Germany faces challenges to its triad of targets at European climate negotiations

As EU leaders prepare to set out the cornerstones of climate and energy policy until 2030 at a summit in Brussels tomorrow, the German government says it will be arguing for a three-pronged approach to tackling climate change.

Speaking in Brussels on 15 October, German Secretary of State for Energy Rainer Baake said, “in addition to a climate target of at least 40 per cent, we are calling for binding targets for both renewable energy and energy efficiency of at least 30 percent.”

The government’s position has broad support from the German public. A survey from polling agency TNS Emnid commissioned by organisations including Greenpeace and Friends of the Earth Germany (Bund) indicated that 81 per cent of Germans wanted to see Chancellor Angela Merkel and her counterparts commit to faster development of renewable energy sources and a binding target on energy efficiency.

However, German businesses have voiced concern over the prospect of stricter rules.“German industry support efforts to protect the climate,” said Markus Kerber, director of the Federation of German Industries (Bundesverband der Deutschen Industrie, BDI). “But a tightening of targets would be counterproductive. Policy must prevent production being displaced and jobs being lost.”

The Climate and Energy Framework 2030 was first presented by the European Commission in January, with the aim of creating a roadmap for energy policy beyond targets already in place for 2020. The package was debated by EU heads of state in March and June but they failed to reach an agreement, instead giving themselves until the end of this month.

Germany’s energy transition – the plan to simultaneously phase out nuclear power and cut carbon emissions through a push into renewable energy – has the support of the grand coalition government of Social-Democrats and the Christian Democrats and saw renewable power cover more than a quarter of the country’s energy needs in the first nine months of 2014.

The European Commission says a 40 per cent reduction in greenhouse gas emissions compared to 1990 is the “centre piece” of the 2030 framework.

Germany already has climate reduction targets in place of 40 per cent by 2020 and 55 per cent by 2030, although the country’s CO2 emissions have been on the rise again since hitting a low point in 2009.

Voices including Claudia Kemfert of the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung, DIW), and energy consultancy Ecofys, say that more is needed to set Europe on course for the 2050 target of at least an 80 per cent reduction. Environmental groups are calling for a target of at least 55 per cent.

With the EU potentially setting the pace for climate targets worldwide at the UN Climate Change Conference in Paris next year, Sweden has called for the CO2 reduction target to be raised to 50 per cent, while German politicians have spoken of 40 per cent as a “minimum”.

But even that could face opposition. Earlier this month, Polish Prime Minister Ewa Kopacz threatened to veto the carbon reduction target, saying she was not prepared to accept the economic impact of rising energy prices. Observers say low income and coal-dependent economies like Poland might be talked round with funds to help them reach the targets.

“The most recent news I got is that Poland is willing to accept a 40 per cent target provided there is some improved transfer [of funds],” said Christian Hey, Secretary General of the German Advisory Council on the Environment.

“I had the occasion to read the draft council conclusions for next week,” he told the Clean Energy Wire on October 16, “and as far as I see there are some provisions for a transfer from the ETS [emissions trading scheme] income to lower-income countries in Europe. It might be that this could be the way forward.”

Neighbours Germany and Poland might appear at opposite ends of the spectrum on the European climate debate, but both rely heavily on coal, handing them similar challenges, Kemfert of the DIW research institute told the Clean Energy Wire.

“If Germany is willing to bring more ambitious emission reductions targets and also specific renewable energy targets it has a very strong voice in Europe. Because we are so coal-intensive at the moment we need to be the first to go for these targets and convince the others they should follow,” she said.

Kemfert said the greatest obstacle to moving away from coal is the failing EU emissions trading scheme (ETS). The DIW calculates that CO2 allowances would need a market value of 40 euros to impact the price of coal-fire power, but the average price is currently around 5 euros (See Factsheet on the EU ETS).

The 2030 framework includes proposals to delay the next batch of allowances due to be auctioned in the current period, and create a market stability reserve (MSR) to regulate the supply of allowances, which would be brought in at the beginning of the next trading period in 2021. But there are questions over whether these measures will have a sufficient impact.

“The Market Stability Reserve proposed by the EU commission will not increase prices in the European Trading Scheme because the allowances are only reduced partly and temporarily,” said Ottmar Edenhofer, director of Director of the Mercator Research Institute on Global Commons and Climate Change (MCC).

“The main problem for the current prices on junk status seems to be the insufficient credibility of European climate policy. We have to reform emissions trading such that we put a minimum price on carbon,” he added.

In Germany, fluctuating supply from renewables like wind and solar mean that other energy sources need to flexible – to be ramped up and down as needed – making gas favourable to coal. Because gas emits less CO2, a functioning ETS is also seen as the route to a more stable grid.

EU leaders are expected to agree on a Europe-wide target of 27 per cent of power generated from renewable sources by 2023, but many in Germany believe this not nearly ambitious enough.

“If you look into the modelling this is little more than business as usual,” said Hey. “It is little more than what you expect as a consequence of the 40 per cent target on emissions reduction. So basically, it implies a considerable weakening of the European-level framework for renewables.”

In Germany, progressive targets on renewable energy are also seen as key to boosting investment in the sector, with a positive impact for the wider economy – and for Europe’s energy security, which has been brought to the fore by disputes between Russia and the Ukraine over energy supply.

“Energy security is becoming increasingly important because Europe is becoming increasingly aware that it is basically energy poor – fossil energy poor,” said Hey. “Renewables are one of the strongest contributors to energy security.”

Energy efficiency could also contribute to energy security. But the 2030 framework’s target of 30 per cent, which Germany would like to see as binding, faces resistance from much of Eastern Europe and countries including Spain, The Netherlands and Ireland want the 30 per cent to be “indicative” rather than binding.

Ruby Russell is a freelance contributor to the Clean Energy Wire. She has also written for Deutsche Welle, The Guardian, The Washington Times and The Telegraph, among others. You can contact her in Berlin at newsroom@cleanenergywire.org or +49 30 2844 902-16.