Renewable Energy Policy in Germany

Explaining the Evolution of Germany’s Renewable Energy Policy

The evolution of Germany’s approach to the promotion of renewable energy appears to have been more implicit than explicit. Even though the resources devoted to the deployment of renewable energy technologies now exceeds those directed toward renewable energy R&D by more than 400%, this distribution apparently has resulted from a variety of political and economic developments that have become more prominent factors in the German government’s decision-making than on an expressed preference for market-based technology policies.23 Two key sets of factors—policy developments at the European Union level and developments in domestic politics and policy—are discussed below.

3.1 Policy Developments at the European Union Level

As a member of the European Union, Germany is obligated to comply with EU-level legislation and directives. Since Germany is also one of the EU’s most influential countries, its compliance with EU policies is also important to the legitimacy and prestige of both entities.

EU policies have imposed burdens disproportionately on member states. For example, the 1997 White Paper “Energy for the Future: Renewable Sources of Energy,” states that the “overall EU target of doubling the share of renewables to 12% by 2010 implies that Member States have to encourage the increase of RES [renewable energy sources] according to their own potential.”24 As one of Europe’s largest and most technologically developed countries, expectations for Germany within the EU are great as Table 3 shows.

More recently, legislation passed by the European Parliament has obligated member states to adopt national targets for the expansion of renewable energy’s share in Europe’s fuel mix. The 2001 Directive on the Promotion of Electricity Produced from Renewable Energy Sources in the Internal Electricity Market (RES-E) aims to increase renewable energy’s share to 12% of primary energy consumption in the EU and to boost renewable sources to 22% of electric power production by 2010. The Directive mandates that “Member States shall take appropriate steps to encourage greater consumption of electricity produced from renewable sources in conformity with the national indicative targets referred to in paragraph 2 [Art.3.2 of the RES-E]”.25 Although Germany had passed its Renewable Energy Law (EEG) prior to the passage of the EU Directive, EU policies and consultations were important considerations for German policy makers in drafting the domestic law.26

Table 2. Reference Values for EU Member States’ National Targets for the Contribution of Renewable Energy Sources to Gross Electricity
Consumption by 201027

 

TWh
1997

% Electricity Fuel Mix
1997

% Electricity Fuel Mix
2010 Target

Belgium

0.86

1.1

6.0

Denmark

3.21

8.7

29.0

Germany

24.91

4.5

12.5

Greece

3.94

8.6

20.1

Spain

37.15

19.9

29.4

France

66.00

15.0

21.0

Ireland

0.84

3.6

13.2

Italy

46.46

16.0

25.0

Luxembourg

0.14

2.1

5.7

Netherlands

3.45

3.5

9.0

Austria

39.05

70.0

78.1

Portugal

14.30

38.5

39.0

Finland

19.03

24.7

31.5

Sweden

72.03

49.1

60.0

United Kingdom

7.04

1.7

10.0

EU Total

338.41

13.9

22

The European Commission is promoting the deployment of renewable energy technologies across the EU to address three main energy policy challenges. First, under the Kyoto Protocol, it has agreed to EU-wide greenhouse gas emissions reductions of 15% from 1990 levels in the first reporting period, 2008-2012. This aggregate reduction target is disparately divided among EU member states; while Germany has accepted a 21% reduction goal, other countries obligations are more modest. A few countries, such as Greece and Portugal, are permitted emissions increases under the “EU Umbrella.” Just as member states are encouraged to adopt renewable energy technologies “according to their own potential,” their technological and economic level of development figure in the apportioning of environmental responsibility within the EU.28

A second set of energy considerations surrounds the high, and steadily rising, level of European energy import dependence. Imports account for 50% of EU energy consumption today and are expected to rise to 70% by 2020 in the absence of policies to curtail them. German energy import dependence, at 62%, exceeds the EU average and continues to grow.29 The Commission notes that renewable energy sources make an “unacceptably modest contribution to the Community’s energy balance,” since indigenous energy resources have a growing geopolitical importance to the EU.30 Russia’s recent proposal to form a natural gas cartel and its de facto market power in European gas markets intensifies the EU’s geopolitical exposure from import dependence.31

The Commission also has noted that the development of renewable energy can be a valuable instrument for economic development and greater social cohesion within the EU. Since renewable energy technologies are developed and manufactured in several EU countries, renewable energy growth, in the Commission’s estimation, can foster job creation, technical capacity development, and international research collaboration across Europe.32 The German government regards its leading technological position in several renewable energy technology fields as presenting major economic opportunities within Europe, especially in the light of the Commission’s encouragement to EU member states to increase the share of domestic, renewable resources in the energy supply mix, for environmental and security reasons.33

3.2 Developments in Domestic Politics and Policy

Environmentalism emerged as a fringe social movement in the 1960s and early 1970s and grew to become a major force in mainstream German politics by the mid-1980s, after local environmental groups joined forces to create a national Green Party.34 The Green Party emerged at a time of growing disillusionment with Germany’s three major mainstream parties (SPD, CDU/CSU, and LDP), which accounted for all but 1% of the electorate in the mid-1970s. Major environmental issues such as the destruction of Germany’s forest as a result of acid rain and chemical spills in the Rhine River in the 1970s served as high-profile rallying points for the Green cause, as did the Chernobyl disaster of 1986. The emergence of the Green Party as a credible alternative to the traditional parties allowed it to play a major role in forcing environmental issues onto the domestic political agenda throughout the 1980s and 1990s.35 In 1998, the Green Party reached a new apex of support, winning sufficient votes to participate in five state-level governments and in a ruling national coalition with the Social Democratic Party. The durability of this “Red-Green” coalition, which still holds office, testifies to the enduring importance and centrality of environmental issues in the consciousness of the German polity. Green Party representatives in the German Parliament have been strong advocates and sponsors of legislation promoting environmental protection, energy conservation, and renewable energy development. Among the initiatives promoted by Green Party politicians are major pieces of renewable energy legislation such as the StrEG and EEG, and the 100,000 Solar Roofs Program.36

Two issues in particular highlight the importance of environmental politics in Germany and their close relationship with developments in energy policy. The first issue is the phaseout of nuclear power. An early energy policy action of the Red-Green government was an initiative for the complete phase out of nuclear power in Germany by 2020.37 After years of negotiation in Parliament, legislation mandating the phase-out was adopted in April, 2002. Germany now faces the challenge of replacing one-third of its electricity supply from other sources. Even though Germany’s aging nuclear plants have been granted successive license extensions, these facilities are all slated for decommissioning by 2020. A combination of options including the construction of new renewable energy plants, combined cycle gas turbines, conservation, and power imports are likely to be used to offset nuclear power.

The second issue is greenhouse gas control. The future challenges incumbent in nuclear phase-out are compounded by the ambitious greenhouse gas emissions reductions targets adopted by the German government. As mentioned earlier, Germany has agreed to a 21% reduction from 1990 levels by 2012 as part of the European Union’s Kyoto Protocol commitment. Under a new EU-sponsored proposal for greenhouse gas emissions reduction in the post-2012 period, Germany may be asked to adopt a 40% reduction target (from 1990 levels) by 2020.38

The adoption of ambitious targets and timetables for a nuclear phase-out and for greenhouse gas reduction places tight constraints on Germany’s future energy options. The replacement of nuclear power plants with even the cleanest fossil fuel options, such as natural gas turbines, would result in a net increase in energy related carbon emissions. Thus, Germany is left with two primary energy technology options: energy conservation and efficiency technologies that can reduce energy demand, and renewable energy sources that can alter the profile of energy supply.39 Both of these options are being pursued aggressively; the short timelines for nuclear phase-out and emissions reduction necessitates the accelerated deployment of energy efficiency and renewable technologies already commercially available or nearing commercial viability. In the light of these constraints, the adoption of policies spurring the diffusion of renewable technologies in the short- to mid-term becomes an apparent necessity.