Germans’ trailblazing ‘energy transition’ faces a backlash over high prices.
By Jason Overdorf
GlobalPost (November 20, 2013)
BERLIN, Germany — Power plants don't make front-page news as a rule. But it turns out Germans don't always follow the rules after all.
A long-standing leader in environmental protection, this country has achieved dramatic success in reducing pollution during the past three decades, changing consumer behavior and slashing emissions of the greenhouse gases scientists say are responsible for climate change.
But a media blitzkrieg this month against Chancellor Angela Merkel's bold new plan to cut 1990 emission levels by as much as 80 percent by 2050 — without relying on nuclear power — suggests the plan may be a step too far for many Germans.
There are signs that “green fatigue” may make the target hard to reach. With Florida, Vermont and other US states just starting to adopt the German model, a perceived failure here could set back American efforts.
Martin Pehnt of Heidelberg’s Institute for Energy and the Environment (IFEU) says there are no easy answers.
“We have to be very clear: an energy transformation from a fossil to a renewable energy age does cost money,” he says. “However, the cost of inaction would be higher.”
Germany has been ahead of the curve in protecting the environment since the 1970s, a decade before the Green Party won its first seats in parliament. Germans pioneered recycling and conservation long before such practices were known elsewhere.
Today, the average German makes some 140 trips by public transport a year, compared with a measly 25 by Americans, according to a recent US study.
Germans install “green roofs” — covered with grass, vines or gardens that absorb rainwater, recycle carbon dioxide and reduce energy bills — at a rate of some 100 million square feet per year, compared with a historical total of around 6 million square feet across the US.
Since the Renewable Energy Act established an innovative incentive program to stimulate investment in clean power a decade ago, the share of so-called renewables in Germany's electricity generation has jumped from 6 percent to 25 percent, compared with an increase from 9 percent to 14 percent in the US.
After Japan’s Fukushima disaster in 2011 — when Merkel accelerated plans to phase out nuclear power — renewables have also eclipsed reactors on the grid, providing 136 billion kilowatt hours of electricity compared with nuclear's 99 billion last year.
As a result, the kinds of benefits US President Barack Obama has promised for Americans’ future have already materialized here.
Although Germany still imports some 70 percent of its energy, it has shaved nearly $10 billion off its annual bill by generating green power at home.
Green energy has created some 350,000 jobs that can't be outsourced in rural communities struggling to keep residents from moving away.
And Germany has emerged as a leading player in developing technologies that will become more important as the impact of climate change sinks in and emissions targets start biting around the world.
Nevertheless, as Merkel's continuing efforts to forge a governing coalition following recent elections have put energy policy back under debate over the past month, critics from both left and right at home and abroad have assailed the country's Energiewende or “Energy Transition” program.
By turns, they allege that conversion to green power has made electricity too expensive for the poor, or crippled German industry’s ability to compete, or increased corporate profits with fat subsidies.
“Germany is committing slow economic suicide” with a “ruinously expensive green dream,”argued the London Telegraph's Ambrose Evans-Pritchard.
“German consumers already pay the highest electricity prices in Europe” and rising prices threaten to make “electricity a luxury good,” Der Spiegel wrote.
“As a result of the current debate about energy prices, other countries no longer turn to Germany as a positive example in energy policy,” Deutsche Welle lamented.
Critics have focused on the Renewable Energy Act that spurred the rapid growth of green power here.
Unlike in many other countries, where government-mandated quotas force power companies to generate a greater portion of their electricity from renewables over time, Germany guarantees profits to green-power producers with “feed-in tariffs” — surcharges passed on to consumers.
Supporters such as the IFEU's Pehnt say that has enabled Germany's renewable energy sector to grow faster.
They argue that quotas and tax breaks such as those that dominate US incentive programs encourage big corporations to deliberate for years before eventually adopting the cheapest technology as close to the deadline as possible.
However, surcharges encourage any and all green-power projects wherever there's a buck to be made.
It’s no accident that Germany boasts nearly 600 community-owned wind farms, solar stations and biofuel projects, says John Farrell of the US-based Institute for Self-Reliance.
“The participatory nature of the program has been the most revolutionary aspect,” he says.
The scheme has protected consumers from rising energy costs by maintaining constant prices and provided steady investment returns for community owners. It has also boosted support for clean energy by creating tens of thousands of self-interested shareholders and employees.
That’s set an example even for such conservative US states as Georgia, where the Sierra Club recently partnered with the Tea Party to set up a robust solar program.
Still, corporate lobbying in Germany has led to an extension of exemptions for fuel-intensive industries, such as steel, to all kinds of businesses.
A 2011 amendment to the Renewable Energy Act increased the number of exempt companies to 2,000 from 700.
That’s prompting critics to call for slashing some $5 billion in such annual fee breaks — something corporate leaders say would decimate German business.
At the same time, the surcharge system — in effect an itemized bill — has made the cost of conversion all too apparent to consumers.
The supplement for green electricity has risen by nearly 50 percent over the past year, and will inevitably climb higher as more green projects replace conventional coal-powered plants.
Electricity already costs some 35 US cents per kilowatt hour in Germany, compared with just 12 cents in the United States.
Next year, the government expects to hike the surcharge again by nearly a fifth. And unlike in other areas, where taxes and fees have encouraged Germans to change their behavior — such as public transportation and water management — the added whack is starting to smart even though proponents argue that the focus on the surcharge is misleading.
“Renewable energy lowers the spot-market price, but the so-called renewable energy surcharge is calculated from the difference between the tariffs paid to renewable-energy operators and the spot-market price,” Pehnt says. “So the more renewables, the lower the wholesale price of electricity — but the higher the surcharge printed on the bill.”
Meanwhile, electricity distributors have failed to pass on the savings from lower spot rates to consumers. Instead, they're quietly reaping greater profits to the chagrin of clean-energy advocates.
That policy, they say, will surely appeal to US companies.
http://www.globalpost.com/dispatch/news/regions/europe/germany/131119/green-fatigue-threatens-clean-energy-leader-germany
By Jason Overdorf
GlobalPost (November 20, 2013)
BERLIN, Germany — Power plants don't make front-page news as a rule. But it turns out Germans don't always follow the rules after all.
A long-standing leader in environmental protection, this country has achieved dramatic success in reducing pollution during the past three decades, changing consumer behavior and slashing emissions of the greenhouse gases scientists say are responsible for climate change.
But a media blitzkrieg this month against Chancellor Angela Merkel's bold new plan to cut 1990 emission levels by as much as 80 percent by 2050 — without relying on nuclear power — suggests the plan may be a step too far for many Germans.
There are signs that “green fatigue” may make the target hard to reach. With Florida, Vermont and other US states just starting to adopt the German model, a perceived failure here could set back American efforts.
Martin Pehnt of Heidelberg’s Institute for Energy and the Environment (IFEU) says there are no easy answers.
“We have to be very clear: an energy transformation from a fossil to a renewable energy age does cost money,” he says. “However, the cost of inaction would be higher.”
Germany has been ahead of the curve in protecting the environment since the 1970s, a decade before the Green Party won its first seats in parliament. Germans pioneered recycling and conservation long before such practices were known elsewhere.
Today, the average German makes some 140 trips by public transport a year, compared with a measly 25 by Americans, according to a recent US study.
Germans install “green roofs” — covered with grass, vines or gardens that absorb rainwater, recycle carbon dioxide and reduce energy bills — at a rate of some 100 million square feet per year, compared with a historical total of around 6 million square feet across the US.
Since the Renewable Energy Act established an innovative incentive program to stimulate investment in clean power a decade ago, the share of so-called renewables in Germany's electricity generation has jumped from 6 percent to 25 percent, compared with an increase from 9 percent to 14 percent in the US.
After Japan’s Fukushima disaster in 2011 — when Merkel accelerated plans to phase out nuclear power — renewables have also eclipsed reactors on the grid, providing 136 billion kilowatt hours of electricity compared with nuclear's 99 billion last year.
As a result, the kinds of benefits US President Barack Obama has promised for Americans’ future have already materialized here.
Although Germany still imports some 70 percent of its energy, it has shaved nearly $10 billion off its annual bill by generating green power at home.
Green energy has created some 350,000 jobs that can't be outsourced in rural communities struggling to keep residents from moving away.
And Germany has emerged as a leading player in developing technologies that will become more important as the impact of climate change sinks in and emissions targets start biting around the world.
Nevertheless, as Merkel's continuing efforts to forge a governing coalition following recent elections have put energy policy back under debate over the past month, critics from both left and right at home and abroad have assailed the country's Energiewende or “Energy Transition” program.
By turns, they allege that conversion to green power has made electricity too expensive for the poor, or crippled German industry’s ability to compete, or increased corporate profits with fat subsidies.
“Germany is committing slow economic suicide” with a “ruinously expensive green dream,”argued the London Telegraph's Ambrose Evans-Pritchard.
“German consumers already pay the highest electricity prices in Europe” and rising prices threaten to make “electricity a luxury good,” Der Spiegel wrote.
“As a result of the current debate about energy prices, other countries no longer turn to Germany as a positive example in energy policy,” Deutsche Welle lamented.
Critics have focused on the Renewable Energy Act that spurred the rapid growth of green power here.
Unlike in many other countries, where government-mandated quotas force power companies to generate a greater portion of their electricity from renewables over time, Germany guarantees profits to green-power producers with “feed-in tariffs” — surcharges passed on to consumers.
Supporters such as the IFEU's Pehnt say that has enabled Germany's renewable energy sector to grow faster.
They argue that quotas and tax breaks such as those that dominate US incentive programs encourage big corporations to deliberate for years before eventually adopting the cheapest technology as close to the deadline as possible.
However, surcharges encourage any and all green-power projects wherever there's a buck to be made.
It’s no accident that Germany boasts nearly 600 community-owned wind farms, solar stations and biofuel projects, says John Farrell of the US-based Institute for Self-Reliance.
“The participatory nature of the program has been the most revolutionary aspect,” he says.
The scheme has protected consumers from rising energy costs by maintaining constant prices and provided steady investment returns for community owners. It has also boosted support for clean energy by creating tens of thousands of self-interested shareholders and employees.
That’s set an example even for such conservative US states as Georgia, where the Sierra Club recently partnered with the Tea Party to set up a robust solar program.
Still, corporate lobbying in Germany has led to an extension of exemptions for fuel-intensive industries, such as steel, to all kinds of businesses.
A 2011 amendment to the Renewable Energy Act increased the number of exempt companies to 2,000 from 700.
That’s prompting critics to call for slashing some $5 billion in such annual fee breaks — something corporate leaders say would decimate German business.
At the same time, the surcharge system — in effect an itemized bill — has made the cost of conversion all too apparent to consumers.
The supplement for green electricity has risen by nearly 50 percent over the past year, and will inevitably climb higher as more green projects replace conventional coal-powered plants.
Electricity already costs some 35 US cents per kilowatt hour in Germany, compared with just 12 cents in the United States.
Next year, the government expects to hike the surcharge again by nearly a fifth. And unlike in other areas, where taxes and fees have encouraged Germans to change their behavior — such as public transportation and water management — the added whack is starting to smart even though proponents argue that the focus on the surcharge is misleading.
“Renewable energy lowers the spot-market price, but the so-called renewable energy surcharge is calculated from the difference between the tariffs paid to renewable-energy operators and the spot-market price,” Pehnt says. “So the more renewables, the lower the wholesale price of electricity — but the higher the surcharge printed on the bill.”
Meanwhile, electricity distributors have failed to pass on the savings from lower spot rates to consumers. Instead, they're quietly reaping greater profits to the chagrin of clean-energy advocates.
That policy, they say, will surely appeal to US companies.
http://www.globalpost.com/dispatch/news/regions/europe/germany/131119/green-fatigue-threatens-clean-energy-leader-germany
