Ecological restructuring or environment friendly deindustrialization

This paper describes the East German energy sector and its fate after 1990 with particular emphasis on environmental regulation. Unification turned the enlarged Federal Republic of Germany into a rather dirty country and the world's largest producer of brown coal. While primary energy demand in the West rose by almost 10% in 1991, it fell by about 30% in the East and demand was not expected to return to its pre-Wende (U-turn) value until 2005, in spite of advancing privatization and energy price rises to Western values. In late 1991 Esso expected a permanent decline. During 1991 upheavals and uncertainty dominated life in the former German Democratic Republic; by mid-1992, bitterness described the public mood and first signs of a political separatism could be detected. Optimists had hoped that by the year 2000 at the latest, a planned economy devoted to energy self-sufficiency would have become fully integrated into the West with the achievement of similar living standards. Evidence so far supports the pessimists who observe rapid industrial decline and the relative impoverishment of large sectors of the population, possibly leading to political destabilization. The ability of market forces to transform communism is being tested, as is the ability of society to shed its socialist inheritance without psychological disintegration. The process itself is as bewildering as it is fascinating. Its outcomes surely hold lessons for developments elsewhere, especially for the role of government in transitional economies and the capacity of environmental regulation to facilitate macroeconomic change.