Taken to the cleaners: The fate of the East German energy sector since 1990

Abstract

This case study of the early stages in the transformation of a ‘planned’ society into a market‐based one under highly favourable conditions describes the nature of the east German energy sector and its fate after 1990 with particular emphasis on the political significance of environmental regulation. Unification turned the Federal Republic of Germany (FRG) from a green vanguard in air quality into a moderately dirty country. In 1991 upheavals and uncertainty dominated life in the former German Democratic Republic (GDR). While primary energy demand in the west rose by almost 10 per cent in 1991, it fell by about 30 per cent in the east and demand was not, in early 1991, expected to return to its pre‐'Wende'1 value until 2005 in spite of advancing privatisation and energy price rises to west German values. By late 1991, however, even ESSO predicted a permanent decline (for 2010, total primary energy demand in the west was given as 387 million tonnes hard coal equivalent compared to 100 for the east). Optimists hope that by the year 2000, the conditions will have been created under which a planned society devoted to energy self‐sufficiency will have become fully integrated with the west. Pessimists foresee a period of continuing industrial decline and increasing impoverishment of the population in the east, possibly leading to political destabilisation. The ability of ‘market forces’ is being tested, as is the interaction between the socialist inheritance and regulated capitalism. The process itself is fascinating and the outcomes may well hold lessons for developments elsewhere, including for the future of the European Energy Charter and the role of environmental regulation in facilitating macro‐economic changes.