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German Energy Policy Following the 2017 Election

Kraftwerk Neurath, by Stodtmeister

As the dust settles on the results of the German election, it is becoming obvious that the fall in votes for the two largest parties, including Angela Merkel’s CDU, will mean significant changes in German policies in a number of areas. There has also been speculation that the CDU will form a coalition with the Free Democrats and the Green Party, in order to secure a majority in the Bundestag, the lower house of the German parliament.

It is understood, according to Ambrose Evans-Pritchard, that the Green party will demand, as the price for its inclusion, that there is a total phase-out of coal plants by 2030 and a much higher carbon price, with 100% of energy generation from renewable sources by 2050. The Greens’ Co-leader Cem Ozdemir, said that it is a national scandal that Germany’s CO2 emissions have been rising for the last eight years, making a mockery of the ‘Energiewende’ – the green energy shift, once touted as the model of virtue. “Instead of being world champions in climate protection, we are world champions in lignite coal,” he said. In addition, the Greens wish to prohibit the sale of internal combustion engines entirely by 2030, within Germany, insisting that fossil-based cars are a dead end. Their argument is that switching to electric vehicles is the only way to save the German car industry, which is  generates 14% of Germany’s GDP. France and the United Kingdom have already agreed to prohibit the sale of fossil fuel vehicles by 2040, so the writing is clearly on the wall for conventional diesel and petrol-powered vehicles.

Foreigners have tended to regard Germany as a world leader in the deployment of renewable sources of energy, referring to the Energiewende policy aimed for a nearly carbon-free economy by 2050.  However, this policy has not been a success, and its objectives were made more difficult by the decision to phase out Germany’s nuclear power stations by 2022. What is too often overlooked, is the fact that a large portion of Germany’s electricity is generated by hard coal and lignite, which is often called brown coal, and which has a reputation for generating high levels of pollution. In 2016 hard coal and lignite accounted for just over 40% of German energy production, while renewables provided 29%, and nuclear just over 13%, with the balance being provided by natural gas (12.4%), oil (0.9%) and others (4.3%), source . In recent years Germany’s carbon emissions have also tended to increase, rather than decrease. In 2016 the increase was 0.7%, this came at a time when most other advanced economies, including the United States, saw significant reductions in their carbon emissions. In contrast with Germany the U.K.’s carbon emissions fell by 6% in 2016, largely due to the phasing out of coal power, and the success of the offshore wind generation programme. It is difficult to see how Germany can successfully phase out nuclear power, within the next five years, without also increasing its carbon emissions. Although Germany maintains an enormous trade surplus, many commentators have argued that Germany has failed to invest in the infrastructure it requires for the 21st-century, including a smart grid, and an extension of its renewable generation capability. Germany does have access to shallow waters in the Baltic and the North Sea, and it would be reasonable to see an extension of offshore wind farms, because at the moment less than 2% of its electricity production comes from offshore sources.

It does seem, but Germany’s reputation, as being in the vanguard of the renewable energy movement, does not reflect the reality on the ground today. It appears that German energy policy has not moved forwards, and the fact that it is still so reliant on the burning of lignite for over 23% of its electrical energy, is nothing more than a disgrace, as other nations move to implement the terms of the Paris Agreement. Germany also has been slow to reposition its car manufacturers to produce electric and hybrid vehicles, the scandal over the mis-testing of diesel vehicles highlighted the fact that its car industry appeared to be stuck with an old model, one which is no longer fit for purpose in the 21st-century and that it was prepared to break the law in order to maintain its sales. At no point during the debates of the election campaign, except from the Greens, was there any understanding that the existing German model is no longer fit for purpose. We can only hope that the Greens are successful in ending the reliance on lignite and coal, and transforming the dynamics of the German motor industry.

photo by Jason Blackeye

A recent article in Nature by Claudia Kemfert, Germany must go back to its low-carbon future, written prior to the German Election, starts with the statement, “Germany’s train to a carbon-free future has been derailed.” The author notes that, “The Energiewende milestones for 2020 are already out of reach. Poor policy choices and lobbying by the fossil-fuels industry mean that Germany will not reduce its greenhouse-gas emissions by 40% by 2020, and so will fail to meet its goals under the Paris agreement to keep global temperature increases well below 2°C. At current rates, it will miss all of its interim energy-efficiency targets for 2020, 2030 and 2040.” She says that “Coal continues to dominate Germany’s energy mix — it is cheap in part because the impacts of its CO2 emissions are not factored into its price. Its use has barely dipped. Because the market favours it, coal provides 43% of the country’s electricity.” In contrast to Germany, the UK has dramatically reduced the usage of coal, showing what can be achieved.  UK carbon emissions from coal fell by  50% in 2016, compared to 2015, to around 37 million tonnes of CO2 (MtCO2). A decade earlier, in 2006, UK coal emissions were 137MtCO2. One factor in the success of UK policy has been the imposition of a surcharge of £18 a tonne of CO2, in addition to the EU market price of €5 (£4.40), source Carbon Brief. In contrast, just one lignite coal plant, at Neurath, Grevenbroich, Northrhine-Westphalia, Germany,  generates 31.3 MtCO2, not far short of the total UK coal emissions in 2016, and the Niederaussem plant produces 24.8 MtCO2.  Dr. Kemfert concludes, “The next government would be foolish to squander Germany’s leadership in the low-carbon future. It must take this opportunity to again make Germany a shining example to other countries.” Unfortunately, I don’t think that Germany has a position of leadership in low-carbon matters at present, increasingly we look to countries like China. The United Kingdom, too often ignored in these matters, is showing the way, particularly in moving quickly from coal and fossil-fuel vehicles. The failure of German policy in this area, in which it was once a world-leader, also throws into question other aspects of German policy, its failure to invest, its over-dependence on engineering, the diesel scandal, which appears to be have been ignored by the authorities, and the weakness of its banking system.

The current weakness of German policy is a criticism frequently made by Marcel Fratzscher, head of the German Institute for Economic Research, who says that Germany has seen less growth than the average among euro-zone countries since the turn of the millennium, that its productivity had only increased slightly, and two out of three employees earned less in 2014 than they did in 2000.[1] In his books Die Deutschland Illusion[2] (The Germany Illusion) 2014 and Verteilungskampf: Warum Deutschland immer ungleicher wird [3] (Distribution battle: Why Germany is becoming ever more unequal) 2016.

Perhaps the dramatic reduction in the votes for the two parties of the former Grand Coalition and the strength of smaller parties expressing opposing views are a sign of movement in the German political landscape. I doubt that future historians will be kind to Mrs Merkel’s governance of Germany, and may see it as a period when Germany lost its way, with no clear vision for its future. If Germany has no clear vision for its own future, this does not bode well for the European Union as a whole.

[1] (Spiegel Online 2014)

[2] (Fratzscher 2014)

[3] (Fratzscher, Verteilungskampf: Warum Deutschland immer ungleicher wird 2016)

© Andrew Palmer, 2017 not to be republished without permission.

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