Germany is set to lead on energy

When it comes to energy these days, Germany is all about Energiewende — the aggressive plan to wean the country off fossil fuels, to a future of wind and solar. The United States? Frack on, baby!

As I saw last month at Fakuma, there's a stark difference between Germany and the United States.

Yes, it's common knowledge that Americans like to drive big, gas-guzzling cars through congested highways an hour to work, from their air-conditioned mini-mansions in the suburbs.

And Germans? They live in smaller modest houses, walk to the bakery every morning and ride bikes or take the train to work. Germans are a “green” people (except when too much beer causes bloating and gas — that contributes to global warming, you know).

The U.S. boom in hydraulic fracturing to release oil and gas from tight pockets of shale has turned the United States into a global force in energy — seemingly overnight. The United States is poised to pass Saudi Arabia, in the next year or two, to become the world's largest oil producer.

U.S. oil output has helped bring down crude oil prices around the world. Natural gas prices are low. And it's led to U.S. jobs, in drilling, petrochemicals and plastics. The American Chemistry Council says shale gas could create more than 500,000 jobs at nearly 10 announced plastics and chemicals expansions. A top Dow Chemical Co. executive put a $10 billion-plus price tag on all the energy-related chemical expansions in the United States.

“Frack” is not a dirty word.

The low energy prices — and prospects of stable polyethylene and polypropylene pricing for years — have helped drive reshoring, as work returns to the United States. European companies are buying U.S. companies and investing in production in the United States and Mexico.

According to a report in the Wall Street Journal, German economists and some business executives are concerned that the huge cost to convert the current energy system — which was working fine — with “green” energy could hurt Germany's industrial base. And Germany's official goals are much more far-reaching than those of the European Union: Germany wants to produce 40 to 45 percent of its electricity from renewable resources by 2015, and a whopping 80 percent by 2050.

Germans strongly support a green economy. The Energiewende movement is tied to the environmental movement. An anti-nuclear passion was fueled by the disasters of Chernobyl and Fukushima.

That leaves coal and natural gas generation for electricity — but these are not renewable. Germany is looking long-term, and for that, the country is to be admired. But if it moves too fast, and costs spike up — as they already have — then Germany's vaunted manufacturing base could get hurt.

And a weak German economy is bad news for all of Europe.

The plastics industry is still growing. Plastics are winning new applications in lightweight cars, in wind turbine blades, in solar panels. German plastics machinery companies are still export-driven powerhouses.

And of course, the eurozone has its ups and downs. Currently, the European economy is facing weakening inflation, as the recovery loses momentum. In September, German manufacturing shrank for the first time in more than a year. The sanctions against Russia over the Ukraine crisis certainly are having some negative impact.

And even though the U.S. economy is rebounding in solid fashion, we live in an interconnected world, a global economy. Stock markets can fall on bad news out of Europe.

So as an American, I say this: Pay attention to Germany, even as we frack away.

Bregar is a Plastics News senior reporter.