In 2011, German Chancellor Angela Merkel announced the country was turning away from nuclear energy in favor of a renewable future. Since then, however, progress has been limited. Berlin has wasted billions of euros and resistance is mounting.
It's a fantastic idea. The energy landscape of tomorrow. There are 675 people in Germany working every day to make it a reality -- in federal ministries and their agencies, on boards and panels, in committees and subcommittees. They are working on creating a world that on one single day in April became glorious reality. Here in Germany. It was April 22. Easter Monday.
That day, it was sunny from morning to evening and there was plenty of wind to drive the turbines across the entire country. By the time the sun went down -- without the need of even a single puff of greenhouse gases -- 56 gigawatts of renewable energy had been produced, almost enough to cover the energy needs of the world's fourth-largest industrialized nation.
Unfortunately, it was only for that day.
The other days are dirty and gray: Most of the electricity that Germany needs is still produced by burning coal. Then there are the millions of oil and natural gas furnaces in German basements and the streets packed with the cars with diesel- and gasoline-powered motors.
The vision of the fantastic new world of the future was born eight years ago, on March 11, 2011, the day an earthquake-triggered tsunami damaged the nuclear power plant in Fukushima, Japan. The disaster led Chancellor Angela Merkel and her cabinet to resolve to phase out nuclear power in Germany. It was an historic event and an historic decision.
But the sweeping idea has become bogged down in the details of German reality. The so-called Energiewende, the shift away from nuclear in favor of renewables, the greatest political project undertaken here since Germany's reunification, is facing failure. In the eight years since Fukushima, none of Germany's leaders in Berlin have fully thrown themselves into the project, not least the chancellor. Lawmakers have introduced laws, decrees and guidelines, but there is nobody to coordinate the Energiewende, much less speed it up. And all of them are terrified of resistance from the voters, whenever a wind turbine needs to be erected or a new high-voltage transmission line needs to be laid out.
Analysts from McKinsey have been following the Energiewende since 2012, and their latest report is damning. Germany, it says, "is far from meeting the targets it set for itself."
Germany's Federal Court of Auditors is even more forthright about the failures. The shift to renewables, the federal auditors say, has cost at least 160 billion euros in the last five years. Meanwhile, the expenditures "are in extreme disproportion to the results," Federal Court of Auditors President Kay Scheller said last fall, although his assessment went largely unheard in the political arena. Scheller is even concerned that voters could soon lose all faith in the government because of this massive failure.
Surveys document the transformation of this grand idea into an even grander frustration. Despite being hugely accepting initially, Germans now see it as being too expensive, too chaotic and too unfair.
How Germans Will Live and Work
And yet, the future of the entire country depends on it: ecologically, economically and technologically. But also societally. In contrast to the new Berlin airport, whose opening has been delayed for years, the Energiewende cannot just be shrugged off as a regional blunder. It is a project that will determine how Germans will live and work in the future, how German industry will remain competitive and what societal cooperation will look like.
Politicians are quick to label projects as being in the national interest, but this one truly is -- especially given that environmental leadership has become a key element of German identity. A majority of Germans were once proud of the turn away from nuclear and toward renewables, a pride political leaders could have capitalized on.
But the grand transformation has lost its way. The expansion of wind parks and solar facilities isn't moving forward. There is a lack of grids and electricity storage -- but for the most part there is a lack of political will and effective management. The German government has dropped the ball.
In the Economics Ministry alone, 287 officials are working on the issue, divided into four divisions and 34 departments. There are at least 45 additional bodies at the federal and state levels, full of people who also want to move the project forward. They collect vast quantities of data and come up with complicated incentives -- a huge effort that has produced only modest results.
One example is STEP up!, an incentive program meant to help companies deal more efficiently with electricity. Its initial goal was to approve 1,000 applications in 2017, but only seven were authorized in the first three quarters of that year. Then there is the law providing tax incentives for electric vehicles. Six months elapsed between the drafting of the law and its publication, despite the legislation's status being "particularly urgent."
Experts are getting bogged down in details -- producing papers, but no strategies. For months, the vital position of state secretary for energy remained vacant. Nobody feels a sense of responsibility and there is nobody to decide what tasks have priority. Because Germany doesn't even have an Energy Ministry, the issue ends up falling through the cracks. And the chancellor has not stepped in to point the way.
In December 2015, Merkel signed the Paris Agreement on climate change, in which Germany pledged to do its part to slow global warming. More than three years have passed and almost nothing has been done. The migration debate and the rise of the right-wing populist Alternative for Germany have largely shunted the issue of climate change.
At the 2007 G-8 Summit in Heiligendamm, in northern Germany, Merkel indicated she was sympathetic to the idea that every person on earth should be allowed to emit the same amount of CO2. It was a revolutionary idea. But nothing came of it.
Even earlier, in 1997, back when she was the German environment minister, Merkel told DER SPIEGEL: "When it comes to reducing CO2 emissions, vehicle traffic is the biggest hurdle." She could say the same thing today.
With Merkel's tenure as German chancellor now coming to an end, her greatest failure would seem to be that she has done so little to advance climate policy, despite it having been a key issue for her early in her political career. Even though Germany introduced the term Energiewende to the global vocabulary, much like kindergarten or wanderlust, its successful implementation has been left to others.
Like the Netherlands, for example, which has long been the largest supplier of natural gas to the European Union. The country has decided to completely abandon the production of the fossil fuel within a decade and to use the pipeline infrastructure for gas produced from wind power with the help of power-to-gas, or P2G, technology. In six years, no more cars with internal combustion engines will be licensed.
In Sweden -- the Energiewende world champion, according to the International Energy Agency -- a high CO2 tax, of almost 120 euros per ton, is driving people and companies to pay more attention to how they heat, drive and do business. The tax was first introduced there in 1991. In Germany, the debate has only just begun.
Even the U.S. is making improvements. Americans are increasingly turning from coal to natural gas to generate electricity. It's only slightly less dirty, but the country's CO2 emissions are trending in the right direction.
Progress, in other words, is being made everywhere -- just not in the birthplace of the Energiewende. German CO2 emissions have only slightly decreased this decade. Eberhard Umbach is on the board of directors at a scientific initiative called Energy Systems of the Future (ESYS). He says that the view of the Energiewende has shifted. Just a few years ago, he says his foreign counterparts were skeptical but also full of admiration for the élan with which Germany had jumped into the project. And now? "It has completely reversed," the scientist said at a February conference. "Others are faster than we are."
The transformation that has already taken place -- the shift in electricity production, fueled by billions in expenditures -- was the easiest step in the process. Politicians have ignored other elements, like industrial production, building efficiency and, especially, vehicle traffic. Involving those areas and coming up with an overarching concept, that's the hard part that must now be addressed. And it will determine whether Germany will once again become a model of sustainable economic production or whether the entire experiment will end in failure.
So, how did this marvelous idea turn into such a monumental failure?
Why Germany's Energiewende Might Fail
The German government made a key mistake when it announced the end of the nuclear era in Germany eight years ago: It announced it was turning away from nuclear power, without simultaneously initiating the end of coal.
Wind turbines and solar panels were installed across the country -- but the coal-fired power plants kept operating. The government set up a clean energy system alongside the dirty one. But why? Because Berlin was afraid of do anything that might harm a single company or voter.
Germany has never come up with a clear strategy for the shift to renewables, fully thought out from the beginning to end. There have always been two competing concepts of the Energiewende, even before Merkel.
Politicians like former Environment Minister Jürgen Trittin, a Green Party politician who was part of the cabinet of the center-left Social Democratic (SPD) Chancellor Gerhard Schröder, were in favor of a radical shift, no matter what the cost. Others, like the SPD Economics Minister Sigmar Gabriel and his successor Peter Altmaier, from Merkel's center-right Christian Democrats (CDU), were more concerned about German industry and job numbers. Neither side trusted the other and a stalemate ensued. Progress halted.
This helps explain why the government never dared set up an Energy Ministry that might have had the ability to move things forward, and instead divided up the project among the Chancellery, the Environment Ministry and the Economics Ministry. It is an unholy trinity that has continually followed the same pattern: The Environment Ministry surges ahead, the Economics Ministry warns of dramatic job losses and the Chancellery avoids making a decision.
The expansion of Germany's electrical grid has suffered the most from this lack of political impetus. More than a decade ago, the German government passed a resolution to quickly build the necessary high-voltage transmission lines, with experts today saying there is a need for 7,700 kilometers (4,800 miles) of such lines. But only 950 have been built. And in 2017, only 30 kilometers of lines were built across the whole country.
In Berlin, one can hear the wry observation that 30 kilometers is roughly the distance that a snail can travel in a year.
Instead of explaining to voters why it is necessary to conduct such a grid to bring energy from the windy north to the industrially strong south, politicians have wilted in the face of NIMBY protests. Indeed, almost everywhere such a power line tower or wind turbine is to be erected, officials are met with protest. Politicians have thus decided to put most of it underground, which is vastly more expensive and will take years longer to build.
Nine years ago, Rainer Spies, the mayor of the municipality of Reinsfeld in southwestern Germany, began planning the construction of a wind park. Together with the power company EnBW, he wanted to erect 15 turbines in a small forest not far from the highway between Trier and Saarbrücken. "Everything seemed to be ready," Spies says. But then the permit process began.
A Red Kite
The mayor and EnBW submitted the requisite documentation -- several hundred pages and a number of environmental studies. But the authorities continually demanded more: species protection analyses, bird flight patterns, noise emissions, shadow patterns and, not least, potential dangers posed to the barbastelle bat, along with detailed information pertaining to its local population. Finally, after the fourth application, officials approved the wind park's construction last year.
The local municipality should have issued a construction permit soon thereafter. But then, someone discovered the nest of a red kite in a fir tree just a few hundred meters away from the planned wind park. It was the worst thing that could possibly happen.
The bird of prey, with its elegantly forked tail, enjoys strict protection in Germany. It eats mice and moles and its enemies include owls and pine martens -- and wind turbines. The birds like to hunt in the cleared areas beneath the turbines because it is easy to spot their prey.
Red kites are migratory, returning from the south in the spring, but they don't return reliably every year. The mayor would have been happy if the bird had shown up quickly so its flight patterns could be analyzed and plans for the wind park adjusted accordingly. It would have been expensive, but at least construction of the project could finally get underway.
But if the bird doesn't return, the project must be suspended. Spies has to wait a minimum of five years to see if the creature has plans for the nest after all. Which means the wind park could finally be build in 2024, fully 12 years after the project got underway.
The situation in Reinsfeld is, of course, an extreme example, but it provides an important explanation for why Germany has fallen behind in the transition to renewables. Plans for new wind parks regularly trigger conflict with officials and, especially, with neighbors. There is hardly a new project these days that doesn't find itself confronted with dissent, or even lawsuits.
It used to be that 40 months would pass between the signing of a land-use contract and a facility going into operation. Today it takes 60 months. At least.
Badly Needed Reforms
The degree to which this has depressed investment can be seen at the auctions held by the Federal Network Agency to sell licenses for wind park construction. These days, there are fewer people taking part in the auctions than there are commissions available -- which means there is no longer any competition. "The entire system is a bit out of kilter," says EnBW head Frank Mastiaux. "Reforms are badly needed."
The number of new construction projects has collapsed in Germany, with just 743 new wind turbines joining the grid last year, 1,000 fewer than in the previous year. In Bavaria, Germany's largest state, just eight went into operation. The wind power boom is over, and manufacturers are suffering. Enercon and Nordex are slashing hundreds of jobs while Senvion, known as Repower Systems until 2014, has filed for bankruptcy. The industry is concerned that it could be facing a debacle of the kind that has already befallen German solar.
Germany is also falling short of its initial targets when it comes to the expansion of offshore wind parks. In the North Sea and Baltic Sea combined last year, the extra capacity that went online didn't even add up to one gigawatt -- 23 percent lower than the previous year. In mid-April, Merkel inaugurated the Arkona wind park off the coast of the Baltic Sea island of Rügen. But not even the charming images of people blowing into their toy windmills at the ceremony can hide the fact that not even offshore wind parks are a growth market anymore.
It is a systemic problem: Wind park operation and grid connection are not in the same hands, in contrast to places like Britain, for example. Coordination can be difficult, costs are high and potential goes unused. It is hardly surprising that nobody wants to generate electricity on the high seas if it isn't guaranteed that it can get to where it needs to go because the grid to southern Germany doesn't exist.
Even connecting a normal solar park to the grid can test one's patience. In Spain, grid connection is guaranteed when the construction permit is issued. In Germany, though, it is "often an incalculable risk," says Dierk Paskert, head of Encavis, the largest independent operator of solar parks in Germany. Even if grid operators play along, it is often the case that the planning authority, municipalities or even individual citizens stand in the way. "It makes planning difficult," says Paskert.
How Germany's Energiewende Could Work After AllAn additional factor exacerbating the renewables crisis is the fact that, two decades after the enactment of the Renewable Energy Sources Act (EEG), 20-year guaranteed feed-in tariffs will begin expiring next year for the first wind, solar and biomass facilities. Some of those who installed solar panels back then -- often farmers and homeowners -- are still receiving 50 cents for every kilowatt hour they feed into the grid. Today, larger facilities receive just 5 cents per kilowatt hour.
The state has redistributed gigantic sums of money, with the EEG directing more than 25 billion euros each year to the operators of renewable energy facilities. But without the subsidies, operating wind turbines and solar parks will hardly be worth it anymore. As is so often the case with such subsidies: They trigger an artificial boom that burns fast and leaves nothing but scorched earth in their wake.
Germany finds itself trapped in an energy dilemma, having grown used to maintaining two separate systems running in parallel. One of them, based on fossil fuels, has proven difficult to discard, while the other, powered by renewables, hasn't yet gained sufficient traction. But the longer it takes to shift from one system to the other, the more expensive and challenging it will become.
If all goes according to plan, the last nuclear power plant in Germany will be mothballed in just four years. The first coal-fired power plants are also set to go offline by then. At the same time, though, Germany's energy needs are likely to continue climbing.
That means that if renewable capacity isn't quickly expanded, a shortage could soon develop. All it would take is an overcast cold spell in 2023 with no sun and no wind. Should the so-called "dark doldrums" continue for several days, the system could quickly reach its limits. Mid-January 2017 was the last time Germany experienced such a situation.
Soon, the coal- and natural gas-fired power plants that have traditionally been used to maintain grid stability in such periods will no longer be there, and a solution must quickly be found to address the issue. The good news, though, is that Berlin seems to be finally paying attention. That, at least, is how it seemed at an April podium discussion held at a conference hosted at a church in the city. In their own way, each of the politicians on stage promised to reinject momentum into the Energiewende.
Making Up Lost Ground
Green Party parliamentarian Cem Özdemir, whose electoral district is in the homeland of Daimler and Porsche in Stuttgart, confirmed that the end of the internal combustion engine was nigh, saying: "Last rights for the automobile have been read." Christian Lindner, the leader of the business-friendly Free Democrats, insisted that construction be accelerated on high-voltage transmission lines.
Annegret Kramp-Karrenbauer, head of the center-right Christian Democrats, admitted that climate protection used to be a higher priority for her party and then pledged: "We are working to make up lost ground." The climate, she said, would be a vital issue this year.
That could very well be, and one reason for that is the Fridays for Future student protests that are increasingly finding support among parents and grandparents as well. An additional motivation is the fact that falling short of climate protection goals will soon be penalized. Starting next year, Berlin will have to pay a fine for each additional ton of CO2 admitted in excess of the target Germany negotiated with its northern European neighbors. Because the country will almost certainly fall short, the Finance Ministry is planning on extra expenditures of 300 million euros next year to cover the fines.
In the face of such penalties, the government has concluded that it would be better to invest money in climate protection than to pay the levies. Still, even Berlin has begun to realize that the Energiewende no longer has the reputation it once did among the voters.
The man who is charged with injecting momentum and acceptance into the Energiewende is Andreas Feicht. Since February, he has been state secretary in the Economics Ministry. And on his very first day in his new office, he was given an indication as to just how difficult his task will be. His boss, Economics Minister Peter Altmaier, took him along on a trip to see firsthand how grid expansion was going.
Their journey took them to Niedernhausen, a municipality in the state of Hesse just east of Frankfurt. Luckily for Feicht, most of the cameras were pointed at Altmaier as he stepped out of the black bus with the tinted windows and walked through a gauntlet of furious citizens, many of them wearing yellow vests. One poster read: "No experiments over our heads."
'Give Us an E!'
The people of Niedernhausen are surrounded by infrastructure of all kinds, such as the highway that buzzes just past the town, along with several train lines, including the high-speed link between Frankfurt and Cologne. And the power lines, which run right over their homes. Grid operator Amprion would like to span high-voltage lines between the existing towers.
The line, 340 kilometers long, is called Ultranet, and it is part of the high-voltage link taking electricity from the coast to the industrial centers in central and southern Germany. Only around 15 percent of Germany's wind turbines are located south of the Main River, which runs like a belt through the middle of the country. Another line further to the east, known as Suedlink, is to be buried underground -- which is vastly more expensive.
"Peter, give us an E!" read one of the posters in Niedernhausen, with "E" representing the German word for an underground transmission line. The head of the local citizens initiative accosted Altmaier, saying the plan as it currently stands is nothing less than an experiment with the lives of humans and that the magnetic radiation of high-voltage lines had not been sufficiently researched. "I will take a close look at the route of the line," Altmaier promised. And then he and the state secretary climbed back onto the bus.
Feicht is a specialist and knows a lot about energy issues, but only at a regional level. He used to be head of WSW, the city-owned utility company in Wuppertal. His ambitions sound rather modest when he speaks of the Energiewende: "We have to make a bit of progress."
The reality is that Feicht has to succeed where his boss Altmaier has failed. He must create a new, stable system out of all of the component parts he has inherited. Because even if not much fits together at the moment, there are some areas where progress has been significant, and which can be used as pillars of a sensible energy policy.
The EEG subsidies have resulted in the installation in Germany of 1.7 million solar units. There are also around 30,000 wind turbines on land and an additional 1,305 offshore in the North Sea and Baltic Sea. In some cases, those facilities generate power at a cost below four cents per kilowatt hour, making it cheaper than coal or nuclear.
A Lack of Tax Breaks
Germany generates 35 percent of the electricity it needs from wind, sun, biomass and hydro and last year, renewables caught up with coal as Germany's most important source of electricity. And yet, none of this is much more than a good start. The advances in electricity production are impressive, but there are many more sectors that must be integrated into the Energiewende, including buildings, industry and traffic.
There are around 19 million residential structures in Germany, but only just over 4 million of them have been brought up to state-of-the-art energy efficiency standards. Many heating units are outdated and around a quarter of the buildings are still heated with oil. Owners have been slow to update, with only about 1 percent of the country's housing inventory being modernized each year. If the pace doesn't increase, only about half the residential structures will have been modernized by 2050. The coalition agreements of a succession of German governments have included the intention of providing tax breaks to promote building modernization, but a corresponding law has never been passed.
Energy remains a significant cost factor for industry, which has led manufacturers to make their factories as energy efficient as possible. But while they have been successful, industry has continued to grow, cancelling out the gains. The result has been a level of industrial energy consumption that has remained largely unchanged for two decades.
Of all the sectors in question, vehicle traffic has fallen the furthest behind, with mobility still almost entirely based on the burning of gas and diesel. Car and truck emissions remain at roughly the same level they were in 1990. The goal of sinking such emissions to 40 percent of their current levels by 2030 seems illusory, as a simple calculation shows: There are around 47 million passenger cars registered in Germany with an additional 3.4 million being sold each year. Even if half of these new vehicles were electric -- which is unrealistic -- there would only be around 15 million such vehicles in Germany by the end of the 2020s.
It's not enough, in other words, to simply produce more and more green electricity. It won't be enough to fulfill the dream of a low-carbon future. It is time for Energiewende 2.0, a much more all-encompassing version that integrates all sectors, technologies and markets. In the end, the system must be extremely interconnected and more than just a gigantic machine that produces and distributes electricity generated by wind, sun and water.
Hydrogen will be an important element of this new energy environment. Hydrogen is an energy source that does not produce any harmful emissions and which is available in infinite quantities. The potential this molecule carries is well-known. Indeed, the hydrogen revolution was announced many years ago. It was too early at the time, but now, the time may be ripe.
How the Energiewende Could Still Succeed
"Head of Hydrogen" is the rather spectacular title given to René Schoof at the energy supply company Uniper. The company produces green hydrogen in Pritzwalk, located halfway between Berlin and the Baltic Sea. Schoof walks past shiny silver cauldrons in which honeycombed compressors divide water into its component parts.
The facility, which opened in 2012, is one of the first and largest of its kind in the world. And it demonstrates that green electricity can easily be turned into synthetic fuel -- into hydrogen or methane, into gasoline, diesel or kerosene. The technology is ready. But Schoof isn't particularly pleased by the Pritzwalk project. It would be enough for him, he says, if it weren't just "sitting around unused in the middle of the landscape."
From a business perspective, it isn't worth it. Much of the energy is lost in the process of turning wind into electricity, electricity into hydrogen and then hydrogen into methane -- efficiency is below 40 percent. It isn't enough for a sustainable business model.
The process has its shortcomings, but there is one decisive argument in its favor: If the number of wind turbines continues to increase, mandated turbine shutdowns due to network oversupply will increase. The companies are compensated for their losses -- in 2017, to the tune of over half a billion euros. But instead of wasting so much money, suppliers could store the extra energy -- and use it to produce methane and hydrogen that could then be fed into the natural gas network, which has 500,000 kilometers of pipelines -- a kind of gigantic battery that could come in handy in times of low wind and low sunlight.
Another option would be to turn the wind power into methane or hydrogen and then turn them into so-called e-fuels. Here, too, existing infrastructure could be used: fuel-storage facilities, pipelines and gas stations of the petroleum industry.
A study by the German Economic Institute and Frontier Economics confirms the astonishing potential of e-fuels. By the middle of the century, global demand could be as large as half of the current market for crude oil. Manufacturers of electrolyzers could find it especially profitable -- and German companies are the world leaders in the field, having cornered almost one-fifth of the global market. This includes Siemens, ThyssenKrupp and MAN -- the old industrial elite.
But there are also opportunities for younger companies. In northern Germany, not far from the Danish border, the founding duo of GP Joule, two agricultural engineers, are building a complete hydrogen-processing chain. The project is called EFarm. Wind turbines supply the region with electricity. They sit adjacent to electrolysis facilities that turn wind power into hydrogen and heat homes with their excess heat. The plan calls for the resulting hydrogen to be transported to gas stations in Husum and Niebüll and for two fuel-cell buses to be introduced for local use. Wind-powered vehicles.
The coastal project is intended to demonstrate that wind power can remain profitable even after the EEG subsidies disappear. It shows how flexible and interconnected the energy system of tomorrow must be and how much more complex it will be to make renewable energy available reliably.
Today, renewable energy is fed into the grid from all sides, with the amount heavily dependent on the weather. The danger of the system falling out of balance is a constant presence. The only antidote is controlling it as intelligently as possible.
In the western German town of Hagen -- on Impulse Square -- a white Nissan Leaf can frequently be found at a charging station there, located just out front of the headquarters of the energy supplier Enervie. What can't be seen from the outside, though, is that the car is also able to relinquish some of its energy as needed. It can charge itself, or it can feed energy into the grid. Few other electric cars in Germany can do that.
The car is essentially making a tiny contribution to stabilizing the system. When Enervie needs energy, the car can feed electricity into the system within the space of three seconds. And the car owner is paid for the emergency assistance. During one test week, the car owner received a total of 20 euros, but ideally, it would be around a thousand euros per year. A car that earns money for its owner.
Essentially, every driver could be a mini-energy supplier, just like those who operate wind turbines, solar cells, biogas facilities and other sources that feed energy into the grid. Taken together, it becomes a kind of virtual power plant. In such a world, utilities would have the task of orchestrating the supply.
The potential problems here are relatively obvious: What happens when a large number of people plug in their electric cars at roughly the same time -- when they come home from work, for example? Utilities could provide discounts to those who plug in later, for example. There is already software and algorithms in existence to make such a thing possible.
Frustration with Stasis in Berlin
In some municipalities, local utilities have already begun developing such intelligent supply concepts. They are, essentially, taking control of the Energiewende locally out of frustration with the stasis in Berlin.
In Bordesholm, a community of 7,500 near the port city of Kiel, the municipal utility company recently inaugurated a battery storage space -- a black, windowless building as big as two houses. Its shelves hold 48,048 modules and the ventilation system constantly hums, since the batteries work best at temperatures between 17 and 23 degrees Celsius (63-73 degrees Fahrenheit).
The local utility uses it to store the electricity produced in a neighboring biogas plant. The batteries provide locals with electricity, but if necessary, they can also feed in power to the national grid within just 0.2 seconds to provide stability -- just as the Nissan Leaf in Hagen does. And the utility receives compensation for doing so. "That's how we earn our money," says Frank Günther, director of the Bordesholm utility.
Intelligent systems are important. But incentives for individuals and companies to act in environmentally friendly ways are even more important. And that's where price matters. The more expensive the production of CO2, the more worthwhile it becomes to invest in climate-friendly technology.
The European emissions trading scheme, which was introduced in 2005, has thus far proved insufficient. The EU issued too many certificates and as a result, prices have remained low and their future trajectory is hard to predict. Furthermore, the trade in certificates only covers half of all emissions: transportation, buildings, trade and agriculture are not included.
A climate tax would be an elegant way of integrating all sectors and interlinking them into a larger system. Over 3,500 economists have called for a constantly rising, globally standardized tax and in the current governing coalition in Berlin, the idea of a CO2 tax is also gaining support. The question is simply how high it should be.
And once again, everyone is being cautious. German Environment Minister Svenja Schulze (SPD) has preferred to rely on a proposal by a leading government economic adviser, Christoph Schmidt, of 20 euros per ton. But at such a low level, its effect would hardly be noticeable -- it would only make a liter of gasoline a few cents more expensive.
The Fridays for Future activists argue for action on a different scale. They believe a price of 180 euros is appropriate. That would make a liter of gasoline about 43 cents more expensive and boost the cost of heating oil by 58 cents per liter. A flight from Germany to New Zealand and back would cost about 2,000 euros more.
Either way, it's clear that the higher the price, the more people will be negatively affected: commuters, people living in older buildings, frequent flyers. At the ESYS Conference in February, Thorsten Herdan, head of energy policy at the Economics Ministry, described the dilemma currently being faced by the government. He argued that although many are now pushing for higher CO2 prices, if you make them high enough to have an actual effect, people will suddenly say: "For God's sake, not that. Otherwise I'll put on a yellow vest."
He was referring to the country-wide protests in France triggered by plans for a higher fuel tax. The result has been that Berlin policymakers are currently leaning toward a model like the one used in Switzerland, in which a large portion of the CO2 tax revenues is sent back to citizens as compensation for the fact that climate-neutral behavior can be expensive and requires sacrifice. That's the core lesson of more than two decades of the Energiewende: Policymakers must ensure that people are on board. Voters must begin to understand what the transformation means for them and that it is vital that they change their behavior. Without sacrifice, it won't work. The second, more difficult, part of the Energiewende -- the intelligent interlinking of different sectors -- is bringing the Energiewende closer to ordinary people. It is influencing how and where people live, how they travel.
Technologically speaking, it's possible to make the energy system free of fossil fuels by 2050, especially in a high-tech country like Germany. Everything is ready: the studies, the strategies, the facilities. ESYS, the association of scientists, has formulated recommendations for how politicians, businesses and society can reach their goals.
According to ESYS, Germany needs to increase its solar- and wind-facility capacity by a factor of five to seven, make synthetic fuel a pillar of the energy system and introduce a CO2 tax in all sectors. According to ESYS predictions, the transformation would cost 2 percent of the country's annual GDP. Currently, that would be about 70 billion euros.
By 2050, the costs would add up to 2 to 3.4 trillion euros, depending on the scenario. Other forecasts fluctuate between 500 million and about 2 trillion euros. One way or the other, the second part of the Energiewende will be expensive and exhausting, a project as demanding as German reunification.
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