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What US Climate Policymakers Can Learn From Germany

The Europeans have a decade’s worth of best practices to share, with Berlin’s Energiewende standing out
, / 2063 0

With US President Barack Obama and the 2016 Democratic presidential candidates rolling out their climate change strategies, now is a good time to take a look at what has worked – and what has not – in  Europe. The stunning success of Germany’s Energiewende could teach the US a few things about transitioning from fossil fuels to renewable energy.

© REUTERS/Jason Reed

© REUTERS/Jason Ree

1. It Can Happen Fast

Germany has managed to move more quickly than any other major industrial country in transforming its electricity sector into one based on renewables. In just 15 years time, Germany has raced from having a power sector with about 5 percent of its power coming from renewable sources (mostly small hydro-electric plants) to generating a full third of its electricity from them, including on- and off-shore wind, bio-energy, hydro, thermal, and photovoltaic solar. On July 25, on a sunny and relatively windy day, Germany’s renewables accounted for 74 percent of its electricity.

This is a faster shift than anyone, even the environmentally minded Green party, anticipated in 2000 when the Renewable Energy Resources Act was passed. The key to the transition’s success: a surcharge on electricity (the feed-in tariff) that helped investors pay for the initial investments into renewable energy generation technology as prices for the generation technology plummeted. Optimists like Greenpeace Germany, who are pushing for the Energiewende to be accelerated, say that Germany could have two-thirds of its power generated from renewable sources by 2030, and 100 percent by 2050. The German government is more conservative: it expects to be 80 percent renewable by 2050.

2. Renewables Don’t Hurt the Economy  

Germany provides stellar evidence that renewable energy expansion, if done correctly, won’t stunt economic growth. While Germany has made incredible strides in expanding renewables, its highly industrialized economy was one of the first to crawl out of the recession in 2009-2010, and grew steadily in all of the non-crisis years between 2004 and 2015. The transition obviously hasn’t lessened Germany’s competitiveness on the global market, as the country exported more in 2014 than ever before (and increased its already lopsided trade surplus to $234 billion) despite international crises, sanctions against Russia, and sluggish global growth. One export record after another has been shattered – even now, when the rest of Europe’s economies are still mired in a nasty funk.

Moreover, the renewables sector has created about 372,000 jobs in Germany, while other aspects of climate protection policy, like energy efficiency, alternative mobility, educational and training programs, research and development, the decommissioning of nuclear reactors, and grid expansion, may have added at least another 1.5 million posts. The most obvious winners of the Energiewende are those farmers, small- and medium-sized businessmen, and citizen’s groups that have invested in renewable energy and sell it to the power grid. Ask nearly any Bavarian farmer if he or she is for expanding renewables – the farmer will likely say “yes”, even if he or she balks at cutting grid corridors through the Alps.

3. The Workhorses Are Solar and Wind

Each country, region, and municipality will, in the future, have a mostly local energy mix that will reflect its natural resources, needs, and weather patterns. Some countries, like Iceland, can rely on thermal power from volcanic sources in the earth. Others, like the southern Balkans and Norway, will have large hydro-electric works to draw on. But most of the renewable power production in the near future will come from solar photovoltaic and onshore wind power. These two technologies are the backbone of Europe’s transition so far, and have the best prospects for becoming yet cheaper and more effective at the same time.

A recent report by the Berlin-based think tank Agora Energiewende argues that solar photovoltaic is already cheaper than fossil fuels in the sunniest parts of the world, and will be cheaper just about everywhere by 2025. “Solar energy has become cheaper much more quickly than most experts had predicted and will continue to do so,” says Agora Director Patrick Graichen. “Plans for future power supply systems should therefore be revised worldwide. Until now, most of them only anticipate a small share of solar power in the mix. In view of the extremely favorable costs, solar power will, on the contrary, play a prominent role, together with wind energy – also, and most importantly, as a cheap way of contributing to international climate protection.”

4. Involve the Grassroots

Germany’s Energiewende has not been driven by the big gas and power utilities – on the contrary. The existing utilities, deeply invested in nuclear and fossil fuels as they are, have tried to put the brakes on the Energiewende. Rather than invest in the renewables revolution like so many smaller investors, they bet against it – and lost. This is why their profits have plummeted in Germany, while a whole cottage industry of smaller producers and renewable offshoots have capitalized on the transition. The four largest utilities in Germany have only six percent of the share of renewable production – although they are now, finally, scrambling to jump on board. In fact, about two-thirds of the clean power generation facilities are in the hands of farmers, individuals, energy co-ops, citizen’s groups, small- and medium-sized businesses, green investment funds, and municipalities. It is this hands-on engagement that has made the Energiewende in Germany popular, and thus possible. It has promoted a vast democratization of the energy sector, empowering citizens in a business once dominated exclusively by multinationals

5. Nuclear Power is Not Necessary

Germany has been expanding renewables at the same time that it has pursued an exit from nuclear power and hit tough EU greenhouse gas reduction targets. Americans, even American leftists, tend to be much friendlier to nuclear energy than Europeans, particularly the anti-nuclear Germans. But no matter which side you fall on, Germany offers proof that nuclear energy is not necessary to transition to green energy. Contrary to alarmist reports that Germany would have blackouts or power outages in the aftermath of the 2011 Fukushima nuclear disaster, when Chancellor Angela Merkel shut down a third of Germany’s nuclear plants and accelerated a phase-out of the rest, Germany has experienced very few outages, fewer than neighboring countries such as pro-nuclear Czech Republic and France.

6. Disincentivize Coal-Fired Generation

Germany deserves kudos for greening the power sector, but not for pro-actively driving down the share of its energy generated by coal, the dirtiest of all energy sources. In fact, coal’s share in the German mix even increased slightly from 2012 to 2014, although it was still lower in 2014 than at its height in 2010. (It is currently on the way down again.) This is not because renewables couldn’t fill the gap left by the shut-down nuclear plants, but because the German government and the EU refused to put a price on the burning of fossil fuels that would make its use prohibitive. The 2005-launched EU emissions trading scheme was born with a flaw that rendered it ineffective, and the EU, led by its German energy commission, refused to fix it. The lesson: it is not enough to support renewables; coal has to be taxed and disincentivized in other ways. The fossil fuels industry will put up a fierce fight, as it has in Europe, but limiting it is imperative for bringing emissions down.

7. Expand and Smarten the Grid Now

Germany was too slow to expand and upgrade its grid networks, which has slowed expansion and irked some of its neighbors. The fact is that much of the time, there’s too much renewable energy in the German network. Meeting supply with demand when using weather-dependent green energy means either having significant natural storage capacity, like Norway does, or requiring a decentralized smart grid to distribute electricity effectively. Germany is now playing catch-up with grid expansion.

In terms of energy policy and use, the US is very different from Germany in many ways. But the German experience is still relevant: it is an economic heavyweight, with sophisticated, energy-intensive production sectors like those in North America. The Germans are out in front on renewable electricity, but notably behind in other areas, like alternative mobility, for example – where Berlin could learn something from California. US policymakers would do well to take the Energiewende into consideration when plotting their own approach to climate protection.