Germany’s merger of energy and climate change policy

Abstract

Nuclear exit has been on the German policy agenda for more than three decades. After the Chernobyl accident in 1986, a majority of the public and relevant stakeholders opposed nuclear power and strove for renewable energy alternatives. At the same time, climate change policy gained the attention of German policy makers, and they approved ambitious targets for the reduction of greenhouse gas emissions. In 2000, the federal government and the operators of nuclear power plants reached a phase-out agreement, and since 2002, the purpose of the Atomic Energy Act has been not the promotion but the phasing-out of commercial nuclear electricity generation. After the federal elections in 2009, the conservative–liberal coalition government implemented a slow-down of the phase-out. But that reversal provoked strong negative public reaction, and in response to the nuclear disaster in Japan, the German cabinet and the Bundestag agreed in the summer of 2011 to a gradual phase-out of nuclear power that will shut down the industry by 2022. They also agreed to accelerate the transformation of Germany’s energy portfolio. This transformation, or Energiewende, will include three key methods of replacing the electricity once produced by nuclear reactors: It will expand renewable energy production and provide the infrastructure needed for that expansion; it will significantly improve the country’s energy-efficiency efforts; and for a transition period, it will also encourage the construction of new and more efficient coal- and gas-fired power plants. Already, the Energiewende has observably decoupled energy supply from economic growth, with Germany’s energy supply and carbon-dioxide emissions dropping from 1990 to 2011 as its gross domestic product rose significantly. It is this evolving Energiewende, rather than the nuclear phase-out, that will require and, perhaps, inspire continuing reforms of social, economic, technological, and cultural policy in Germany.

Even before the Chernobyl disaster in Ukraine, climate change and nuclear exit were on the political agenda in Germany, but the April 1986 nuclear accident had a deep impact. Public opinion on nuclear power had been almost evenly divided in the preceding decade, but within two years of the Chernobyl meltdown, opposition to nuclear power had increased to more than 70 percent in Germany; support barely exceeded 10 percent (Jahn, 1992). One of the country’s largest parties, the formerly pro-nuclear Social Democrats, committed itself to phasing out nuclear power within 10 years, and the Greens—represented in the Bundestag since 1983—demanded an immediate shutdown of all nuclear plants. Also, the trade unions, which had supported a coal-and-nuclear strategy, changed their policy toward a nuclear phase-out.

As sentiment turned against nuclear power, scientific reports warning of an impending climate catastrophe received much attention in Germany, and in March 1987, Chancellor Helmut Kohl declared the climate issue to be the country’s most important environmental problem (Huber, 1997). The German Bundestag appointed an Enquete (investigative) Commission on Preventive Measures for the Protection of the Earth’s Atmosphere, with the mandate to study climate change and the ozone problem and to make proposals for action. An inter-ministerial working group on carbon-dioxide reduction was established in June 1990. The commission worked in cooperation with parliamentary groups of both the government and opposition parties; there was general agreement that energy use had to be profoundly changed.

The first climate Enquete Commission recommended a goal of 30 percent reduction of carbon-dioxide and methane emissions from 1987 levels by 2005 and an 80 percent reduction by 2050 (Bundestag, 1991), along with a fundamental reform of energy policy that included an electricity feed-in law that would give financial support to increased generation from renewable energy sources (Schafhausen, 1996). Members of parliament from all parties also reached a growing consensus that it was time to create markets for renewable energy technologies (Lauber and Pesendorfer, 2004). By the late 1990s, the stage was already set for a phase-out of the German nuclear industry that would be paired with an emphasis on renewable energy and lower greenhouse gas emissions. But the merger of climate and energy policy—what eventually came to be known as the Energiewende—had begun much earlier.

The modernization of German energy markets

Very few large utilities had controlled German electricity production and supply since before World War II (Mez, 1997b), and German electricity regulation traditionally relied on a mix of public and civil law. Basic energy law was embodied in the Energy Supply Industry Act (Energiewirtschaftsgesetz) adopted in December 1935, which laid down the framework conditions for a cheap and secure electricity supply and defined German state control of the sector for more than 60 years. The other important piece of legislation in regard to energy regulation was the Monopolies Act, which generally exempted electricity and gas supply from laws that regulated monopolies. Contracts for concessions, territorial boundaries, supply to special customers, the technical conditions for feeding surplus electricity into the grid, reserve deliveries, and other arrangements—e.g., association agreements—are all based on civil law.

Until the 1980s, there had been numerous attempts at reforming the German energy sector, but both bottom-up and top-down approaches failed. It wasn’t until the mid-1980s that a strategic turnabout in energy policy, including a transfer of electricity-supply infrastructure back to municipalities—the Energiewende—was widely and seriously discussed (Hennicke and Öko-Institut, 1985). And, of course, after the Chernobyl disaster, the anti-nuclear movement flourished and was strengthened by stakeholders from politics, industry, media, science, and the churches.

However, the introduction of environmental concerns into the German energy system was successful fairly early on. The Ordinance on Large Combustion Plants introduced strict limitations in 1983 on sulphur dioxide, nitric oxide, and particulate emissions; it constitutes an exemplary top-down policy tool (Mez, 1995). The Electricity Feed-In Law, enacted in 1990, provided another notable, environmentally oriented change in the German energy framework. The law required electric utilities to connect renewable electricity generators to the grid and to buy the electricity at rates ranging from 65 to 90 percent of the average tariff for final customers. Together with a federal wind power program and subsidies from various state programs for renewables, the law gave considerable financial incentives to investors, although less for solar power due to the high costs of photovoltaic modules. These incentives greatly stimulated the expansion of wind power, from about 20 megawatts of installed capacity in 1989 to more than 1,100 megawatts in 1995 (Lauber and Mez, 2007).

In the 1990s, the European Commission put liberalization of the electricity and gas industry on its agenda, and when single-market directives for electricity and gas had to be adopted by EU member states, utilities—which had opposed such cross-border, unified markets—changed their position and tried to reach an energy consensus with the federal government, political parties, and other stakeholders. Three attempts to reach such consensus, which would have given guarantees for the undisturbed operation of nuclear plants, failed (Mez, 1997a).

After the elections in the fall of 1998, the new red–green federal government emphasized ecological modernization, climate change policy, job creation, and socio-economic development; energy policy was to be a leading element of this agenda. This energy-policy element included a “green” tax on energy, the phasing out of nuclear power, and the promotion of renewable energy sources and combined heat-and-power (or co-generation) facilities.

The fundamental revision of nuclear policies reflected the consensus among Greens and Social Democrats after the Chernobyl accident. The basic decision against the future construction of nuclear power plants was enshrined in the Nuclear Energy Phase-Out Act; licenses of existing nuclear plants were reviewed and limited in terms of time. The legislative process was characterized by the government’s endeavor to reach a consensus with nuclear power interests and to avoid legal disputes before the courts. Due to the powerful position of nuclear vested interests, these negotiations entailed many setbacks for nuclear opponents. Still, legislation that went into effect in 2002 created a framework for the eventual phase-out of Germany’s nuclear power industry.

Meanwhile, action on climate change continued apace. Within the framework of the Kyoto Protocol and the European burden-sharing agreement on greenhouse gas emissions, Germany agreed to reduce emissions by 21 percent from 1990 to the first commitment period, 2008–2012. In addition, the government pledged in 1995 to attain a 25 percent reduction of carbon-dioxide emissions by 2005. By 2000, a reduction of about 18 to 20 percent—corresponding to 180 to 200 million tons of carbon dioxide—had already been achieved, leaving another 50 to 70 million tons to be cut.

To achieve this target, the government launched the Climate Change Policy Action Programme of October 2000. The successor act to the Feed-in Law, the Renewable Energy Sources Act (RESA) and a Combined Heat and Power Act that supported co-generation efforts were integral parts of this programme. The RESA—which covered the promotion of all renewable energy sources and set targets to considerably increase the share of renewables in electricity generation and to at least double the contribution of renewables to total energy consumption—became the basis for dynamic growth of renewable energy technologies in Germany. Implementation of the Combined Heat and Power Act was blocked due to opposition from large utilities and the Mining, Chemical and Energy Industrial Union. Nonetheless, climate change policy and the energy policy of the federal government had finally merged. Government support for this merger has persisted until today.

Energy balance, electricity generation, and carbon-dioxide emissions trends

Germany is presently one of the very few industrialized countries in which carbon-dioxide emissions are lower than they were in the early 1990s. Perhaps more important, energy consumption and greenhouse gas emissions have been observably decoupled from economic growth. Between 1990 and 2011, the country’s annual total primary energy supply decreased from 14,905 petajoules to 13,374 petajoules (AG Energiebilanzen, 2012), and carbon-dioxide emissions dropped from 1,042 to 800 million tons per year, a reduction of about 23 percent (Ziesing, 2012). As energy supply and greenhouse gas emissions fell, however, Germany’s real gross domestic product rose from 1,800 billion euros to 2,440 billion euros, or 36 percent, which represents an average growth rate of 1.5 percent (Ziesing, 2012). The implementation of energy-efficiency measures and the rising share of energy sources that have no carbon-dioxide emissions are the primary reasons for this emerging emission and energy productivity.

The decoupling of energy supply and economic growth in Germany is a remarkable fact that is even more remarkable when carbon-dioxide emissions and productivity are taken into account. Productivity per unit of emitted carbon dioxide increased by 76 percent between 1990 and 2011, from 1.7 million euros of gross domestic product per ton of carbon dioxide emitted to 3 million euros of GDP per ton of emissions (Ziesing, 2012).

Petroleum and natural gas currently cover slightly more than half of Germany’s energy supply. Hard coal and lignite, both predominantly used for electricity generation, contribute about one-quarter. The share of nuclear power dropped from 11.2 percent in 1990 to 8.8 percent of total primary energy in 2011. But the expansion of renewables—from 1.3 percent in 1990 to nearly 11 percent in 2011—more than compensated for the reduction in nuclear generation. In the first half of 2012, this trend continued; the share of nuclear was 7.5 percent, and the renewable share equaled 11.5 percent (AG Energiebilanzen, 2012). According to ExxonMobil’s 2012 prognosis, natural gas will expand and take over the leading position from oil before 2030 (ExxonMobil, 2012).

Generation and domestic electricity consumption show different trends than the total primary energy supply. Approximately 550 terawatt-hours of electricity were produced and consumed in Germany in 1990. Generation steadily increased and topped at 637.2 terawatt-hours in 2007, and domestic consumption followed this trend, peaking with 618.1 terawatt-hours used in the same year (AG Energiebilanzen, 2012).

The sources of electricity have, however, changed markedly over time. From 1992 until 2006, nuclear power dominated electricity generation in Germany. The share of electricity produced by nuclear power stations, however, has dropped since 1997, when it was 30.8 percent of total electric production. In 2011, nuclear ranked fourth in terms of share of electricity production, with 17.6 percent of gross generation, behind lignite (24.5 percent), renewables (20.1. percent), and hard coal (18.3 percent) (AG Energiebilanzen, 2012). In the first half of 2012, the contribution of renewable electricity continued to grow and reached 25 percent. While the total primary energy supply has dropped since 1990, final energy consumption has fallen only slightly, from 2,631 terawatt-hours in 1990 to 2,516 terawatt-hours in 2010 (AG Energiebilanzen, 2011). (Consumption peaked in 1996, at 2,691 terawatt-hours.) The lion’s share of consumption—well above 50 percent—is used for heating and warm water, and transportation fuel contributes nearly 30 percent of consumption.

Electricity represented a 20.5 percent share of German energy consumption in 2010, of which nuclear power contributed 22.4 percent. This means that the nuclear share of electricity consumed was 4.6 percent, and the German nuclear exit requires only enough other power to substitute for that 4.6 percent of final energy consumption. The small nuclear share of final energy consumption dropped to 3.6 percent in 2011 and continued to drop in 2012.

Three scenarios for future electricity generation in Germany prepared by the Federal Network Agency, or Bundesnetzagentur, assume that net power requirement will not increase and that peak demand will not exceed 87.5 gigawatts until 2023. In comparison with the base year of 2010—before the Fukushima accident—a total capacity of 20.3 gigawatts previously produced by nuclear reactors will be replaced by a mix of conventional power stations and renewable generation technologies. The expansion of pumped-storage hydroelectric systems and natural-gas-fired power stations is the most important conventional contribution to these scenarios, while the main emphasis is placed on the expansion of renewable energy technologies. The three scenarios opt for ambitious but different expansions of onshore- and offshore-wind generation, photovoltaic sources, and biomass plants. The total installed capacity of these three renewable energy sources will increase from today’s 164.4 gigawatts to 215.4 gigawatts, 230.9 gigawatts, or 259.8 gigawatts, depending on which scenario is followed (Bundesnetzagentur, 2012). All three scenarios assume the nuclear sector will provide no electricity in 2023; they differ primarily in the amount of energy they project will come from various alternative technologies.

Germany’s renewable energy action plan

Germany has the fourth largest economy in the world and is the sixth largest emitter of greenhouse gases. The demanding greenhouse gas emission-reduction targets the German government has adopted are not specific to particular energy sectors; the promised decrease in emissions—minus 40 percent compared with 1990 emissions by 2020, 55 percent by 2030, 70 percent by 2040, and 80 to 95 percent by 2050—has to be delivered by all sectors. If the electricity sector does not reach the total reduction target figure, for example, other sectors have to reduce their emissions more than the average percentage.

According to the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, the category of public electricity and heat production is responsible for the largest percentage of the country’s greenhouse gas emissions. In 2011, about 40 percent of the country’s total carbon-dioxide emissions of approximately 924 million tons was produced by fossil power stations. Compared with the base year 1990, Germany has managed to reduce greenhouse gas emissions by 24.2 percent. And in 2011, the use of renewable energy sources avoided greenhouse gas emissions equivalent to approximately 129 million tons of carbon dioxide, with biomass contributing 46.5 of that total, wind energy 26.5 percent, hydro power 12 percent, and photovoltaics 10 percent.

Still, the German greenhouse gas reduction targets are quite challenging.

In August 2007, the federal cabinet approved the key points of a detailed Integrated Energy and Climate Program, and several pieces of primary and secondary legislation have already been implemented on the basis of this program. To reduce carbon dioxide in the electricity sector, the share of combined heat and power, or co-generation, plants should be doubled by 2020. Insulation of the country’s building stock is a major undertaking, but because heating is the largest component in Germany’s final energy consumption statistics, it will be crucial to reduce energy consumption in existing buildings as quickly as possible. With their 2010 Energy Concept, the conservative–liberal federal government and Chancellor Angela Merkel furthered this comprehensive strategy for transforming the energy system through a long-term focus on climate change. In doing so, they set ambitious targets for increases in renewable energy and energy efficiency and reductions in greenhouse gas emissions (BMU, 2012).

In response to the nuclear disaster in Fukushima in 2011, the German federal cabinet and Bundestag instituted a phase-out of nuclear power by 2022, but they also accelerated a comprehensive transformation of Germany’s energy supply in favor of renewable energy. Rather than the phase-out, it is this transformation—nothing less than a fundamental change in how Germany supplies itself with and uses energy—that will affect social, economic, technological, and cultural development in Germany for decades to come, and likely even longer.