Preview2018 - Energiewende funding needs fixing -German energy agency

CLEW: Which topics or events do you think will shape Germany’s energy and climate policy in 2018?

Andreas Kuhlmann: Once a new federal government is in place, it will certainly have an impact on the country’s climate and energy policies. However, we still don’t know what the coalition will look like, let alone the goals to be included in a coalition agreement. New elections or a completely different model of governance are also on the cards. Exciting times lie ahead, and the outcome will define our policies for years to come.

An urgent task is to define a new ecological framework for the energy transition, which clearly gears the market towards reducing CO2 emissions. The current system of specific taxes for different technologies, surcharges, and fees has evolved unsystematically over time. It does not measure up to the requirements of an integrated Energiewende, and inhibits investment.

A new framework could simplify the system and provide incentives for reducing CO2 emissions. It would also offer clear guidelines for addressing issues that are as controversial as ending coal-fired power production. Of course, a difficult debate is still ahead over the implications, for instance how these changes can be managed in a socially just manner, but it would be an urgently needed signal nonetheless.

It will also be important to push the Energiewende’s systemic integration further. Together with 50 partners, the dena will publish a study on integrated energy transition by mid-2018. We want to outline realistic pathways of transformation towards a climate-friendly energy system and economy, and derive practical political advice from these.

Do you expect Germany to achieve its self-imposed goal of reducing its greenhouse gas emissions by 40 percent by 2020 compared to 1990 levels? What needs to happen to achieve the target, or to at least come close to achieving it?

The 2020 target will be difficult to achieve, that’s no longer a secret. This certainly is no glorious chapter in Germany’s climate policy. But we shouldn’t spend too much time assigning political blame. Instead, we should learn from this experience and look ahead to prepare for achieving the next step – reducing emissions by 55 percent by 2030. The long-term target remains unchanged: a near-total decarbonised economy by 2050. Nobody can say today which technologies or business models will get us there. What we can do, though, is lay the groundwork for innovative companies to develop these technologies and business models.

Which are the most pressing energy and climate policy issues that will have to be tackled in 2018?

Adjusting the energy transition’s economic aspects to the need to curb CO2 emissions is an important and complex challenge that will require a lot of perseverance. We must find a way to integrate the German energy transition into the EU’s energy policy, and simultaneously to guarantee fair competition. But it requires taking a first bold step to create new incentives.

Allow me to repeat myself: more needs to be done in the transport and construction sectors. The debate over diesel technology has brought the transport sector into action, but the quest for alternatives remains focussed too much on e-mobility. E-cars will undoubtedly be an important component of the transition in the transport sector. But our study on e-fuels showed that we need to ramp up our efforts and also keep an eye out on alternative solutions. E-fuels will be crucial - for instance to provide low-emission fuel for aviation, shipping, and road freight transport – but they will also be relevant for passenger car fleets.

The situation is similar in the construction sector. The climate targets can be reached, but we will have to do a lot more and become smarter, too. We must create specific incentives and widen their scope. In the construction sector, the energy transition is best achieved by using all available efficiency technologies in the most economical way possible. The existing infrastructure for electricity, natural gas, and oil needs to be efficiently coupled with renewable energy sources.