Author: Filip Rambousek (IMS FSV UK)

Introduction

E977B7679174415FA2525D589E2CCF05_03_energiewende_636_322Germany´s energy transition, Energiewende, is an important process not only from the perspective of Germany for if Germany succeeds it can serve as a model for others. The term itself describes the fundamental shift in Germany´s energy supply from fossil fuels (nuclear power, oil, gas, coal) to renewable sources of energy such as wind, solar, hydropower, biomass etc. Although the process of Energiewende is often considered as a recent political decision (especially as an “after Fukushima” outcome) the roots of the shift go much deeper in history. It was already in the 1970s when “the term ‘Energiewende’ was born in an attempt by opponents of nuclear power to show that an alternative energy supply was possible.”[1] Since that time the nuclear power was constantly challenged and its meaning reassessed several times. Basic aims of the Energiewende, which also this paper works with, were outlined by the former CDU/CSU and FDP government in 2010 in the framework of so-called Energy Concept. This document laid down ambitious targets at least in three fields:

  • First, the share of renewable sources of energy in the energy mix should reach 35% by 2020, 50% by 2030, 65% by 2040 and 80% by 2050;
  • Second, the primary energy consumption should be reduced by 20% by 2020 and 50% by 2050 when compared to 2008;
  • Third, the greenhouse gases emissions should be reduced by 40% by 2020, 55% by 2030; 70% by 2040 and 80-95% by 2050 when compared to 1990 levels.[2]

The Concept intended to prolong the lifetime of the nuclear power fleet, which should have helped to maintain the aforementioned three main goals. However, in reaction to the Fukushima disaster in 2011 came a political decision to phase-out all nuclear power plants by 2022 and the oldest ones immediately, which has made the process of fundamental energy transition even more challenging.

There are plenty of papers and whole web pages being either extremely friendly or extremely critical to the Energiewende.[3] The aim of this paper is to try to add (if possible) a sober voice to the discussion. In addition to that the author´s effort is to analyse the current state of the whole process of energy transition, the process, which encompasses wide range of aspects. The text is therefore divided into several parts. First, technical challenges of the Energiewende are reminded; second, the question of economic costs that burden industry as well as individual citizens are discussed; third, the environmental impacts are considered and fourth, current political debates are mentioned given the issue of the EEG[4] (Renewable Energy Act) amendment.

Technical challenges: North-south power line as an example

If we go beyond the target of 20% reduction in primary energy consumption by 2020 and 50% by 2050 when compared to 2008, which consists of many technical innovations, the other great task is to adapt the grid to the new energy market which should to a large extent include also renewables. The grid expansion is an integral part of the Energiewende. Until now the electricity has been produced mostly in coal power plants in the Ruhr region and in nuclear power plants in southern Germany. Growing share of renewables changes traditional electricity routes and demands construction of new power lines. In general, reinforcement of 3000 kilometres and construction of 2750 kilometres of power lines is planned and the estimated costs are 20 billion EUR till 2022.[5]

05GermanGrid0425-1366916980706

Illustration: Bryan Christie Design. Source: www.entsoe.eu

Whilst the highly industrialized south of the country is reliant on nuclear energy, the north is wind-rich. One of the greatest technical tasks of the Energiewende is therefore to connect the wind-rich north with the electricity-hungry industrial south. It is intended to do so through the construction of the north-south power line, the 800 kilometres long “aorta of the energy revolution,” which should balance the complete nuclear phase-out. The power line would connect Wilster in Schleswig-Holstein with Grafenrheinfeld in Bavaria and would be carried on pylons up to 70 metres high. All the main grid expansion plans should be approved by 2015 and finished by 2022.[6]

The grid is already congested after the immediate shutdown of 8 nuclear power plants in 2011. By 2022 the remaining 9 will be phased out. Hence, the deadline for compensatory efforts is clear. Yet, many local protests are slowing the construction down. Everyone supports the Energiewende and simultaneously, no one wants to have the massive pylons “in the backyard”. This so called NIMBY-Syndrome (Not-in-my-backyard)[7] represents major obstacle to the project, which is of key significance to the whole energy transition. These local protests are, particularly in Bavaria, reflected by the politicians too. For example Horst Seehofer, head of the CSU and of the Bavarian government, has claimed that “it is possible to be both massively in support of the nuclear phase-out and put up a massive fight if we are going about the wrong way of achieving it.”[8] Despite this statement is the north-south power highway still considered key to carry out the entire energy turnaround and for the public support of the Energiewende is not decreasing,[9] there is a strong belief that also these local obstacles will be overcome. The problem can be partially solved by placing some parts of the new grid underground but it is several-times more expensive and hence does not provide complete solution. The new government´s task in this field also remains the same: “to reconcile national priorities with the dynamics of its federal system.”[10]

Economic challenges: high costs for industry and households

Energiewende may bring significant benefits in a long-term perspective but demands great investments now. Among the most important items that need to be financed are the distribution grid renovation and expansion, research and development of technologies related to renewables, production of new renewable capacities as well as their connection to the grid etc. Most of them are financed by the so-called EEG (Renewable Energy Act), in which is laid down a surcharge that supports renewable energy production. The problems are: firstly that this incentive is recovered from final consumers and secondly that the surcharge has increased significantly in last few years.

electriccost1“To date, German consumers have absorbed the costs of the EEG but the growing burden on households has ignited a political debate in Germany about the costs of the Energiewende.”[11] Yet, the continuous public support of the whole process is necessary to carry it out. Hence, the EEG amendment is being prepared. On the other hand it is clear that the amendment cannot radically reduce incentives for renewables because it could seriously harm credibility of the general idea of Energiewende.

“Private consumers and industrial customers today pay twice as much per kilowatt-hour than in 2000”[12] states Peter Löscher, the CEO of Siemens. Even more apparent are the high electricity prices in comparison with other countries. The price of electricity in Germany was in 2012 40% higher than the EU average and three times higher than in the USA,[13] which could endanger competitiveness of German industry. The argument that German industry is losing its competitiveness due to high electricity prices is very influential because everyone – the federal government included – appreciates the contribution of the industrial production to the GDP as well as its meaning for overcoming the economic crises without serious harms. This argument also helped to push forward the idea of the EEG amendment. It is at the same time necessary to point out that large consumers enjoy extensive exemptions from the EEG surcharge and that “household consumers carry a disproportionate share of the burden”.[14] This fact has also led to clashes between the federal government and the European Commission.[15] However, the question of costs of the Energiewende and its appropriate distribution has not been solved yet.

Environmental challenges: unfavourable circumstances

In the Energy Concept of 2010 were set very ambitious goals concerning the environment and reduction of GHG (Greenhouse Gases) emissions in particular. The federal government committed itself to a GHG reduction of 40% below 1990 levels by 2020, 55% by 2030, 70% by 2040 and 80-95% by 2050. Unfortunately, the circumstances have not been friendly and even seriously complicated meeting of these targets. First, the EU Emissions Trading Scheme has failed. The price of carbon fell below 3 Euros per tonne, whilst allowances in California were at the same time sold for 13.6 dollars per tonne. As a result, “European countries are planning 69 new coal plants, with a capacity of over 60 gigawatts, almost as much as France’s nuclear-power capacity.”[16]

The lower the price of emission allowances is the more attractive is heavily polluting coal. Secondly, the prices of gas are temporarily very high which again plays into the hands of carbon. Germany is not an exception and its energy market is adapting to these circumstances. Hence, even Germany is going to build 10 new power plants for hard coal,[17] which is one of the greatest paradoxes of the Energiewende aiming particularly at environmental friendliness. From the aforementioned reasons, Germany is not likely to meet the target of the Energy Concept in terms of GHG reduction by 55% by 2030 when compared to the 1990 levels.[18]

Snímek obrazovky 2014-07-15 v 19.30.23

Německé emise CO2 v roce 2013 po pěti letech opět vzrostly díky zvýšenému spalování uhlí pro výrobu elektřiny

As mentioned in the introduction, not only these unfavourable circumstances but also the entire nuclear phase-out made the whole Energiewende more complicated as well as challenging. An interesting comment on the decision to close all nuclear power plants offers for instance John Rhys from The Oxford Institute for Energy Studies. He compares the United Kingdom with Germany to show that the political elites treated two kinds of risk in a very different way: whilst the United Kingdom assessed climate change as a potentially larger threat than a nuclear catastrophe, the Germans did an absolute opposite.[19] However, the rest of the paper is filled only with a strong criticism of alleged internal weakness of the German energy transition with emphasis on the correctness of the UK´s way of achieving environmental goals. Nevertheless, the author of this paper is convinced that the main reason for such a stance is simply a misunderstanding of the long-term feature of the Energiewende. Of course, one cannot omit current negative consequences of the new policy and focus only on future – meaning in this case even year 2050. That would not make sense. On the other hand, it is not possible to completely overlook the successes of the process such as the growing share of renewables in the German energy mix etc. and focus only on current problems. The aim of this paper is therefore to find the right proportions, the adequate expression of a very complex, long-term oriented energy policy shift.

Political challenges: question of affordability added to the debate

One of the significant features of the Energiewende has been its continuous public support from the very beginning of the general shift to renewable sources of energy. It is necessary for any government to do everything it can to maintain this support, which is of key importance to the whole project because it is no one else than the final consumers who carry the costs of the energy turnaround. Electricity prices have risen two times since 2000 and German households and industry pay in average three times more than citizens and entrepreneurs in the USA.[20] High electricity prices also remain important task for the grand coalition government constituted in the fall of 2013. Recently, question of affordability of electricity and more broadly affordability of the Energiewende as a whole has become principal phenomenon of the current debate as well as the planned EEG amendment.

Indeed, the draft version of the amendment informs that “the new EEG will have to break with the current dynamic development of costs so as to limit future rises of electricity prices” and that besides larger proportion of renewables in the future energy mixes it is also desirable to achieve “an affordable and secure supply of electricity for private households and industry”.[21] Nevertheless, the general direction of the new energy concept remains unchanged, which indicates already the very first paragraph of the draft amendment. “The energy turnaround is a right and necessary step as we make the transition into an industrial society that lives sustainably and makes a true commitment to preserving the environment, also for generations to come. It is making our country and our economy less dependent on ever-scarcer fossil resources, [The energy turnaround] is key in allowing Germany to make an appropriate contribution to combating climate change, and gives rise to new growth in sectors offering significant potential for new jobs. In other words, our energy reforms lay the basis for the success of our country in economic, social, and environmental terms”.[22]

Spolkový ministr hospodářství Sigmar Gabriel (vlevo)

From the international perspective is politically interesting the issue of alleviations for German industry, which has been seen in Brussels as a violation of free competition. However, the discussion – particularly between Sigmar Gabriel, German vice-chancellor and energy minister, and the EU competition commissioner Joaquin Almunia – brought an agreement, which generally enables continuation of the established course meaning that large part of the electricity-intensive industry can be henceforward exempted from the subsidies for renewables.[23] The aforementioned EEG amendment will also probably become law quite soon. Mr. Gabriel hopes to reach signing the amendment into law by August 2014.[24]

In short, even though the cost dynamics of the Energiewende will have to be regulated, the whole project does not seem to be endangered also thanks to continuous public support underpinned by the fact that renewables create several times more job opportunities than the conventional sources of energy.[25]

Conclusion

Aim of this paper was to show that Energiewende encompasses too many aspects to only condemn it or praise. The author has therefore decided to structure the text into several thematically organized chapters, which cover the most important features of the complex process of German energy policy shift. The first section shows that the project entails large technical challenges including the grid renovation and construction. One of the most important parts of it is the north-south axis, which is intended to connect the wind-rich north of the country with the electricity-hungry south. Yet, there are still several obstacles slowing down the construction (local protests particularly), which is of key significance to the entire Energiewende. The second section reflects the growing cost dynamics which more and more burdens German households as well as industry and has become integral part of the political debate and the EEG amendment too. The third section illustrates quite clearly that despite its long-term environmental targets has the process brought some unwanted temporary consequences such as the growing usage and even construction of coal power plants. The last chapter presents the same issue from the political perspective. At the national level, the most important task of the new federal government remains the same: regulate the increasing costs. Internationally, the key objective of Germany was to convince Brussels that German industry does not have to fully take part in paying the EEG surcharge. And as the text concludes – Germans have succeeded.

At the end of the paper, the author would again like to stress the main feature of the Energiewende, which is according to him it´s long-term orientation. Germans pay a lot now only because they believe that at the end they will gain a lot – energetic independence, environmental friendliness of the whole energy sector etc. They are simply convinced that they are investing in their future.

Notes

[1] “Energy transition” web pagehttp://energytransition.de/ (accessed May 27, 2014). Brief summary of the historical development of the process of Energiewende can be found here as well.

[2] Energiekonzept: für eine umweltschonende, zuverlässige und bezahlbare Energieversorgung (official document of the federal government: September 2010). See: http://www.bundesregierung.de/ContentArchiv/DE/Archiv17/_Anlagen/2012/02/energiekonzept     final.pdf?__blob=publicationFile&v=5 (accessed May 27, 2014).

[3] As an example of extremely critical stance see: John Rhys, Current German Policy – the “Energiewende”: A UK and climate change perspective (The Oxford Institute for Energy Studies: April 2013), http://www.oxfordenergy.org/wpcms/wp-content/uploads/2013/04/Current-German-Energy-Policy-A-UK-and-climate-concern-perspective.pdf (accessed March 25, 2014). As an example of extremely friendly stance see: “Energy transition” web pagehttp://energytransition.de (accessed May 27, 2014).

[4] In German: Erneuerbare Energien Gesetz.

[5] Manuel Berkel, Ausbau des Stromnetzes: Notwendigkeit der Energiewende (Bundeszentrale für politische Bildung: March 1, 2013). See: http://www.bpb.de/politik/wirtschaft/energiepolitik/148524/ausbau-des-stromnetzes (accessed March 25, 2014).

[6] Philip Oltermann, North-south divide threatens Germany’s renewable energy highway (The Guardian: February 7, 2014), see: http://www.theguardian.com/world/2014/feb/07/north-south-divide-threatens-germany-renewable-energy (accessed March 25, 2014).

[7] For more information about this social phenomenon see: Falk Schmidt, NIMBY- A Syndrome of the German Energy Transition (Institute of Advanced Sustainability Studies e. V.). See: http://www.iass-potsdam.de/research-clusters/global-contract-sustainability/transformation-processes/studies/nimby-syndrome(accessed March 25, 2014).

[8] Philip Oltermann, North-south divide threatens Germany’s renewable energy highway (The Guardian: February 7, 2014), see: http://www.theguardian.com/world/2014/feb/07/north-south-divide-threatens-germany-renewable-energy (accessed March 25, 2014).

[9] Ibid. In October 2013, 84% of the population was in favour of the nuclear phase-out.

[10] Ibid.

[11] Energy policies of IEA countries: Germany – 2013 review (International Energy Agency: 2013), 12. See Executive summary: http://www.iea.org/Textbase/npsum/germany2013SUM.pdf (accessed March 25, 2014).

[12]  Peter Löscher, Three Points for a Cost-efficient Energy Transition (Siemens: June 5, 2013), 3. See: http://www.siemens.com/press/pool/de/events/2013/corporate/2013-06-energiewende-dialog/speech-loescher-energiewende-dialog-e.pdf (accessed March 25, 2014).

[13] Peter Löscher, Three Points for a Cost-efficient Energy Transition (Siemens: June 5, 2013), 3. See: http://www.siemens.com/press/pool/de/events/2013/corporate/2013-06-energiewende-dialog/speech-loescher-energiewende-dialog-e.pdf (accessed March 25, 2014).

[14] Energy policies of IEA countries: Germany – 2013 review (International Energy Agency: 2013), 12. See Executive summary: http://www.iea.org/Textbase/npsum/germany2013SUM.pdf (accessed March 25, 2014).

[15] See for example: Frank Dohmen, Christoph Pauly and Gerald Traufetter, War on Subsidies: Brussels Questions German Energy Revolution (Spiegel: May 29, 2013). See: http://www.spiegel.de/international/europe/european-commission-set-to-fight-german-energy-subsidies-a-902269.html (accessed May 27, 2014).

[16] The failure to reform Europe’s carbon market will reverberate round the world (Economist: April18, 2013). See: http://www.economist.com/news/finance-and-economics/21576388-failure-reform-europes-carbon-market-will-reverberate-round-world-ets(accessed March 25, 2014).

[17] Ezra Levant, Germany out in the coal (Toronto Sun: January 6, 2014). See: http://www.torontosun.com/2014/01/06/germany-out-in-the-coal (accessed March 25, 2014).

[18] Peter Löscher, Three Points for a Cost-efficient Energy Transition (Siemens: June 5, 2013), 3. See: http://www.siemens.com/press/pool/de/events/2013/corporate/2013-06-energiewende-dialog/speech-loescher-energiewende-dialog-e.pdf (accessed March 25, 2014).

[19] John Rhys, Current German Policy – the “Energiewende”: A UK and climate change perspective (The Oxford Institute for Energy Studies: April 2013), 2–3. See: http://www.oxfordenergy.org/wpcms/wp-content/uploads/2013/04/Current-German-Energy-Policy-A-UK-and-climate-concern-perspective.pdf (accessed March 25, 2014).

[20] Peter Löscher, Three Points for a Cost-efficient Energy Transition (Siemens: June 5, 2013), 3. See: http://www.siemens.com/press/pool/de/events/2013/corporate/2013-06-energiewende-dialog/speech-loescher-energiewende-dialog-e.pdf (accessed March 25, 2014).

[21] Key elements of a revised Renewable Energy Sources Act (Bundesministerium für Wirtschaft und Energie: January 21, 2014), 1–2. See: http://www.bmwi.de/English/Redaktion/Pdf/eeg-reform-eckpunkte-english,property=pdf,bereich=bmwi2012,sprache=en,rwb=true.pdf (accessed March 25, 2014).

[22] Ibid., 1.

[23] EU ruling on industry exemptions a lost opportunity (Renewables International: April 16, 2014). See: http://www.renewablesinternational.net/eu-ruling-on-industry-exemptions-a-lost-opportunity/150/537/78231/ (accessed May 27, 2014).

[24] “Energy transition” web pagehttp://energytransition.de/2014/05/german-government-to-push-through-energy-policy-reform/ (accessed May 27, 2014).

[25] Agentur für Erneuerbare Energien“ web page: http://www.unendlich-viel-energie.de/mediathek/grafiken/erneuerbare-arbeitsplaetze(accessed May 27, 2014).

References 

“Agentur für Erneuerbare Energien“ web page: http://www.unendlich-viel-energie.de/mediathek/grafiken/erneuerbare-arbeitsplaetze (accessed May 27, 2014).

Energiekonzept: für eine umweltschonende, zuverlässige und bezahlbare Energieversorgung (Official document of the federal government: September 2010). See: http://www.bundesregierung.de/ContentArchiv/DE/Archiv17/_Anlagen/2012/02/energiekonzept-final.pdf?__blob=publicationFile&v=5 (accessed May 27, 2014).

Energy policies of IEA countries: Germany – 2013 review (International Energy Agency: 2013). See Executive summary: http://www.iea.org/Textbase/npsum/germany2013SUM.pdf (accessed March 25, 2014).

“Energy transition” web page: http://energytransition.de/ (accessed May 27, 2014).

Ezra Levant, Germany out in the coal (Toronto Sun: January 6, 2014). See: http://www.torontosun.com/2014/01/06/germany-out-in-the-coal (accessed March 25, 2014).

Falk Schmidt, NIMBY- A Syndrome of the German Energy Transition (Institute of Advanced Sustainability Studies e. V.). See: http://www.iass-potsdam.de/research-clusters/global-contract-sustainability/transformation-processes/studies/nimby-syndrome (accessed March 25, 2014).

Frank Dohmen, Christoph Pauly and Gerald Traufetter, War on Subsidies: Brussels Questions German Energy Revolution (Spiegel: May 29, 2013). See: http://www.spiegel.de/international/europe/european-commission-set-to-fight-german-energy-subsidies-a-902269.html (accessed May 27, 2014).

John Rhys, Current German Policy – the “Energiewende”: A UK and climate change perspective (The Oxford Institute for Energy Studies: April 2013). See: http://www.oxfordenergy.org/wpcms/wp-content/uploads/2013/04/Current-German-Energy-Policy-A-UK-and-climate-concern-perspective.pdf (accessed March 25, 2014).

Key elements of a revised Renewable Energy Sources Act (Bundesministerium für Wirtschaft und Energie: January 21, 2014). See: http://www.bmwi.de/English/Redaktion/Pdf/eeg-reform-eckpunkte-english,property=pdf,bereich=bmwi2012,sprache=en,rwb=true.pdf(accessed March 25, 2014).

Manuel Berkel, Ausbau des Stromnetzes: Notwendigkeit der Energiewende (Bundeszentrale für politische Bildung: March 1, 2013). See: http://www.bpb.de/politik/wirtschaft/energiepolitik/148524/ausbau-des-stromnetzes (accessed March 25, 2014).

Peter Löscher, Three Points for a Cost-efficient Energy Transition (Siemens: June 5, 2013). See: http://www.siemens.com/press/pool/de/events/2013/corporate/2013-06-energiewende-dialog/speech-loescher-energiewende-dialog-e.pdf (accessed March 25, 2014).

Philip Oltermann, North-south divide threatens Germany’s renewable energy highway (The Guardian: February 7, 2014), see: http://www.theguardian.com/world/2014/feb/07/north-south-divide-threatens-germany-renewable-energy (accessed March 25, 2014).

EU ruling on industry exemptions a lost opportunity (Renewables International: April 16, 2014). See:http://www.renewablesinternational.net/eu-ruling-on-industry-exemptions-a-lost-opportunity/150/537/78231/ (accessed May 27, 2014).

The failure to reform Europe’s carbon market will reverberate round the world (Economist: April18, 2013). See: http://www.economist.com/news/finance-and-economics/21576388-failure-reform-europes-carbon-market-will-reverberate-round-world-ets(accessed March 25, 2014).