Renewable Energy Policy in Germany

Summary and Conclusion

Over the past two decades, Germany’s approach toward renewable energy has shifted from a focus on publicly-financed R&D toward policies promoting application and implementation of new technologies in the market place. As this paper has discussed, this transition has occurred gradually and as a result of a number of domestic and international political developments since the 1980s. EU Directives mandating aggressive renewable energy deployment, pressure from domestic environmental advocates and legislators, the phase-out of nuclear power, and commitments to international treaties such as the Kyoto Protocol all have been important factors in the evolution of German energy policy. The ascent of deployment-based policies appears to have occurred implicitly and incrementally, in response to political constraints and limited energy technology options, rather than through conscientious changes in the direction of strategic policy or a belief that demand-increasing policies are fundamental drivers of technological advance.

The energy policy environment that has taken shape in Germany over the past decade as a result of these policy pressures has facilitated the rapid growth of renewably-generated electricity in Germany. Moreover, this growth has created new domestic industries that now employ more than 120,000 people directly and indirectly and has offset increasing amounts of greenhouse gases and other air emissions each year.62 It will be a major challenge for the German government to sustain the current rate of renewables deployment, considering several factors: resistance to renewables incentives from domestic industry lobbies and community advocacy groups, tensions within the coalition government over subsidies for renewable energy, availability of cheap energy imports with EU energy integration, and the gradual saturation of the German renewable energy market. A key turning point may already have been reached earlier this year, when the government reduced compensation rates to renewable energy providers under pressure from the domestic gas and coal industries. While Germany has taken an aggressive approach to renewable technology deployment since 1990, its momentum is not as strong today as in previous years. Despite its many successes in spurring the growth of renewable energy sources, it is not certain that the German government will be able to meet its ambitious environmental and climate policy commitments at home and abroad without major changes to existing policies.