not yet succeeded.

What Remains

Germany’s electricity mix in 2023 looked roughly like this:

• Wind: 27%
• Solar: 12%
• Biomass: 8%
• Hydro: 3%
• Lignite: 17%
• Hard coal: 9%
• Gas: 11%
• Nuclear: 1% (before final shutdown in April)
• Other: 12%

The renewable achievement is real. On sunny, windy days, Germany can exceed 80% renewable generation. Records are broken regularly. The buildout continues—200 GW of combined wind and solar capacity is targeted by 2030.

But the system remains structurally incomplete:

• No baseload replacement: Nuclear is gone; nothing comparable has taken its place
• Storage negligible: Battery capacity remains trivial relative to the balancing need
• Hydrogen speculative: Green hydrogen is a decade away from meaningful contribution, at best
• Coal essential: Lignite plants that should be closing remain indispensable

The Energiewende has built a remarkable renewable fleet on top of a system that still requires fossil backup for reliability. The fence was removed before the replacement was ready.

The Lesson

Germany’s energy transition offers lessons that other countries would be wise to learn.

What worked:

• Feed-in tariffs drove rapid renewable deployment
• Technology costs fell dramatically through scale
• Public support for the energy transition remained broadly durable

What failed:

• Nuclear was removed before alternatives were in place
• Gas dependency on a hostile power was a strategic catastrophe
• Grid expansion lagged generation buildout by years
• System costs were underestimated; integration was treated as an afterthought

The Energiewende did not fail because renewables failed. Wind and solar have performed as advertised. It failed because the transition was sequenced incorrectly—removing firm, low-carbon generation before replacements existed, assuming Russian gas would bridge the gap, and neglecting the grid and storage investments that a high-renewable system requires.

Chesterton’s Fence was not merely decorative. It was load-bearing. Germany tore it down anyway, confident that good intentions would suffice.

The invoices are now arriving. German industry is paying them—and increasingly choosing to pay them elsewhere.