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Briefing
Wednesday, 26 Jan 2022
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News, studies and reports on the German energy transition. For the very latest, follow us on Twitter
@cleanenergywire, or sign up to our weekly newsletter for a round-up of the top energy transition news and analysis from Germany and beyond, as well as the latest from the CLEW Journalism Network.
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Clean Energy Wire
Germany will attempt to move towards a "social-ecological" market economy model that puts great emphasis on diplomacy to advance the global fight against rising temperatures and establishes CO2 pricing as a "central element of the future regulatory framework," the country's economy and climate ministry has said. In its
annual report on the economy, the ministry calls for an "international (minimum) price for CO2”, for example via a
climate club. The report says the government will reform the taxation system to make carbon pricing more effective, for example by abolishing climate-damaging subsidies and taxation rules. But a rising CO2 price must be accompanied by financial compensation to avoid undesired social effects, according to the report. "In order to further secure prosperity and competitiveness, economic recovery must go hand in hand with effective climate protection and sustainable progress," Green economy and climate minister Robert Habeck said. "This transformation is a historic challenge, but also a great opportunity."
The report says the "historic transformation" towards climate neutrality will require both technical developments as well as a shift away from today's economic model towards a "social-ecological" market economy. "This requires taking into account the interests of future generations systematically and reliably," it states, adding the government will complete a planned immediate climate action programme by the end of the year. The report also calls for adding new sustainability indicators to conventional data such as gross domestic product (GDP) to measure prosperity. "Starting this year, we will gradually develop the social market economy into a social-ecological market economy. The work in concrete terms has begun," Habeck said.
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Further background on CLEW
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Rising metal prices could slow the shift towards a low-emission energy system, the German Institute for Economic Research (DIW) said in a report. "If we assume that demand continues to grow strongly, the prices for copper, lithium, nickel and cobalt are likely to peak around 2030 and remain there for years," DIW
economist Lukas Boer said following a scenario analysis. "This would make them an obstacle to the energy transition." Large amounts of copper will be needed for making wind turbines and solar arrays, while e-mobility will require a lot of cobalt, lithium and nickel. The additional demand is set to push up prices significantly because the supply can't be easily increased. "It can take up to two decades before new mines are developed," the DIW said. "As a result, prices will rise." According to the scenario, copper prices could rise by almost 70 percent in 2030 compared to 2020, and lithium prices by almost 180 percent. "If this development actually occurs, the metals studied would significantly influence inflation, trade and global economic performance in the future," Boer said. "In the scenario, the energy transition could lead to a fourfold increase in the production value of the four metals in the period from 2021 to 2040, making the expansion of renewable energies more expensive." He added uncertain perspectives for renewables and electric cars currently prevent investments in metal extraction. "We need a globally coordinated climate policy that gives producers more planning security."
The resource demand of low-emission technologies is much more diversified than that of fossil fuels, meaning that questions regarding the sourcing and recycling of raw materials are set to
become more and more pressing, as e-cars, renewable power installations or power battery systems become more widespread. Industry representatives have urged EU states to seriously explore possibilities for
sourcing key raw materials for more climate-friendly technologies domestically instead of relying on imports.
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Further background on CLEW
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Clean Energy Wire
The separate planning procedures for electricity, gas, and hydrogen infrastructure must be combined to pave the way towards a low-carbon economy, Germany's energy agency (dena) has said in a
report. "Since the transformation extends across all sectors, it is no longer sufficient to plan the infrastructures for electricity, gas and,
prospectively, hydrogen independently of each other," dena said in a report following a dialogue with grid operators, energy companies, public authorities, policymakers and civil society. "Integrated planning of energy infrastructures is necessary to meet the requirements of a climate-neutral energy system." The agency said planning procedures for separate energy infrastructures should be preceded by an additional step looking at the overall system to create a common basis. "An upstream system development planning process complements the existing energy infrastructure planning processes with the aim of creating a consistent and coordinated framework." Broad public participation should legitimise this system development plan, which should also include a step to ensure innovations can be put to use as early as possible, dena said.
Despite various attempts to simplify planning procedures, lagging infrastructure expansion has become a key hurdle for Germany's energy transition. The new government's more ambitious climate targets have added urgency to the problem: It plans to increase the share of renewables in the country's power use to 80 percent by 2030, and aims to pull forward the coal exit to that date.
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Further background on CLEW
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Sign up now! The new German government has to hit the ground running on the international stage as the country assumed the presidency of the Group of Seven (G7) mere days after taking office. Chancellor Olaf Scholz and his team have made clear that the climate crisis and its consequences are at the centre of the presidency. The government aims to use the presidency as a starting point for an international “climate club”, uniting the countries with the highest ambitions worldwide, but
open to all countries and with an eye to supporting developing and emerging nations in their transitions. Analysts see the climax of Germany’s presidency – the summit of heads of state and government on 26-28 June in Schloss Elmau in the Bavarian Alps – as an important stepping stone in the 2022 global climate agenda. Five months ahead of the leaders’ meeting, Clean Energy Wire invites state secretary Jochen Flasbarth to lay out how the government aims to use the presidency to support and cooperate with developing countries. In addition, Brigitte Knopf, Secretary General of the MCC, and U.S. advisor on climate policy and politics Alden Meyer share their views on what Germany must deliver to make its G7 leadership a success story.
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