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Climate change has entered a new phase. The alarm signals of an ever more rapid change in the biosphere are increasing. At the same time, it is becoming a decisive political factor. Hundreds of thousands of young people are pioneering a new extra-parliamentary climate opposition. The young bring the old along with them. Climate protection was already a central motivation for voters in the recent European elections.

The issue has what it takes to reshape the political landscape, and not only in Germany. If the gap between the climate policy impatience of growing sections of society and the climate policy inertia of politics and business deepens, it could lead to a legitimacy crisis of the market economy and liberalism. Those who want to make both institutions future-proof must face up to the ecological challenge.

The modern industrial age has up to now been based on the seemingly unlimited availability of fossil fuels. They have propelled a tremendous increase in production and consumption and encouraged ever more extensive mobility. Globalization has helped free more than a billion people from extreme poverty. At the same time, the industrialization of the former “Third World” and the expansive lifestyle of the growing global middle class have led to a dramatic increase in energy consumption. About half of the fossil energy ever consumed since the beginning of industrialization was burned in the last 30 years.

Historically speaking, the pioneers of industrial modernity—Europe and the United States—are responsible for the lion’s share of the rising carbon-dioxide (CO2) concentration in the atmosphere. The populous new industrial nations of Asia have started to overtake them. China now accounts for around 28 percent of global CO2 emissions, with India ranking third after the US.

Germany is the only country among the six largest climate sinners whose CO2 emissions have remained roughly the same during this period. Compared to the base year 1990, they have even fallen by around 30 percent. Germany’s share of global economic output is about 3.2 percent, its share of greenhouse gas emissions 2 percent. Nevertheless, per capita CO2 emissions in Germany are above the European average. This is mainly due to the high share of coal in the energy mix. Sweden, with its combination of hydropower and nuclear energy, only emits half as much per capita.

Over the last 200 years, the average global temperature has risen by 1.1 degrees and the trend is a steep upward one. The Arctic waters are ice-free this summer, the melting of Greenland’s ice has reached dramatic proportions, and we have one hot summer after another. We have to fear for the living conditions on our home planet.

It’s Hard to Change

Now that the burning of coal, oil, and gas is throwing the earth’s climate out of whack, the hedonism of modernity is also being criticized. In affluent countries—especially in Germany—there’s a growing movement calling for a radical change in individual lifestyles. The joy of driving a car, the flight abroad for vacations, the large apartment, the permanent online communication, the annually changing fashions, the availability of food from all over the world regardless of season, and the high consumption of meat are regarded as ecological sins. For the followers of a new eco-puritanism, our quest for “more and more” is ruining the planet. “Repent and turn back” is therefore the new categorical imperative.

So far, however, the effect of all these sermons of penance has been very limited. Admittedly, the consumption of meat among the young and educated is decreasing, as is the urge to own a car. But at the same time, the registration figures for SUVs are increasing as is the power consumption of digital communications—and there’s no sign of a slump in the tourism industry. The number of those who have drastically reduced their personal carbon footprint remains modest.

This is not only due to the power of old habits and individual comfort. Our personal carbon footprint depends heavily on structures that individuals can only change to a very limited extent: the way we generate energy; the buildings in which we live; the alternatives available to the automobile; and the professions in which we work. For business people, scientists, members of the international cultural scene, politicians, and the elites of global civil society, flying is not a question of individual morality but rather of everyday professional life. Even where it would be sensible and reasonable to take the train instead of the plane, a lack of capacity and time-consuming connections all too often get in the way.

Just so there’s no misunderstanding: there is no freedom without personal responsibility. It is good and right to ride a bike or take a train, and not to buy products for which people are maltreated or animals suffer. Everyone is free to seek the “good life” that comes from having more free time and social relationships rather than from an increase in income and consumption. But a sober look at the magnitude of the environmental challenge shows that it cannot be solved by appealing to frugality. We will not win the race against climate change without a green industrial revolution, one that decouples wealth production and nature consumption. This is ambitious, but it’s also possible.

The Authoritarian Temptation

The criticism of the slowness of democracy, of its eternal compromises, has a long tradition. In light of the alarming information about melting Arctic glaciers, burning forests and thawing permafrost soils, the calls to take drastic measures here and now are getting louder. For some, democracy is becoming a luxury that we can no longer afford; ecological necessity demands the restriction of freedom.

To argue against this authoritarian temptation doesn’t mean playing down the ecological crisis. If global warming gets out of control and heats up the seas beyond their tipping point, humanity will be facing great upheavals, from economic collapses to global migration. In this respect, the environmental crisis also threatens democracy. We must therefore do everything we can to press ahead with the ecological transformation of industrial society and prevent the climate crisis from destroying liberal democracy.

The ecology of renunciation is based on a static view of the relationship between man and nature. It understands the earth as a fixed space that offers only a limited potential of resources in which humans must settle. If humans exceed the limits set by nature, the species risks self-destruction. An early proponent of this thinking was the British theologian and economist Thomas Malthus (1749-1832). With his famous “population theory,” he came to the conclusion that the earth can only feed about one billion people. Crossing this threshold would lead to catastrophic famines and the collapse of human civilization.

Malthus, however, couldn’t foresee the enormous increase in agricultural productivity through chemical fertilizers, pesticides, modern machinery, and the breeding of higher-yielding plants and livestock. Today, more than seven billion people live on earth, their life expectancy has doubled since then, and the amount of calories available per capita has increased by more than 50 percent. A miracle? Yes, but a miracle based on science and technology. What Malthus did not take into account was human ingenuity.

We cannot override the laws of nature. But technical progress make it possible to push the “natural boundaries” further and further. The “limits of growth” are not fixed. Solar power offers an almost inexhaustible source of energy for an ecological industrial society, one based on the combination of natural and technical photosynthesis, bio-economy, and hydrogen.

Voluntarily going without this and that will at best slow climate change down, but not stop it. This is particularly true in view of the billions of people on our planet who want nothing more than access to a modern life: well-equipped homes, education and professional health care, the opportunity to travel, a rich diet. For the vast majority of the world’s population, “zero growth” is not an alternative. For them, economic growth is still the key to higher living standards, better education, and better health care.

Green Industrial Revolution

The ecological renewal of industry, our cities, and public infrastructure requires increasing investment in alternative energy systems and new production facilities, the expansion of public transport, and the ecological modernization of existing buildings. If we do it right, we will create a new economic dynamic—a long wave of environmentally friendly growth in the global economy.

Rationally speaking, the question is not whether the global economy will continue to grow. With the world’s population rising to ten billion, the countries of the South becoming increasingly industrialized, and cities continuing to grow, the key question is whether we can decouple value creation from environmental pollution. At an annual growth rate of three percent, global economic output will roughly double in the next 20 years. Over the same period, greenhouse gas emissions will have to fall dramatically in order to keep the rise in temperature in check.

This requires nothing less than a green industrial revolution with an impact similar to the invention of the steam engine, electrification, or the triumph of the automobile. In essence, it is about a threefold transformation of the old industrial society: first, from fossil energy sources to renewable energies; second, a continuous increase in resource efficiency (generating more wealth from fewer raw materials and energy); and third, the transition to a modern circular economy in which every residual material is returned to biological or industrial production.

Prices Must Tell the Ecological Truth

A market economy only works if prices tell the ecological truth. An ecological tax reform that gradually makes greenhouse gas emissions and the consumption of scarce natural resources more expensive would have a far greater effect than more and more new bans. The additional burdens arising from environmental taxes can be refunded to all citizens in the form of a flat-rate eco-bonus. This would even have a socially redistributive effect because low-wage earners generally have a smaller CO2 footprint than the wealthy.

A successively rising CO2 price would unleash measures to reduce carbon dioxide emissions that can achieve the most favorable cost-benefit ratio. The second major advantage over state-controlled production and consumption is that it steers the initiative of companies and consumers in a sustainable direction without prescribing exactly what they should or should not do. At the same time, it provides incentives for producers and consumers to make environmentally friendly investments and purchases.

However, it is not a silver bullet. A CO2 price that adequately reflects the costs of climate change would have to be so high that it could only be implemented gradually. Climate economists say a carbon price could start at around €60 per ton, before being increased to a three-digit figure. In Sweden, which introduced a national CO2 tax back at the beginning of the 1990s, the price is currently €115 per ton. It applies to economic activities that are not covered by European CO2 emissions trading, and companies competing internationally pay lower rates.

Germany, Be a Pioneer

The Paris Climate Conference of 2015 didn’t prove to be the major breakthrough that many had hoped for. Global greenhouse gas emissions continue to rise, with most countries lagging behind their declarations of intent. The inertia of politics and business, and everyday habits are slowing progress. The conflicts of interest between economy and ecology cannot be overcome overnight. CO2-intensive industries are resisting the devaluation of their capital. Many developing countries continue to rely on coal to sate their hunger for energy. In key countries such as the US and Brazil, a climate policy rollback is underway. The Russian leadership is focusing on increasing oil, gas, and coal exports. CO2 emissions also continue to rise in China despite the impressive expansion of renewable energies and electric mobility.

Despite all the warnings that we are on the brink of catastrophe, economic growth is prioritized over climate protection everywhere in the world, even though the predominant, resource-guzzling and fossil energy-fired growth model destroys more wealth than it creates if its ecological effects are taken into account.

The only real chance of stopping climate change lies in a new model for economic prosperity and social progress: a shift from overexploitation of nature to cooperation with nature, from fossil fuels to renewable energies, from waste of resources to networked cycles, from old-style industrial agricultural to high-tech eco-agriculture. Highly industrialized countries should lead the way.

In many countries today, solar and wind energy are cheaper than new coal and nuclear power plants. Countries like Germany should also play a pioneering role in electricity storage and intelligent grids, hydrogen technology, electromobility, and environmentally friendly chemistry. This would enable us to make an effective contribution to steering the economic catch-up of Asia and Africa in a sustainable direction. If we show that climate protection and economic success are two sides of the same coin, Europe can become a model for others. And, at the same time, we would secure our own economic future.

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© REUTERS/Fabrizio Bensch

Third-year geology student Luisa Neubauer is often referred to as “the German Greta,” after the Swedish teenager Greta Thunberg, the frontperson of the global Friday school strikes who has risen to international fame. But Neubauer, the face of Germany’s Fridays For Future protests, is an original—a wily strategist and practiced activist behind the well-informed, revved-up young people who are calling out the country’s  political class for failing to address climate change.

Within a few short months, Neubauer and her cohorts have motivated hundreds of thousands of people to join the campaign and have reframed the debate in Germany. It’s something that neither activists nor think tanks, scientists nor Green Party politicos had managed to do. By putting themselves at the center of it, the youngsters have linked the present and the future of the climate change conundrum in a cogent narrative. The issue is no longer one of distant people and the distant future, but rather it’s about them, the youngest generation, which demands a response to “the climate crisis,” terminology they’ve introduced, with credible strategies to secure their future.

Neubauer conveys this urgency wherever she goes, and this year she’s already had audiences with the French president, EU commissioners, and German cabinet ministers. “The politicians have to act, now,” she recently told German public radio, underscoring that the movement’s focus has expanded from the shutting down of coal-fired power plants to the big-ticket challenge of designing a sustainable world. “We have to ask ourselves how we want to organize the economy and live and work without wrecking the planet,” she says.

Overnight Media Sensation

Almost overnight, Neubauer, a Hamburg native, has gone from being a virtual unknown to a media sensation, her words and picture splashed across the German press and blogosphere.

At the demonstrations, it’s plain that she resonates with many of her generation (especially those much like her—an important caveat.) She doesn’t outwardly appear particularly hip, much less radical. Her usual demonstration attire is jeans, a royal-blue woolen jacket, and her signature charcoal-gray winter hat with fat pompom. “She looks normal even though she’s quite extraordinary. This is why so many people can relate to her,” says Insa Vries, an activist from Ende Gelände (Here and No Farther), a climate group that embraces civil disobedience.

Neubauer’s cell phone is her communications hub, from which she helps manage the social media accounts that are the global movement’s sole means of coordination. The branches in 120 countries link up and spread their message via Twitter, Facebook, Instagram, and WhatsApp. That’s how on March 15, the Global Climate Strike amassed 1.6 million protesters worldwide—the largest student-centered demonstration ever. In Germany alone, some 300,000 young people skipped school to demonstrate in more than 150 German towns and cities.

One sees at once that Neubauer is no novice. On stage with micro in hand before a throng armed with placards and banners, she is truly in her element. On March 29, the Friday demo at the Brandenburg Gate in downtown Berlin mobilized an estimated 20,000 to 25,000 people. Although the main attraction was Greta Thunberg, who arrived from Sweden and spoke briefly, Neubauer was omnipresent: negotiating Greta through the crowd, leading the chants, introducing speakers, and periodically delivering bursts of oratory: “We’re the generation that can change this climate chaos! We’re more global and networked than the generation before us!”

Perhaps this is simply Neubauer’s 15 minutes of fame, and her novelty will wear off quickly. But at the moment the German media can’t get enough of the speed-talking young woman who takes on the talk shows’ usual suspects with a poise and self-confidence beyond her years.

On the receiving end recently was Ulf Poschardt, editor-in-chief of the conservative Die Welt news group, who appeared alongside her on the talk show Hart aber Fair. Poschardt, 52-years old and usually unflappable, obviously hadn’t done his homework. He blanched when she jumped on his lament that e-cars don’t have enough “soul” for his liking. “Excuse me,” she interjected, “but you obviously have no idea that we’re in a climate crisis! The planet can only take so much carbon dioxide, that’s why we have carbon budgets that we have to stick to,” she said. “And if you want to say that it’s all no good because of your emotional relationship to your sports car or because [e-cars] lack soul, then I have to say, sorry, we really don’t have time for this anymore.”

Pulling the Emergency Brake

In a discussion with Peter Altmaier, Germany’s minister of economics and energy, which was published in full in the weekly Der Spiegel, Neubauer unloaded on the minister when he suggested that rather than skipping school, the students should demonstrate on weekends. In school, he said, students learn how to become full-fledged citizens. Neubauer shot back: “That’s a big misunderstanding: We’re not taking to the streets because we want to change something later as adults, but rather because decision-makers like you need to take action now. We’re pulling the emergency brake because we’re thinking beyond the next exam.”

“The young people, like Luisa, they have the facts right and they wield them very effectively,” says Volker Quaschning, a professor of renewable energy systems at the University of Applied Sciences in Berlin and founder of Scientists for Future, a group of 26,000 natural scientists supporting the movement. The student activists, he says, scoured the Internet to find and read the scientific studies that explain global warming and the potential of renewable energy. “They can show up the politicians and pundits because they haven’t read them,” he says.

“The kids are saying what we’ve been saying for 20 or 30 years. But they’re getting a hearing right now that we never got,” says Quaschning. “We’ve been telling the politicians exactly this for years, and they brushed us off. But the young people, they’re honest, innocent in a way, and speak straight to the problems, which they didn’t create but will have to pay for. They have a credibility that we older people don’t have because we’re part of the problem.”

Building an International Movement

The first few school strikes in Germany, in Berlin, the port city of Kiel, and elsewhere broke out last November, inspired by Thunberg, who had plunked herself on the steps of Sweden’s parliament, the Riksdag, with a cardboard sign reading “School strike for climate.” Luisa and Greta first crossed paths in early December 2018, at the UN climate summit in Katowice, Poland, and agreed to work together, across borders.

Neubauer, despite her age, was no stranger to grassroots organizing. She had worked in a wide range of campaigns with organizations such as 350.org, ONE, Young Friends of the Earth, Foundation for the Rights of Future Generations, Fossil Free Germany, and the German Green Party’s youth wing, among others. As a child, she had marched for environmental causes alongside her grandmother, a veteran of the 1970s environmental movements which gave rise to the Green Party. As high school student, she took on plastic waste and fracking. At her college, Göttingen University in central Germany, where her scholarly focus is sustainable businesses, she was among the activists who forced the administration to divest from all of its holdings in gas, coal, and oil.

But in Katowice, and talking with Greta, she realized that weekly school strikes were the way forward: civil disobedience would finally catch the establishment’s attention. Four weeks later there were 10,000 kids chanting in front of the Ministry of Economy and Energy in Berlin, with Luisa leading the chant: “Wir sind hier, wir sind laut, weil ihr unsere Zukunft klaut!” (We are here, we are loud, because you’re robbing us of our future!”)

Hailstorm of Flak

While Chancellor Angela Merkel has paid the young activists gentle praise, saying she is supportive of their aims, Neubauer quipped that the compliment only shows how out of touch the chancellor is: “Well, it’s nice that they praise our commitment. [But] we go out on the streets to demand that [the government] take a hold of climate policy and drive forward real climate policy.” If Merkel is serious, said Neubauer, “she should meet her own self-imposed goals.”

In stark contrast to Merkel’s faint praise, Neubauer, Thunberg, and many others in the movement have had to endure a hailstorm of flak, some of it quite nasty. The teacher’s union, among many others, object to the truancy while the leader of the Free Democrats, Christian Lindner, suggested they leave politics to the professionals.  The right-wing Alternative für Deutschland (AfD), has gone even further. The party, which calls climate change a sham, ridicules the whole campaign as one of privileged, supremely politically correct children of upper-middle-class Green Party voters.  The response of the hard right, though, is another story. Neubauer’s lifestyle has come under heavy fire, foremost her international travel. Far-right trolls posted a doctored video on YouTube, drawing in part on her Instagram account, which shows her in places as far away as Africa, North America, and Asia and using the hashtag “#LangstreckenLuisa,” or “Long-distanceLuisa.” An Instagram image of a hand, presumably hers, holding a plastic cup of ice cream with plastic spoon stuck in it, reveals her brazen hypocrisy, these critics imply. Most of the flak comes from men, with some using misogynist insults, such as: “Little blondie should stop taking those long-distance flights and go work on an organic farm.”

The question that just about everyone asks Luisa Neubauer is when the school strikes will end. Neubauer says they‘ll return to school when Germany agrees to exit coal in 2030—rather than 2036, as planned. It is, however, virtually unthinkable that Germany’s coal commission will reconvene and renegotiate the exit date that it set just months ago. If they don’t, says, Neubauer, then they’ll strike until 2030—that’s 813 Fridays from now.

While it’s unlikely the movement can sustain its current levels of energy and enthusiasm for that long, in truth it has only just begun, and Luisa and her allies obviously have no shortage of creativity. And already they’ve shifted the debate by underscoring climate change’s existential threat. “We’re bringing the topic of climate change to the dinner tables and the classrooms and the town halls,” says Luisa. “This is certainly a success in itself.”

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During Angela Merkel’s 2019 New Year’s video address, images of brown, drought-stricken fields shot by German astronaut Alexander Gerst from the International Space Station were faded in to remind viewers of “the vulnerability of the basis for life.” Climate change was a Schicksalsfrage, a question of fate, Merkel exclaimed. An issue that demanded bold international action.

A few weeks later, it looked as if Germany might actually be doing its part. On January 26, the government-appointed coal commission—consisting of 28 representatives of government, unions, industry, and environmental NGOs—presented its plan to phase out coal by 2038. Though the commission’s plan still needs to be enshrined in law, it was lauded far and wide for taking all interests into account. While taking a major step towards climate change mitigation, it also foresees spending €2 billion per year for the next two decades to cope with the loss of coal mining jobs in affected regions. Patrick Graichen, the director of think-tank Agora Energiewende, said it “showed that large social conflicts can still be solved together in Germany. It is therefore a great moment for our political system.”

The “coal consensus” is a late success for Merkel’s climate policy. Too little, too late, perhaps: even if the new deal is fully implemented, Germany will only meet its own 2020 emissions targets by 2025, according to Agora Energiewende. A vast amount of work has yet to be undertaken by the country if it is to fulfil its commitments under the Paris agreement. And the debate about coal has raised questions about Merkel’s climate legacy.

Noble Words

Judging only by her words, one could be forgiven for mistaking Merkel for a veritable climate warrior. She has been grappling—at least rhetorically—with climate change since the beginning of her political career. As environment minister under Chancellor Helmut Kohl, she presided over the first UN climate conference (COP1) in Berlin in 1995. At the time, she wrote in the Frankfurter Allgemeine Sonntagszeitung: “With good reason, it is expected from governments and politicians that they no longer close their eyes to the pressing scientific findings that climate protection requires rapid and vigorous action.”

Ever since, Merkel has hammered home that message at international summits, earning her the nickname “climate chancellor.” At the G8 summit in Heiligendamm in 2007, for example, she persuaded oil-loving US President George W. Bush and Russian President Vladimir Putin to accept the latest IPCC report recommending emissions cuts to prevent the earth from warming by more than between 1.5 and 2.5 degrees Celsius above pre-industrial levels. At the 2015 Paris UN Climate Change Conference, Merkel was credited with working tirelessly behind the scenes and getting skeptical leaders such as Putin on board with the final agreement.

Missed Targets, Tarnished Reputation

In late 2018, the government announced it would miss its own 2020 emissions targets. Instead of the 40-percent reduction of greenhouse gases over 1990 levels that had been its initial target, Germany would only achieve a 32-percent drop. Emissions had stagnated at 11 tons of carbon dioxide (CO2) per inhabitant, higher than the EU average of 8.4 tons. In a report in December, the government blamed unexpected growth, both of the population and the economy, for the lack of progress. Having given up on trying to reach the 2020 target, the government said it would concentrate on meeting its 2030 goal of a 55-percent reduction over 1990 levels.

Why isn’t Germany meeting its targets? For one, the Energiewende, or energy transition, set in motion by Gerhard Schröder’s SPD-Greens coalition, is running out of steam. It was once the world’s most ambitious renewable energy program. Germany’s renewable energy feed-in tariffs were copied the world over and sparked a wave of innovation in wind and solar technology at home, with some impressive results: renewables now account for 40 percent of German electricity, up from 10 percent when Merkel took office in 2005.

However, Germany is not committing to the investments necessary to make the Energiewende sustainable in the long term. From 2021, subsidies for wind and solar energy will end completely. Over the past few years, the number of new wind turbines installed on land has dropped radically due to new restrictions on their size and location and political resistance at the local, state and federal levels. The result has been job losses in what was once lauded as one of Germany’s most innovative industries. The systems that store power when the sun is not shining and the wind is not blowing, as well as the high-capacity “electricity autobahns” to transport power from the wind farms of the North Sea to the industrial south, have not received enough government support, a deficit some critics blame on Merkel’s Economy Minister Peter Altmaier, who is not a big fan of the Energiewende.

Merkel’s about-face on nuclear power also played an important role. Upon becoming chancellor, Merkel moved to “phase out the phase-out” of nuclear power set in motion by her predecessor. But following the 2011 Fukushima accident she abruptly reversed course and decided to shut down all nuclear plants by 2022, even faster than under the previous government’s plan. Since nuclear power was CO2-free and provided the baseload electricity required by German industry, massive continued investment is required in renewable sources as well as in relatively clean gas plants. But this has yet to occur to a sufficient degree. As nuclear plants have been taken offline in recent years, the baseload has been increasingly covered by lignite or brown coal.

Slow Retreat from Coal

Under the new “coal consensus,” lignite will be mined and burned for another 19 years. Lignite emits more CO2 than virtually any other fuel. Open-cast lignite mines bring with them huge environmental and social costs, from sinking ground water to the destruction of villages and the forced relocation of tens of thousands of people. For a “climate chancellor,” Merkel has had a very friendly relationship with the coal industry. In 2006 she even laid the first stone of a brand new RWE lignite power plant in the western town of Neurath.

As the coal commission convened last year, environmentalists stepped up their anti-coal activism. In the Rhine region there were massive protests against the planned clearance of the Hambach Forest for the expansion of a lignite mine. Since the fall, German high school students, inspired by Swedish 16-year-old Greta Thunberg, have been staging “school strikes for the climate.” On a cold January Friday, about 10,000 Berlin teens skipped school to protest outside the building where the coal commission was holding its final meeting.

Under the commission’s proposals, all coal plants would be closed by 2038. €2 billion per year or a total of €40 billion over 20 years would be invested in coal regions. Utilities would receive billions in compensation. Altmaier said the plan would result in a 55-percent drop in emissions by 2030 over 1990 levels. New subsidies would keep consumer energy prices affordable. Both industry and unions welcomed the deal.

But not all are happy. Greenpeace Germany director Martin Kaiser, who took part in the negotiations, said that under the plan, Germany aimed to keep warming below 2 degrees Celsius, while the Paris agreement stipulates a maximum of 1.5 degrees Celsius. “This won’t be achieved by a step-by-step phase-out of coal-powered plants by 2038,” said Kaiser. For Germany to be in line with Paris, emissions must be reduced by 70 percent by 2030, not 55 percent.

Karen Pittel of the ifo Center for Energy, Climate and Resources said “the compensation for power plant operators and the planned relief funds for electricity prices would cause the cost of the coal phase-out to rise further.  A chance for fundamental reform of energy and climate policy has been missed.” The phase-out would make the Energiewende—which, according to Pittel, will already cost €1 trillion by 2050—even more expensive.

Too little, too late, too expensive. But perhaps better late than never in an era when the likes of US President Trump sing the praises of “beautiful clean coal.”

Cars Are King

The area where Merkel will find it hardest to make progress is transportation, Germany’s “problem child,” at least in terms of climate change and pollution. Road transport emissions in the EU have risen by more than 20 percent since 1990. And in Germany itself, the car industry employs a million people and enjoys an annual turnover of more than €400 billion. Over the past two decades German automakers pushed “clean diesel” as the way to reduce CO2 from cars rather than investing in alternative fuels and electric motors. Indeed, diesel is taxed at lower rates than gasoline, encouraging the purchase of diesel-guzzling SUVs and negating the positive impact of diesel’s lower CO2 emissions. The “Dieselgate” scandal—in which Volkswagen and other German carmakers were found to have installed illegal software in diesel cars to keep emissions artificially low during testing—laid bare the lie of “clean diesel” in 2015.

Nevertheless, Transport Minister Andreas Scheuer still goes to great lengths to protect the car industry, even questioning the validity of EU air quality standards because of a critical paper signed by German lung specialists. When a transport commission tasked with devising ways to reduce CO2 emissions proposed a speed limit of 130 kilometers per hour on the autobahn, Scheuer criticized it as going “against common sense.” That put him at odds with the 63 percent of Germans who favor a speed limit, according to a survey published by by DIE WELT newspaper in January. Scheuer was once again speaking the language of the car giants. Unsurprising in a country with a powerful auto lobby and in which senior politicians in the CDU/CSU and SPD have been known to take on lucrative jobs in the industry upon leaving office.

Another effort to clean up transportation—putting a million electric cars on German roads by 2020—will fail miserably. In 2018, a total of 100,000 electric and hybrid plug-ins were registered in a country with 46 million cars.  Merkel’s governments simply have not invested enough in charging stations or committed to the necessary financial incentives to boost sales in electric models. As countries around Europe name end dates for the sale of combustion engines, Germany hangs on to gasoline and diesel, protecting its flagship industry in the short-term and yet risking its future.

Now What?

A so-called climate protection law being pushed by Environment Minister Svenja Schulze is supposed to be passed this year. The law will bundle a series of measures, ensuring Germany’s emissions will be lowered to achieve the government’s goal of a 55-percent CO2 reduction by 2030 compared to 1990s levels. Meanwhile, as Germany simultaneously phases out coal and nuclear energy, it will have to produce a lot more electricity through renewable sources and “back-up” natural gas plants. No one really knows how much power a full transition to electro-mobility would require. One estimate puts it at 120 terawatt hours, requiring the equivalent of 20 new gas-fired power stations. Other problems that could nullify German climate efforts are the rapid growth of air travel and electricity used for IT.

According to a 2018 Hamburg University study, “climate change is an important factor in the voting behavior of about 40 percent of Germans.” It is perhaps no surprise that the Greens, who have the most aggressive climate policy of any party, are enjoying record support, polling at about 20 percent. The next government could very well be a CDU-Greens coalition, creating a chance to take more radical but necessary steps toward fulfilling the targets of the Paris accord and ending a decade and a half of Merkel’s wishy-washy approach to climate change.

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© REUTERS/Fabrizio Bensch

In September 2015, when the US Environmental Protection Agency discovered that Volkswagen had been cheating on its air pollutant emissions tests for diesel cars, few could have imagined it would morph into one of the biggest German political scandals in modern times.

Three years later, as a result of those revelations, German cities may be on the verge of banning diesel cars—a move that could cripple the powerful German automotive industry, which has already been reeling from the “dieselgate” revelations. Berlin is desperate to avoid such a scenario, but it now looks like developments are moving too fast to be controlled.

On Tuesday the country’s administrative court in Leipzig upheld a decision by lower courts that said that banning diesel cars would be the most efficient way to quickly get air pollution below EU limits in the cities of Stuttgart and Dusseldorf. The two German states in which those cities are located had challenged the local court ruling, saying the problem needs to be tackled at the national level, not the local. But they were rebuffed by the high court.

No National Solution

In Berlin, national lawmakers have been unable to come to a solution. A half-hearted offer to make public transport free in certain cities, part of the coalition agreement of the incoming government, would take many years to have an effect. A technical solution to retrofit diesel cars to bring their air pollution down, meanwhile, has been mired in arguments over who should pay for it. An expert panel advising the government has drafted a preliminary recommendation that the taxpayer should pay, but after a furious reaction to the leaked draft the group has delayed coming out with a final recommendation. They are meeting again on Wednesday.

DUH is calling on the federal government to put in place a “blue badge” scheme across the country that would only allow the newest, cleanest diesel cars to drive in city centers to avoid a patchwork of different bans. The admissible levels would correspond to “Euro 6” EU standards, estimated to cover about one third of the 15 million diesel vehicles on the road.

Diesel in the Cross Hairs

The court ruling comes at a time when consumers are already rejecting diesel cars because of the dieselgate scandal. Sales of diesel cars have already fallen by nearly eight percent in 2017, with sales collapsing by more than 20 percent in December alone. Consumers are concerned that if they buy a diesel car, they will be unable to drive it in some cities. And who would buy their used car if it faces bans?

Car dealers are now dealing with many unsold diesel cars, and German automaker Daimler warned in its annual report this month that a further shift away from diesel cars could lead suppliers to demand bailouts in the form of compensation payments.

The legal challenges to air polluters are not directly related to the emissions cheating scandal, but the issue has galvanized environmental campaigners, who see an opening to put pressure on the government. The scandal has also focused attention on diesel cars—the public now knows the cars are more polluting than previously claimed by the manufacturers.

The German NGO Deutsche Umwelthilfe, which initiated the original legal challenge in this case, has been filing these lawsuits for many years. There are currently 19 other pending legal challenges for cities across Germany, and the Stuttgart and Düsseldorf decision provides a precedent they will likely use to win those as well. In the blink of an eye, a domino effect could bring a patchwork of contradictory diesel bans to cities across Germany. The federal government is desperate to avoid this, but if courts have ruled that air pollution must be brought under limits, and diesel bans are the only way to do this quickly, there may now be no other options.

The irony is that Germany’s air pollution levels are not dramatically higher than in other countries. Indeed, air pollution violations are one of the most common environmental infringements of EU law. The difference is that, likely thanks to the outrage generated by German automotive manufacturers caught cheating, German courts have now said those limits can be transgressed no more.

As the new German government prepares to take office, this will be one of the first urgent issues it will have to tackle.

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© REUTERS/Wolfgang Rattay

It was hailed as a breakthrough: nearly four months after the election Chancellor Angela Merkel’s conservatives and the Social Democrats agreed to launch formal negotiations on forming a government together, again. In a 28-page draft policy agreement, the negotiating parties listed the compromises they had spent weeks wrangling over – and skirted around the issues where no agreement could be reached.

During negotiations, the two sides appeared ready to drop German-authored plans to lower carbon dioxide emissions by 40 percent from 1990 levels by the year 2020 because it simply wouldn’t be feasible – the country has only managed to slash 27 percent until now. In the end, however, they kicked the can further down the road, appointing a commission to create a blueprint for reducing emissions as quickly as possible and gradually phasing out coal power.

It is a glaring departure from the green image Germany has built. Just a handful of years ago, the country’s Energiewende, or energy transition, was seen as a shimmering example of how the world could beat climate change that the German term itself—rather than “energy transition” or “clean energy revolution”—was being used in American media.  This was its raison d’etre – and the physicist-chancellor Angela Merkel appeared fully convinced of its promise, which she showcased in international climate conferences, winning her the moniker die Klimakanzlerin, or the climate chancellor.

And even though renewable energy generation in Germany broke more records in 2017, growing to cover an astounding 36.1 percent of the country’s electricity needs, that won’t offset the country’s rising carbon emissions enough to meet its own goal of reducing greenhouse gas emissions by 40 percent in 2020.

Breaking Up Monopolies

Germany commenced its Energiewende less than two decades ago by breaking up the monopoly of a few giant utilities and setting market conditions for wind and solar power, as well as bioenergy, to become one of the economy’s primary sources of power. In addition, it created over 300,000 jobs, local revenue for rural areas, and cutting-edge exportable technology.

Inspired by Germany’s ingenuity and gumption, I undertook to learn everything I could about Germany’s visionary experiment by visiting the citizen-prosumers on the ground from the Baltic Sea to the Black Forest, and interviewing the Energiewende’s thinkers. I authored a blog about Germany’s clean energy revolution and wrote dozens of articles for English-language media. For five years, I lived and breathed the Energiewende, convinced that Germany was a determined pioneer in an effort that would keep our planet livable for future generations of human beings and other species.

Yet, despite Merkel’s vigorous push after the meltdown at the Fukushima power plant in Japan in spring 2011, Germany’s commitment to the mission has since fallen off dramatically. It is now a middling contender in the field of climate protection, ranked a lowly 29 out of 61 countries worldwide by the NGO Germanwatch. About two years ago, I noticed that there was ever less new hailing from Germany to write about. I cancelled my blog.

There’s a good measure of hypocrisy in the way Germany continues lecturing other countries like the US about climate protection while it falls ever further behind on its own 2020 emissions reduction goals. As much as Washington deserves a lecturing on the topic, Germany no longer has the cachet to do it.

Playing the Spoiler

These days Berlin even plays the spoiler, throwing its weight around in the EU to the detriment of progressive environmental legislation, as it is currently doing on the EU’s long-awaited climate and energy package—seminal legislation, currently in draft form, that will underpin the transformation of the European energy system until 2030. Germany has pushed to weaken provisions that would open up energy markets to citizens’ initiatives and other new business entrants – the very actors who ignited the grassroots Energiewende in the first place.

One reason for Germany’s demise as climate leader is not public opinion, which overwhelmingly backs the Energiewende and is fearful of climate change. On the contrary, it’s Germany’s grand coalition of Christian Democrats (CDU/CSU) and Social Democrats (SPD), which will most probably be renewed this year for another four-year term. Indeed, Germany’s two biggest parties came to power four years ago talking not about hitting Germany’s emissions targets or prompting the Energiewende’s next exciting breakthrough, but rather about how to slow it down. And this they did.

Chancellor Merkel still pays lip service to climate issues, but her party’s commitment to Germany’s automobile industry is obviously greater. She’s illustrated this by pushing to lower emissions standards for cars made in the EU, allowing the EU carbon trading scheme to collapse, and turning a blind eye to the testing standards of Germany’s diesel gas-guzzlers.

The Social Democrats, her partner in office, haven’t been any better, putting the interests of a small number of coal miners and recalcitrant fossil fuel companies above those of the planet. Germany burns more coal than any other country in Europe; state-subsidized, coal-fired plants provide 37 percent of its power, most of it from lignite, the dirtiest kind of coal. At the recent UN climate summit (in Bonn, Germany, of all places), the Germans refused to join a coalition of 19 countries led by Canada and the UK to set a date for ending coal use. In fact, new coal pits are still being excavated in the west of the country.

The grand coalition’s tepid endorsements of renewables and its changes to support systems have caused investment in renewables to drop to its lowest since 2007; permits to build onshore wind parks have been capped at just 2.8 GW a year through 2019—a gross underachievement compared to the 4.6 GW of installments in 2016.  New investment in and deployment of solar power is lagging in a similar way. Moreover, half-hearted energy savings measures failed to stem the still-rising volumes of oil and gas used in transportation, heating, and industry.

Wrong Moment

This is absolutely the wrong moment for Germany to be curbing renewables. Despite the fact that Germany’s renewables have replaced many gig watts of fossil-fuel generated energy, Germany’s emissions have not declined significantly over the last decade. Although this is in part explained by the economy’s growth, the country’s total emissions increased every year over the last three years.

Merkel long ago forfeited her title as climate chancellor, failing time and again to stand up for the climate. She barely mentioned the environment in her election campaign this year (the Social Democrat candidate Martin Schulz wasn’t any better on the topic).

While it’s hard to fall lower than US federal climate protection polices under the Trump administration, I’m not surprised by Trump’s negligence. But I hadn’t expected Germany to balk so suddenly.

After Trump’s election victory and the looming prospect of America’s retreat from the global stage, there was immediate speculation that Germany would assume the mantle of leader of the free world. This, of course, was never a serious option considering Germany’s humble military and skittish geopolitics. But it could have stepped in and led the world on climate protection.

Not so long ago, German energy specialists immodestly called the Energiewende “Germany’s gift to the world.” It was. Now, the least Germany can do is not to play the spoiler.

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© REUTERS/Lucy Nicholson

OPEC’s 171^st meeting in Vienna on November 30 saw an important shift in the global oil market, with member states agreeing to slash production by 1.2 million barrels per day – around 1 percent of global output.  It’s a significant move to tackle the oversupply that has driven down prices. But the OPEC gathering also reflects a new paradigm: After two years, the Saudi-led price war to drive American shale and other “high cost” producers from the market is over. And to the surprise of many – not least the Saudis – shale has survived. What now?

The United States Energy Information Agency (EIA) expects persistent market oversupply to have been quenched by the second half of 2017. The Saudis view the diminishing oversupply as an opportunity to cut production – and they agreed to take on the largest cuts, slashing 486,000 barrels a day. They also worked intensely to coordinate cuts with Russia, which promised to limit output by up to 300,000 barrels a day. Just a day after the Vienna meeting, prices jumped from $50 to $52 per barrel.

The Saudi plan did face numerous obstacles. Iran had refused to participate in any cut, insisting it should first be allowed to re-establish production it lost under years of sanctions. In response, the Saudis threatened to boost their own production, punishing Iran by collapsing prices and denying them market share. The Financial Times’ Nick Butler correctly characterizes this as “playing with fire,” and not only because of the severe pain this would impose on weaker OPEC states, but also for the geopolitical retaliation it might provoke from the new US administration as the Saudis would also bankrupt numerous shale producers in the US.

In the end, the Saudis succeeded in getting Russia, Iran, and the rest of OPEC on board. But the relief is only temporary. US shale is widely expected to expand into the void, re-depressing prices by later next year. In all these scenarios, the future remains extremely difficult for OPEC, for Russia, and for other oil-dependent states.

A Price War Backfires

Oil prices began to rise in 2002, dipped during the financial crisis and rose again steadily through mid-2014. That sustained period of high prices spurred the development of unconventional shale production. Driven by technical innovations in hydraulic fracturing along with abundant venture capital, the US added more new oil to the global market by 2014 than all of what was lost during the Arab Spring revolution and subsequent wars in Libya, Iraq, and Syria. By mid-2014, some two million excess barrels-per-day (bpd) were flowing into storage, and the price collapsed.

Facing unprecedented surplus production, the Saudis insisted that OPEC alone could not cut enough production to boost prices without sacrificing immense market share. However, Russia and other non-OPEC producers would not join any cut, while Iran, Iraq, Nigeria, Algeria, and other OPEC members demanded “hardship exemptions.” This led the Saudis to instead push OPEC to maintain production levels, further driving down prices in an attempt to force US fracking – believed to be too expensive – out of business. Soon, the Saudis, Iraq, and other OPEC states plus Russia were all increasing production, intensifying their low-price pressure on shale and jockeying for market share before sanctions expired on Iranian production. But they were chasing a moving target.

How Has Shale Survived?

Fracking was supposed to be expensive, with an initial gush of oil or gas dissipating and soon requiring additional fracking. But all this has now changed.

First, fracking is more like a manufacturing process than conventional oil production. Shale producers were able to innovate at phenomenal rates – the Permian Basin in Texas, for example, has shown gains of 500 percent over several years. Horizontal well drilling was accelerated, shrinking labor and rig costs. Initial production per new well was also increased substantially.

Second, fracking’s domestic financial backers demonstrated surprising loyalty in spite of high debt and risk levels, reducing bankruptcies below all expectations. And when bankruptcies, mergers, and acquisitions did take place, they generally brought fresh financing, preserved technical capacity and further rationalized operations, producing more robust companies.

All in all, firms in richer regions remained profitable when oil was in the $40s, and survived losses incurred – especially between November 2015 and April 2016 when prices descended to the mid-$20s. It is important to note that OPEC and Russia require high profits to support their oil-dependent national budgets – generally in the $80s – while private US shale firms demonstrated they can pay loans and thrive with modest profit margins in the $40s. How much lower further tech and operations innovations can take them remains to be seen.

Tech advances recently caused the US Geological Service (USGS) to declare an additional 20 billion barrels of West-Texas Permian Basin oil as recoverable – the largest continuous addition in US history. And beyond North America, similar deposits in Argentina, China, and Russia could flourish with capital, expertise, and infrastructure.

In short, shale portends a new era of abundant and generally cheap oil and gas likely to last some decades. Of course, major political disruptions in the Persian Gulf or Russia could usher in a new era of high prices, as the bulk of global conventional oil is produced there. And if global producers continue to under-invest while prices remain low, capacity could be swamped by a demand surge. But the resource base is not in doubt – it only requires investment, time, and effort.

Geopolitical Implications

Revenue shortfalls for highly oil-dependent Russia, Saudi Arabia, and Iran don’t bode well for future relations in East and Central Europe, the Caspian, or the Middle East and North Africa. These three regions have seen their budgets tightened and spend reserves worn thin, and their room for compromise has diminished.

Energy is already central to Russia’s relations with Ukraine, its diplomacy regarding European and Asian pipelines and other energy deals, and its new Mideast focus. The conflicts in Syria, Yemen, and Iraq are all cases of intensified armed contention and collusion among these states as competition on the oil market increases.

Meanwhile, America’s shift towards net-oil-exporter status could make an aggressive Trump administration overconfident in confronting Iran or the Saudis should the latter undermine US shale producers.

The least volatile geopolitical scenario would be for the Saudis to succeed in cutting production as they have now vowed to do, boosting prices and stabilizing national budgets. Howard Hamm, the fracking billionaire close to Trump, told Bloomberg ahead of the OPEC meeting that he hoped his fracking colleagues would react to a production cut with “discipline,” maintaining higher prices. This reflects a widely shared view in the US energy business that mutual interests will work to preserve the decades-old US-Saudi oil market (and geopolitical alliance). But it’s just as likely that the US confrontation with Iran will intensify collaboration with the Saudis; re-imposing oil-sale sanctions on Iran would certainly make life easier for the kingdom – and all other producers – by reducing stubborn global supply surpluses.

Undermining Energiewende

Finally, there will be significant consequences for climate change mitigation strategies, such as Germany’s Energiewende, or energy transition. It was formulated under very different expectations about remaining oil and gas resources and the prices renewables would have to face. The new hydrocarbon abundance contradicts deep-seated beliefs in “peak oil,” the “end of the age of hydrocarbons,” and “perpetually high” oil and gas prices – ideas that underpinned more than thirty years of environmental strategy.

Indeed, cheap, abundant, increasingly fracked oil will have complex and destabilizing geopolitical and climate consequences requiring careful analysis – and action.

NB. This post was updated on December 1, 2016 to reflect OPEC’s decision to reduce production.

The post An Oil-Price War’s Surprise Ending appeared first on Berlin Policy Journal - Blog.

(c) REUTERS/Wolfgang Rattay

The current German government has received a good deal of grief from environmentalists and Energiewende supporters lately. This is because it scaled back subsidy programs for the expansion of renewably-generated electricity and called to life tendering procedures that are more likely to benefit larger rather than smaller companies or energy cooperatives. And indeed, the expansion of renewables in the power sector, as well as the mushrooming of coops, has slowed – but not stopped.

But it has also been doing something else for which it hasn’t been given enough credit: namely rounding out the Energiewende. Late last year, Berlin gave energy efficiency the biggest push ever with a package of measures aimed at cutting the country’s emissions by 62-78 million tons of CO2-equivalent by 2020. This is a big step toward meeting its 40 percent climate target. I’ve said it before: Bravo!

It has also been pushing hard for new power grid corridors, despite stiff opposition within the coalition. (This has now gone on far too long and it’s high time that Merkel puts her foot down with the stubborn Bavarians.)

Now it has taken on another long neglected field, namely heat. Until now the Energiewende has concentrated almost exclusively on electricity. And indeed, its greatest accomplishments so far come in the power sector: 27.8 percent of Germany’s electricity supply comes from renewables. On the contrary, in the heating and cooling sector, final energy consumption is lagging way behind: just 9.9 percent, far below 2020’s 14 percent target.

But last week Merkel’s coalition put into motion an initiative to boost the use of renewable heating in buildings. The supports are only worth €300 million – just a drop in the bucket, really, but intended to give a push to the expansion of large solar thermal collectors and biogas production. The support for solar and biogas heat will be revenue dependent – in other words, in the form of a market incentive program like the one that has benefited solar photovoltaics and onshore wind over the last decade. SMEs will benefit from a 10-percent bonus for investing in renewable heat, and large companies will be eligible for further investment grants and loans. The financing is aimed to benefit mostly older residential and commercial buildings – the biggest sinners when it comes to efficiency.

“Through improved incentives we want to significantly speed up the expansion of renewable energy in the heating market,” said Sigmar Gabriel, Germany’s Minister for Economic Affairs and Energy and leader of Angela Merkel’s SPD coalition partner. “We also want to open the program more strongly to the commercial sector.” Getting more businesses, particularly SMEs, involved is critical to keeping popular support behind the Energiewende.

Although it is unclear, writes ENDSEurope, which technology the new guidelines benefit most, the biogas sector sees it favorably. The program’s incentives could cover as much as 30 percent of a facility’s net investment in the construction and expansion of biogas pipelines for untreated biogas.

The program and the new energy savings criteria will enter into force in April 2015.

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(c) REUTERS/Thomas Peter

I’ve been picking the brains of some German experts about the year ahead of us for the Energiewende. What should happen in 2015, and what should we keep our eyes on?

So I asked, among others, Patrick Schmidt, senior project manager and partner at Ludwig Bölkow Systemtechnik, a German strategy and technology consultancy firm in the fields of energy, mobility, and sustainability, located near Munich.

Patrick is the kind of expert that is working on the cutting edge of the Energiewende. He grew up in Freiburg, the southern German city that pioneered “Ökostrom” (green electricity), studying electrical energy technology in Karlsruhe before working on renewable energy and mobility projects for the European Parliament, the German Bundestag, and the automobile industry. Since 2012 he’s been working in connection with the Federal Ministry of Transport and Digital Infrastructure (BMVI) on mobility and fuel strategy.

First, he says, renewable energy expansion in Germany has to be moved into higher gear again. Germany has to “shift the build-up of renewable power systems up one gear,” he says. “The deployment of renewable power systems has been very successful in driving down technology costs. Renewable systems like photovoltaics and wind, for example, have become cost-effective for households and industry through their mass application in Germany. Unfortunately, changes in the regulatory framework in recent years have resulted in slower deployment rates. These barriers must be overcome for Germany to remain in the trajectory for a sustainable development to 2050.”

Second, Patrick argues that Germany has to think broadly about “regulatory frameworks” that allow for more options to integrate fluctuating renewable power production. “Currently,” he says, “the focus of integrating fluctuating renewable power from photovoltaics and wind power is focused on the expansion and smartening up of power grids. But complementary technology options are: supply-side flexibility, demand-side flexibility, energy storage.”

Lastly, there’s lessening the environmental impact of the transport sector, which has so far been a flop in Germany. He’s for “greening conventional transport fuels with renewable power.” What exactly does he mean? “Power-to-methane and power-to-liquids are fuels that allow for a smooth Energiewende through established transport fuel infrastructures and drives, i.e., they are of ‘drop-in’ quality and thus a good starter to get things going in the transport sector. Certainly, these drop-in fuels come at a cost in the beginning, which would have to be shared and borne among users of conventional fuels. What can be taken for granted is that technology costs will be driven down with increasing amounts of renewable power-to-anything fuels in the market. The past ten years have shown how fast progress can be with the Energiewende in the electricity sector. A view into the rearview mirror shows that the energy transition in the transport sector has not gained at the same pace – but it could.”

(NB. Patrick Schmidt’s personal views do not necessarily reflect those of Ludwig Bölkow Systemtechnik.)

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(c) REUTERS/Ina Fassbender

2014 saw the Energiewende, Germany’s renewable energy transition, clear a few formidable hurdles and post some encouraging gains. But there were setbacks, too.

First there were the production numbers, which should increase from year to year as renewable capacity expands – and if the weather plays along, which it did. For the first time ever, renewables led power production in Germany, outpacing nuclear, black coal, and lignite (but not lignite and black coal combined). Renewables generated 27.3 percent of Germany’s electricity, up from 25 percent last year. Moreover, energy consumption dropped by 3.8 percent while the economy grew by 1.4 percent, which the Berlin think tank Agora Energiewende said is a sign that investments in energy-saving devices and equipment are paying off.

Very big – and welcome –  news is that coal-generated power decreased, as did carbon emissions. Over the past two years more coal was used than 2011 levels and GHG emissions crept up. This was enormously damaging to the reputation of the Energiewende, both in Germany and abroad. Critics carped: what’s the use of it if emissions go up?

Moreover, in 2014 the wholesale price for power dropped to a record low of €33 per megawatt hour from €38 in 2013, which enabled Germany to export more power than ever before. As for consumers, they benefited too as prices fell slightly for private buyers.

2014 also saw the much-heralded reform of the EEG, Germany’s renewable energy law. As expected, the Merkel government cut back the feed-in tariff for solar PV and onshore wind, which will slow expansion. It also introduced auctioning as a mechanism to finance renewable generation. This is good news for big producers, like the utilities that can play ball at this level. But it’s not welcome news for Germany’s smaller producers, who to date have been the backbone of the Energiewende. Most of them are simply too small to compete for tenders of this size.

The year ended with an unexpected Christmas present: Germany finally got behind energy efficiency and ratcheted up the pressure on utilities to cut emissions more dramatically, which translates into less coal-fired production. The new program will slash carbon emissions by between 62 million and 78 million tons by 2020. A reduction of 25 to 30 million tons will come by way of energy efficiency. There will be tax incentives for the renovation of existing buildings’ heating and hot water systems as well as 40 billion euros from public and private schemes. In total, this means an additional 70 to 80 billion euros in investment in efficiency between now and 2020. Moreover, the Merkel government finally got tough with the electricity sector, signaling it has to cut back an additional 22 million tons of carbon emissions by capping coal-fired power generation.

These measures were vigorously applauded by the greater Energiewende community, which had come to doubt the Merkel administration’s commitment to the project.

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