Revolution Threatens to Falter Is Germany's Green Energy Plan Failing?

Germany has set higher targets for renewable energy usage than any other industrialized nation. Angela Merkel's government plans to decommission its nuclear plants by 2022 and to obtain 80 percent of all energy from renewables by 2050. So far, though, too many promises from Berlin have gone unfulfilled.

By Laura Gitschier and Christian Schwägerl

E.ON Energie

German Environment Minister Norbert Röttgen never tires of all the praise for Germany's energy revolution coming from around the world. Whenever he explains to foreign politicians that his highly industrialized country aims to decommission all of its nuclear power plants by 2022 and obtain at least 80 percent of its energy from renewable sources by 2050, he is only rarely met with utter denial -- at least not among his fellow environment ministers. The reactions range between incredulous amazement, genuine enthusiasm and envy over the great amount of courage such a move takes.

Last Friday, Röttgen, whose ministry is responsible for energy policy, was once again able to bask in praise. Germany's federal government had convened energy experts from around the world to join in a dedication ceremony for a branch office of the International Renewable Energy Agency (IRENA) in Bonn, the former capital. Of course, it only had to do with a few offices in the wing of a building that once housed Germany's Postal Ministry. But it was occasion enough for international representatives to gather in the banquet room of the Hotel Petersberg, which has used over the years as the seat of the Allied High Commission after World War II and as a federal guest house hosting a number of major international conferences, for which it has been dubbed the "German Camp David." Adnan Amin, IRENA's Kenyan director general, raved about "the global leadership that has been exercised by Germany on sustainability."

The only question is whether things will stay that way. The pioneer could quickly become a loser if something goes wrong with the energy revolution, like an explosion in prices, power shortages or missed environmental targets. Should that happen, Germany would be a cautionary example for all the world of how, even with climate change and nuclear dangers, it is impossible for an industrialized nation to meet its needs with green energy.

A few things already began going wrong in the weeks just after the Bundestag, Germany's federal parliament, passed Chancellor Angela Merkel's plan to shift to renewable energies in late June. A court put a spanner in the works, government plans ran up against opposition and the calculations didn't add up. Is Merkel's energy revolution now heading towards a crisis?

A Bad Beginning

The Bundesrat, Germany's upper legislative chamber, immediately blocked two strategically important laws. Since early July, Germany's 16 federal states have been refusing to co-finance subsidies for building owners who make energy-savings upgrades on them. The refusal sabotages the plan to lower the energy consumption of buildings, which currently accounts for 40 percent of total energy usage in Germany. Joachim Pfeiffer, the economics expert of the parliamentary group of Chancellor Angela Merkel's center-left Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), warns that a "key building block of the energy plan" is in danger. Jochen Flasbarth, president of the Federal Environment Agency (UBA), is also critical of the development, saying it is "not a good sign for the energy-savings target."

What's more, in September, the Bundesrat blocked a bill for pilot carbon capture and sequestration (CCS) projects that would eliminate the greenhouse gas carbon dioxide by storing it underground rather than releasing it into the atmosphere. The governors of Germany's states, who are members of the Bundesrat, are afraid of civil protests.

Without having this option at its disposal, though, it will become more difficult to use fossil fuels to meet the energy needs not covered by energy generated from renewable sources once Germany phases out its nuclear plants. And because the government has not succeeded in arranging for CO2 storage, the European Commission has now initiated infringement procedures for non-implementation of a 2009 EU directive on the issue that could wind up costing Germany a lot of money.

The next attack came from the Hamburg Finance Court. The court allowed E.on, a German electric utility giant, to file an expedited motion against the fuel rod tax, and it expressed very fundamental doubts over whether the federal government was even permitted to impose the levy, which is intended to help pay for the development of renewable energy sources. At first, the Chancellery saw it as unthinkable that the energy company would dare to file a case against the tax on nuclear fuel -- but it was wrong. Now, the Munich Finance Court has expressed its doubt over the tax's legality, as well.

If the companies win their cases, it will mean that the federal budget will have €2.3 billion less each year of the funds earmarked to help finance the energy revolution. Indeed, there is already talk that the next thing the companies will do is demand compensation for the losses sustained when the government mandated a summary shut-down of the country's seven oldest nuclear reactors immediately following the Fukushima disaster in Japan -- which could also be rather expensive.

Broken Promises

On top of that, three promises are in danger of being broken. First, the government's energy plan states: "The amount paid by every electricity consumer to subsidize renewable energies is to remain unchanged at around 3.5 (euro) cents per KWh," or kilowatt hour. But the assessment of Germany's Renewable Energy Sources Act (EEG) will already be rising to 3.8 cents per KWh soon.

Chancellor Merkel had also promised that Germany's energy revolution wouldn't force it to become dependent on imported nuclear power. But while German energy generators exported 6 percent of their power in 2010, since the swift shutdown of the seven nuclear power plants in the spring, they've been forced to import 2 percent of the energy used. The Environment Ministry denies that any of that energy is from atomic sources despite the fact that electricity generated from the Czech nuclear power plant in Temelin is making its way to Germany via Austria.

Chancellor Merkel also promised that the nuclear phase-out wouldn't undercut climate-protection efforts. But experts have told the Economics Ministry that, according to their calculations, German CO2 emissions will actually increase by 5 percent -- or 40 million metric tons -- between now and 2020 because more energy will be generated by coal. And, as of yet, there are still no plans to offset this increase in another area, such as vehicle traffic.

Unanswered Questions

Experts are warning of a false start. "Whoever says A and phases out (nuclear energy) more quickly must also say B and create the preconditions for an expedited transition to renewable energies," demands Pfeiffer, the CDU/CSU economics expert. "The goals of the energy revolution are well defined, but its implementation is flagging," adds Stephan Kohler, head of the partially state-owned German Energy Agency (DENA). He sees a major failure in the fact that the planned new regulations for increased energy efficiency failed to move forward in the initial months.

Despite the many problems, Environment Minister Röttgen is in high spirits. At Friday's ceremony in Bonn, he donned the mantle of a statesman, speaking about how the energy revolution has become "a major joint project" and would help avoid "environmental liabilities." Likewise, he celebrated the fact that Germany had the world's second-highest level of investments in renewable energies -- even ahead of the United States.

In fact, the energy revolution has resulted in a boom on the renewable-energy market. Major American investors, such as the private equity company Blackstone Group, have put billions into offshore wind parks. And, after years of dragging their feet, Bavaria's CSU-led government and the government of Baden-Württemberg, led by a coalition of the Green Party and the Social Democratic Party (SPD), are now competing to see who can be faster at building wind turbines and covering rooftops with solar panels.

At the same time, the rapid build-up is making it clear that the key questions have yet to be answered. No one knows how the German electrical grid can be expanded and how locals can be won over who live in areas where the necessary projects need to be carried out. It also must be made clear whether the operators of coal- and gas-fired power plants will receive their own bonus for keeping their facilities ready for use. Since green energy will be given the priority, the more of it that surges into the power lines, the more frequently the plants generating power from fossil fuels will be forced to shut down. This, in turn, could render them money losers.

A False Start? Or Is Patience Needed?

These questions should be answered before the year is up. For their part, the government's environmental strategists don't want to hear anything about false starts or idleness. "When it comes to the energy revolutions," says UBA President Flasbarth, "the ink is still drying, and many measures need time before they will have an effect."

DENA chief Kohler, on the other hand, is losing patience. As he sees it, the fact that there is so much chaos on several fundamental aspects of the energy revolution, makes it necessary to set up a new governmental agency. "Germany lacks an energy minister who thinks through the new policies in a strategic way and decisively implements them," he says.

Nevertheless, Environment Minister Röttgen is still counting on success. At Friday's ceremony in Bonn, he said that Germany doesn't have any "missionary zeal" in energy-policy matters in terms of spreading its ideas to other countries. But he added that it "could be an interesting example for other countries."

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