German election primer - Faster renewables expansion vital for next government's climate policy
What role do renewables play in election campaigns?
What role do renewables play in election campaigns?
- Gearing the German economy towards climate neutrality and averting the worst climate change effects are among the biggest concerns of many voters. The government's emissions reduction plans for industry, mobility or heating hinge greatly on sufficient renewable power. But the build-out of solar PV, wind power and biogas capacity has been trailing target volumes significantly for years.
- Most parties' leading candidates, including Armin Laschet (CDU/CSU), Olaf Scholz (SPD), Annalena Baerbock (Green Party) and Christian Lindner (FDP), have all said they agree that cutting red tape and removing other hurdles to faster renewables expansion must be a major priority for the next government coalition.
- Germany's current 2030 goal is to reach a share of 65 percent renewables in the power mix. But due to an accelerating phase-out of coal power capacity, industry representatives and environmental groups alike have called for ramping up the goal to at least 70 percent. But talks to discuss such changes in the first quarter of 2021 were scrapped due to a corruption scandal involving chief negotiators from the conservative CDU/CSU.
How are Germany’s climate targets and renewables expansion interlinked?
How are Germany’s climate targets and renewables expansion interlinked?
- The new EU target of a 55 percent greenhouse gas emissions reduction by 2030 compared to 1990 implies a quick boost to expanding renewable power in practically every European country. Germany in particular needs this rapid expansion, as it is concurrently phasing out its nuclear and coal power plant fleet over the next years.
- The latest energy ministry calculations found that Germany will need about 15 percent more green electricity by 2030 than previously planned. The revised figure will play a big role after the September election, when the new government will have to base its renewable energy expansion targets on this benchmark.
- A 2021 landmark ruling on climate policy by the country's highest court added further pressure on the government to deliver on emissions reduction, compelling it to bring forward the target year for greenhouse gas neutrality by five years to 2045.
- Researchers have found that the country in theory could convert its entire energy demand to renewables within the next two decades. According to the German Institute for Economic Research (DIW Berlin), Germany could reach 100 percent renewables by 2035 if the construction volumes for renewables, in particular wind power, are greatly increased and European cooperation on power supply security is improved.
- But energy policy researchers from the EWI Institute at the University of Cologne doubt that Germany can even reach 65 percent by the end of the decade. Depending on demand in 2030, the share could be as low as 55 percent, the EWI said. German Renewable Energy Federation (BEE) calculates that the country needs 77 percent renewables by 2030 to achieve climate targets and a significant decrease in fossil fuel usage by the end of the decade.
What is hindering renewables expansion in Germany?
What is hindering renewables expansion in Germany?
- Polls have consistently shown that most people in Germany are strongly in favour of climate action measures and generally back an ambitious roll-out of renewable energy technologies. However, turning ambitions into concrete projects that affect peoples' daily lives can sometimes spark conflict. Particularly onshore wind turbine and transmission line construction are often contested due to their physical impact on local environments. Solar PV meets fewer objections, but expansion is still too restrained to match emissions reduction ambitions, which industry representatives blame on legal and financial uncertainties for investors.
- Land use planning and other administrative prerequisites for renewables construction are the responsibility of the 16 states. But the roll-out differs greatly despite pledges by state governments to wholeheartedly support the energy transition. Northern states, for example, have led wind power installation rankings for years, while southern and central German states like Greens-led Baden-Württemberg or conservative-led North Rhine-Westphalia and Bavaria lag far behind, not least due to state rules on minimum distances to residential areas or environmental protection. Likewise, federal law, for example regarding proximity to infrastructure like aviation or the military, is also obstructing the expansion.
- Besides administrative difficulties for licensing new renewable power installations, local interest group protests also hinder construction, for example residents concerned about the impact on the value of their homes, or environmental groups concerned about wind farms’ effects on wildlife.
- The slow development of grid and storage infrastructure to better distribute and manage renewable power is also a hindrance. Grid operators have warned that expanding the power line infrastructure needs equal attention, given that the wind and solar power are often generated far from industrial centres, where consumption is highest.
What about funding for renewable power expansion?
What about funding for renewable power expansion?
- The question of how to fund new installations has been linked to renewables expansion ever since the country launched its renewables support about two decades ago. Guaranteed remuneration greatly contributed to a fast rise of renewable power technologies but has also meant that German households pay one of the highest power prices in the world.
- In 2017, the system of fixed guaranteed rates for renewable energy producers over 20 years was changed to an auction system, awarding tenders to investors willing to implement projects at the lowest rate. Although credited with price drops, the switch to a tender-based model is said to have caused more hesitancy among investors and favours larger operators over smaller so-called citizen energy projects.
- With the introduction of a national carbon price in the heating and transport sector in 2021, the energy transition's financial burden on citizens has taken centre stage in party campaigns. Ministers from both government coalition parties and representatives from the opposition all have proposed to abolish the renewables levy on the power price. The government already decided to use revenues from CO2 pricing as well as further federal budget funds to help lower the levy, which could eventually replace it in full. To that end, climate activist groups, think tanks, industry representatives and senior policymakers have advocated a faster rise of the carbon price and a parallel reduction in power prices.
What's the current status of renewable power technologies?
What's the current status of renewable power technologies?
- Renewables have made great strides in Germany since their launch at scale in the year 2000, when guaranteed renewables funding was introduced via the Renewable Energy Act (EEG). They provided nearly half of the country's entire power consumption in 2020, with onshore wind power leading the charge in electricity and biogas providing the greatest renewables share in primary energy consumption. But a drop in renewable power generation in 2021 due to unfavourable weather conditions showed that much still needs to be done to make the supply of clean electricity more reliable through storage and flexibility solutions as well as through greater production capacity.
- Following the landmark 2021 climate ruling, the government considerably stepped up its renewables expansion target and annual auction volumes, on which it initially agreed on only weeks before the ruling in a reform of the Renewable Energy Act (EEG). The non-binding proposal titled "Climate Emergency Programme 2022" says the revised goals for the end of the decade will have to be 95 gigawatts (GW) of onshore wind capacity – up from the current 71 GW target in the EEG – and 150 GW of solar PV capacity (EEG target: 100 GW).
- Onshore wind power is already Germany's most important renewable electricity source and is also projected to cover the bulk of its clean energy needs in the future. The technology is expected to grow from a total capacity of 55 gigawatts (GW) in 2021 to 71 GW by the end of the decade. Capacity growth was strong until 2017, when fixed remuneration was replaced with tenders, and dropped steeply in the three years that followed. The government introduced an action plan for the sector in 2020 to speed up new construction and also to retain capacity at risk of being taken off the grid because guaranteed remuneration had expired after 20 years. Construction figures slightly rebounded in 2021 and are expected to reach about 2 GW by the end of the year. However, this is still much lower than the 4 GW annual expansion target set out in the latest renewable energy act (EEG) reform.
- Germany’s offshore wind sector is facing a lull in activity after the government curtailed offshore wind targets and reorganised the allocation of marine areas for the technology, which is expected to play a crucial role in hydrogen production and act as a reliable base load provider in the power system. New projects in the North and Baltic Seas will not be implemented before 2023.
- While solar capacity has expanded much more rapidly than wind power in the past years, the growth rate is still far from that seen as needed to meet emissions reduction targets – and also rather unbalanced across the country. The latest EEG reform envisaged nearly doubling capacity from 52 GW in 2021 to 100 GW by 2030. In the first half of 2021, construction of new solar PV installations soared by more than 20 percent to over 3 GW. This is in line with the annual EEG goal of 6 GW, but according to industry association BSW Solar the figure would have to be at least three times higher to match emissions reduction ambitions.
- Apart from increasing the renewables share in power production, also Germany's transport sector is supposed to be weaned off fossil fuels in the next years. Besides electric vehicles, biofuels in liquid transport fuels should bring the share of renewable energy in transport to nearly 30 percent by 2030.
What do the parties say?
What do the parties say?
- Almost all of the parties expected to make it into parliament support a fast further expansion of renewable power capacity. With the exception of the far right AfD, which claims climate change is not linked to human activity and argues that Germany should abandon emissions reduction efforts altogether, all parties propose varying approaches to how more clean power installations can be connected to the grid in a cost-efficient way.
- While the official government goal for the renewables share in power consumption in 2030 still is 65 percent, the coalition member SPD says the country should strive for 100 percent only ten years after that, by 2040. The Greens even want to bring the date forward to 2035 and the Left Party says it should be achieved "as fast as possible". The conservative CDU/CSU alliance, which has led the German government for the past 16 years, has said it wants to achieve a much faster roll-out by streamlining licensing procedures and wants to retain capacity by modernising turbines at existing locations.
- The Greens, the SPD and the Left Party all aim to ensure that solar panels are made a standard for all new buildings. The conservatives also advocate a "solar package" to boost the technology and continue to fund old installations to keep them on the grid. Unveiling his "energy masterplan," CDU/CSU candidate Laschet promised a support programme to make the use of rooftop solar more widespread and affordable and generally push renewable power technologies under the slogan "more market, less regulation."
- SPD candidate Scholz said he would make renewables expansion a priority right at the beginning of his term and "write expansion targets into law" to ensure the country is on track towards climate neutrality.
- Pro-business party FDP, on the other hand, says it wants to do away with state-sponsored renewables funding altogether and let the different technologies compete on the market freely. For this, the FDP wants to ease regulation on self-supply and storage, which could decisively change investors’ calculations.
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