Strong Government Support for Renewables
Germany has stolen a march on other member states of the European Union and most of the rest of the world in launching its low carbon transition in earnest more than a decade ago. Germany’s renewable energy policy really began in 1974 after the first oil crisis, and consisted almost exclusively in promoting research for the first 15 years. Market creation measures only came after 1988; of these the most important was the Feed-in Law. From 1991 to 1995, under the 1,000 roof programme, applicants received 50 percent of investment costs from the federal government plus 20 percent from the Land government. Eventually 2,250 roofs were equipped with photovoltaic (PV) modules, producing a total of about 5 MW.
For wind energy, the government introduced a programme for subsidizing 100 MW – later 250 MW – by a payment of €0.04/kWh (later reduced to €0.03). This was accompanied by the Feed-in Law that obliges national electricity utilities to buy electricity generated from renewable sources at above-market rates set by the government. As a result, newly installed wind capacity shot up from about 20 MW in 1989 to over 1,100 MW in 1995. In subsequent years, these subsidies declined rapidly, and the Feed-in Law barely survived attacks from the conventional electricity generators.
Significant improvement came after the 1998 election, when the ‘red-green’ coalition came into office, and strengthened renewable energy support, especially for PV and biomass, thanks also to activists and municipal utilities. Eurosolar’s 100,000 roof proposal since 1996 and the German Solar Energy Industries Association, played key roles in the continued growth of the PV market after the 1,000 roof programme.
The new federal government emphasized ecological modernization and climate change policy as well as job creation and socio-economic development. It included eco-tax on energy, phasing out nuclear power and strengthening renewable energy sources and combined heat and power generation for increased efficiency of energy use.
The government’s measures to promote renewable energy included a five-year market incentive programme that provided about €445 million from 1999 to 2002; a tax break on bio-fuels in keeping with a EU directive; and most importantly, it adopted the 100,000 roof programme for PV, and the Renewable Energy Sources Act adopted in 2000 and subsequently amended in 2004. This new Law repealed the Feed-in Law of 1990 but maintained an essential feature, i.e., the reliance on feed-in tariffs to encourage the development of renewable energy sources for electricity. This has given German PV and other renewable technologies a further boost. In 2006, Germany accounted for 56 percent of the world’s solar energy technology market and around 80 percent of the European market.
Germany already generates 6.5 percent of electricity from wind and is planning to increase this amount. In September 2009, the cabinet announced plans for up to 40 offshore wind parks holding as many as 2,500 turbines and projected to generate 12 GW by 2030.
There are also plans for other sources including biogas, small hydroelectric plants and geothermal. In July 2009, a large group of German companies announced a joint investment of €400 billion ($560 billion) in concentrated solar power (CSP) plants in the Sahara Desert. These are seen as making significant contributions to the total energy supply but are also important because the energy supply is predictable or storable and can provide a buffer against fluctuations in other sources.
No Nuclear or Carbon Capture and Storage (CCS)
Unlike the UK government, the Germans are confident that they can achieve their aims without nuclear power. In 2002, they decided to phase out their nuclear plants by 2022, and while the present Chancellor, Angela Merkel, is known to favour extending the stations’ lifetimes beyond that date, there is little support for building any new reactors. Public opinion in Germany is against nuclear energy especially after the July 2009 incident in which the Krümmel nuclear reactor had to be shut down for the second time in two years and the revelation of problems at the Gorleben site, which is intended for long term storage of nuclear waste.
Germany has traditionally relied very heavily on coal and, so like the UK, is actively pursuing research into CCS. Vattenfall, a Swedish-German firm, has applied for EU funding to help it build a 385 MW demonstration plant. Germany is not, however, depending on CCS to help it achieve its emissions targets in the same way that the UK is. In particular, it is not included in their plan for reaching their 2020 target because they do expect it to be commercially available by then. Instead, while they will still be generating 40 percent of their electricity from coal, the emissions will be reduced by increasing the efficiency of the plants, by having more combined heat and power (CHP) installations, and by an 11 percent reduction in total energy consumption. If CCS proves successful, they will be well-placed to take advantage of it; if it does not, they have other strings to their bow.
Germany, in sharp contrast to the UK, is looking forward to a future in which more and more, if not all, of its energy comes from renewable sources. It clearly sees this as an opportunity: the creation of 500,000 new jobs and establishing Germany as a major exporter of renewable technologies; and substantially reducing energy imports.
Transport and Airline Tax
Like the UK, Germany is looking at specific measures to reduce carbon emissions from the transport sector, such as improving the efficiency of vehicles and moving traffic from road to rail and from private cars to public transport. But the Germans start with the advantage of a superior rail network. Unlike their British counterparts, the German Federal Department for the Environment is advocating that airlines pay tax on aviation fuel and VAT on tickets for international flights; thus, removing a major subsidy to the industry.
No Carbon Trading
While the UK White Paper assumes that carbon trading will make an important contribution to meeting the country’s emissions target, the UBA (Umweltbundesamt – The Federal Environment Agency of Germany) explicitly states that Germany aims to reduce its greenhouse gas emissions by measures implemented within Germany itself.
Source: The Institute of Science in Society (ISIS) Report dated October 14, 2009.
