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Energiewende: german energy policy
in times of green transition
Energiewende: política energética alemã
em tempos de transição verde
DOI: 10.21530/ci.v12n3.2017.649
Solange Reis
1
Abstract
Germany has developed an ambitious strategy to increase the share of renewable sources
in its energy matrix and to enable the transition to a green industrial paradigm. Known as
Energiewende, the policy implied profound structural transformations in the energy system.
Participation of the residents and of small entrepreneurs stands out among its particularities.
The state leads the transitional project by mediating the divergent interests among social
and economic agents. The challenge is to maintain social consensus despite unequal costs.
Individual consumers, farmers and some industries faced high electricity prices while
energy-intensive industries were exempt, a disparity that attracts much criticism. The project
involves dismantling nuclear power plants, which leads to increasing use of coal or natural
gas. Another challenge is to keep investments on track. This article presents the topic from
its historical development and shows that German energy strategy surpasses moral and
economic concerns. Beyond economics and energy security, it is a broader plan to place the
country in the vanguard transition to green capitalism.
Keywords: Energiewende; Germany; Renewable Energy; Green Capitalism.
Resumo
A Alemanha desenvolveu uma estratégia ambiciosa para aumentar a participação de fontes
renováveis na matriz energética e viabilizar a transição para um paradigma verde. Conhecida
como Energiewende, essa política implicou profundas transformações estruturais no sistema
energético. A participação da população e de pequenos empreendedores destaca-se entre
as suas particularidades. O Estado conduz o projeto, mediando interesses divergentes entre
1 Programa de Pós-Graduação em Relações Internacionais San Tiago Dantas (Unesp, Unicamp, PUC-SP); Instituto
Nacional de Ciência e Tecnologia para Estudos sobre os Estados Unidos (INCT-Ineu), ambos em São Paulo/SP,
Brasil. E-mail: reissolange@gmail.com
Artigo submetido em 20/02/2017 e aprovado em 20/09/2017.
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Energiewende: german energy policy in times of green transition
agentes sociais e econômicos. O desafio é manter o consenso social apesar dos custos
desiguais. Consumidores individuais, agricultores e algumas indústrias sofrem aumento
no preço da eletricidade, enquanto o setor industrial intensivo em energia recebe isenções,
situação que gera muitas críticas. O projeto envolve o fechamento do parque nuclear,
o que leva ao aumento no uso de carvão ou gás. Outro desafio é manter os investimentos
necessários. O artigo apresenta o tema a partir de seu desenvolvimento histórico, indicando
que a estratégia ultrapassa preocupações morais e econômicas atuais. Para além da economia
e da segurança energética, o projeto posiciona o país na vanguarda da transição para o
capitalismo verde.
Palavras-chave: Energiewende; Alemanha; Energia Renovável; Capitalismo Verde.
Introduction
Will an industrialized country that consumes a substantial amount of energy
and still has pretty high emissions manage to achieve the ambitious goals
without jeopardizing the security of supply, triggering a massive increase
in energy prices and, above all, scaring off power-intensive branches of
industry? (DEUTSCHE BANK, 2012, p. 2)
At some point in one Deutsche Bank report, these questions arise about the
viability of the German energy policy called Energiewende. Similar doubts foster
debates in various academic, political, and communication spheres. At the heart
of the issue lies the effectiveness of the German strategy to achieve high rates of
electricity from renewable sources and to reduce greenhouse gas emissions, while
eliminating the use of nuclear energy.
Energiewende comprises a set of legislation, incentives and investments to
increase the share of renewable sources in electricity generation and to combat
climate change. Its design implies costs and transformations that require constant
engagement of economic and social sectors.
Although the government is the architect of this transformation, the horizontality
of the operational process involves individuals and city councils, as well as small
and large entrepreneurs. The strategy started before German Reunification,
surviving governments of different ideological orientations. The environmental
motivations coincide with those of the European Union (EU), but the project
reflects the German conception that energy and industrial policy go side by side.
Given the growing integration of the German market with the European
energy infrastructure, Energiewende impacts neighboring countries. Some of them
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see German energy policy with good anticipation; other nations perceive it as a
catalyst for regional asymmetries. According to some critics, with the excuse for
reducing domestic and regional dependence on external fossil resources, Germany
plans to lead the common market by becoming a major exporter of secondary
energy and leveraging markets for its green technology industry.
With regard to external dependence, the option to end nuclear energy implies
more gas consumption in the short and medium term. Good for Russia, bad for
transatlantic relations, significant for international politics.
The article summarizes its historical and regulatory points, and indicates some
possible effects for Germany’s foreign energy policy. It highlights the role of the
state as a transformative agent towards a new model of industrialization in the 21
st
Century. As the last section of this paper shows, a similar sort of Schumpeterian
green transition is being adapted and advanced by emerging countries such as
China as a way to sustain its enormous economic needs.
History
The Energiewende has ambitious goals and implies structural and regulatory
transformations in the way that energy is generated, subsidized, distributed and
remunerated.
Figure 1: Goals and Results
Emission reduction goals 2020 2030 2040 2050 Situation in 2014
Reduction of greenhouse gas
emission (year basis 1990)
- 40% - 55% - 70% - 80% - 26,4%
Renewable sources in total
energy consumption
+18% +30% +45% +60% +12,4% (*2013)
Renewable sources in total
power consumption
– +40% +55% +80% +27,3%
Reduction in primary energy
consumption (year basis 2008)
- 20% – – - 50% - 9,1%
Reduction in power consumption
(year base 2008)
- 10% – – - 25% - 4,8%
Source: AGORA, 2015; BUCHAN, 2012.
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The project stands on four pillars: (a) public incentives for renewable energy as
primary source for electricity; (b) infrastructure modernization, (c) decentralization
of supply and consumer autonomy; (d) closing of the nuclear industry. Structured
around the increase of wind and solar energy, it proposes to eliminate the use of
nuclear power plants until 2022 and drastically reduce the percentage of coal in
the energy matrix until 2050.
German government took the first steps in that direction in the 1970s, when
oil shocks took place and environmental protection ideas gained track. As many
other countries did, Germany also sought to diversify its oil suppliers beyond the
Middle East. That led to the intensification of its relations with the Soviet Union
in the wake of the Ostpolitik and the gradual incorporation of “red gas” (Russian)
into West Germany energy matrix (HÖGSELIUS, 2013).
At the same time, it sought to increase energy security through renewable
sources and the creation of public agencies for planning and implementing clean
energy policies. Although the term “energy security” comprises various definitions,
from geopolitical to economical sense, this paper consider it as low vulnerability
of vital energy systems (CHERPA; JEWELL, 2014).
Investments in nuclear power grew at that time too, but the resistance of
the population represented a constant barrier to the nuclear sector. Anti-nuclear
feelings since the 1970s partly explain why Energiewende is welcome by civil
society today notwithstanding the economic and social costs of the process.
The concept of “energy transition” was borrowed from the book “Energie-
Wende: Wachstum und Wohlstand ohne Erdol und Uran” about growth and
well-being without oil and uranium. The book argued that the fundamental and
radical change in the energy policy of the Federal Republic of Germany (and of
the industrialized countries in general) has become indispensable” (KRAUSE,
BOSSEL, REISSMANN, 1980, p. 13).
The Green Party´s (Die Grünen) first election for Federal Parliament in 1983
and the Chernobyl nuclear accident in Ukraine three years later stimulated the
establishment of the Federal Ministry for the Environment, Nature Conservation,
Construction and Nuclear Safety (Bundesministerium für Umwelt, Naturshutz,
Bau and Reaktorsicherheit), raising the issue in the hierarchy of the institutional
agenda.
Since then, a set of initiatives at federal, state and municipal levels have
redesigned the rules of the electric sector. Those actions included fostering
production of clean energy at residences and the dismantling of operational
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monopolies. The issue gained urgency during German Reunification in 1990 as
the industrial and energy industries in former East Germany relied on energy
intensive Soviet model.
On a regional level, the adhesion to the European Energy Charter in 1994
stimulated market liberalization. It also helped dismantling large conglomerates
of electricity in the European bloc, prohibiting suppliers from participating in
power distribution. The model adopted in Germany opened doors for wind and
solar generators that still lacked competitiveness. By the time of Kyoto Protocol in
1997, the country committed itself to more ambitious targets than the EU. While
the bloc proposed to reduce pollutant emissions by 8% over 1990 levels, Germany
made the individual commitment of 21%. (EUROPEAN COMISSION, 2017).
It is important to note that Chancellor Angela Merkel was in charge of
the Ministry of Environment during Kyoto negotiations. The fact counts as an
indication that the development of Energiewende extrapolates ideological or partisan
divisions. Therefore it could be viewed as raison d´état and national interest. The
environmental policy of conservative coalitions does not differ conceptually from
the leftist proposals despite the differences regarding the nuclear issue and the
extent of the state role (HAKE et. al, 2015).
In the United States, for instance, the cleavage between Democrats and
Republicans persists with regard to the adoption of climate policies, as the latter
tend to prevent legislation on environmental protection (FERREIRA; VIGEVANI,
FERREIRA, 2012).
In 2002, the first fully left-wing coalition in West Germany, by Sozialdemokratische
Partei Deutschlands (SPD) and the Bündnis 90/Die Grünen, also known as Red-
Green Coalition, approved the closure of the national nuclear plants (Atomaustieg)
by 2022. Although more motivated by the risk of accidents and toxic waste
effects, and less by the level of pollution inherent in uranium mining, the socialist
proposal placed Germany at the forefront of a clean energy system with less threat
to human security.
Continuing the paradigm shift, the conservative coalition by the CDU/
CSU-Fraktion and the liberal Freie Demokratische Partei (FDP) adopted the
“Energiekonzept” (DIE BUNDESREGIERUNG, 2010) in 2010. The document
focused on making Germany one of the world most energy-efficient and climate-
friendly economies, but the path should be gradual and market-oriented. The plan
announced the postponement, for up to 14 years, of the closure of nuclear power
plants, as atomic technology should serve as a bridge in the energy transition.
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The setback, called by the media as “Exit out of Exit” (DIE ZEIT, 2011),
reflected the pressure of interest groups, notably the fossil segment, as well as
the economic crisis and the austerity in the European bloc. While defending a
non-fossil pattern, Merkel had always opposed the dismantling of the nuclear
industry (SOKOL, 2005).
However, the return of nuclear policy did not avenge. Popular demonstrations,
criticism by left opposition and the accident at the Japanese Fukushima plant in
2011 forced the government to rewind and shut down eight nuclear power stations
that run with reactors built before 1980. The number of nuclear plants closed at
once was equivalent to more than 50 percent of the entire national installations
(DEUTSCHE WELLE, 2011). The Parliament approved the reversal by 80% of votes.
One of the rejections votes came from Die Linke, the far-left party that advocated
for an even faster dismantling (APPUNN, 2015). Since then, Energiewende has
gained solidity and controversy.
Development
Wind and solar power are the central elements of the transformation, which
increased the share of renewables in electricity generation from 4% in 1990 to
27% in 2014 (NOW, 2014, p. 5). Due to initial costs and intermittency that typically
characterized these two industries at that time, the challenge was to innovate in
technology and adopt regulations that would make the two sources more reliable
and competitive. High costs, coupled with operational instability, would reduce
public support and affect the export sector.
The solution required state intervention to ensure, through legislation, the
priority of alternative sources in the distribution network despite the lack of
competitiveness of renewable energy plants in its initial phase. In this sense,
Energiewende exemplifies German ordoliberalism.
The central tenet of ordoliberalism is that governments should regulate markets
in such a way that market outcome approximates the theoretical outcome in a
perfectly competitive market (in which none of the actors are able to influence
the price of goods and services)”. (DULLIEN, GUÉROT, 2012, p. 2).
The first mechanism applied was the feed-in tariff (FiT) laws of 1991, which
established a tariff system for the protection of the renewable segment. The FiT
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guaranteed a fixed remuneration for 20 years and priority for green sources in the
network of national power distribution. This regulation is a public incentive with
great support from the political class (LAIRD, STEFES, 2009, p. 2622).
As energy from renewable sources may be more expensive in its early
beginning, the legislation allowed the four major distributors (Eon, RWE, EnBW
and Vattenfall) to buy expensive energy from green operators and resell it in the
European Energy Exchange, which trades electricity, natural gas, permits for CO2
emissions and coal through spot and derivative contracts. Final consumers such
as residences, commerce, services and non-energy intensive industries pay for
the difference between wholesale and stock market prices. That marks the first
imbalance in the distribution of costs, an inequality that fuels much criticism.
Other sectors that receive additional tariff exemptions are energy-intensive
industries such as chemical and metallurgical, and factories that generate their own
energy. These exceptions preserve the competitiveness of the giants, burdening
small and medium-sized industries, residences, and commerce.
FiT tariffs were questioned in the European Court of Justice as a sort of subsidy
and, thus, a violation of free trade rules. In 2001, the Court dismissed the claims
as unfounded arguing that EU member states could oblige electricity distributors
to buy clean energy at a price above market value as long as they repassed the
costs to consumers. This interpretation also took into account the importance of
renewable energy for the environment and the reduction of greenhouse gases that
cause climate change (EUROPEAN COURT, 2001). Currently, more than two-thirds
of European countries adopt some form of FiT (LAIRD, STEFES, 2009, p. 2244).
In July 2016, German Parliament approved reforms, maintaining the fixed
remuneration system only for small producers, such as residences and commercial
business that had installed solar panels on their roofs. Medium and large providers
of clean energy must follow the market prices. Those reforms serve the interests
of traditional generators and non-tariff-free industries; on the other hand, by
maintaining fixed remuneration mechanism for smaller producers, the government
aims to guarantee operational and political support from the population. The
economic sustainability of the Energiewende will be under test from now on as
the visible hand of the state reduces its intervention.
The project receives increasing support from the population, although this
varies according to economy mood: more than 90% support Energiewende
(WETTENGEL, 2016). The popular participation is not restricted to ideas and
voting, as residential consumers bear much of the extra costs. By 2013, households
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contributed €8.3 billion of the total €23.6 billion spent on electricity, although
residential consumption was only a quarter of the total (NOW, 2014, p. 31). The
same type of support is common among politicians, as 85% of Parliament voted
in favor of related legislations (NOW, 2014, p. 9).
Decentralization is what favors German energy policy in comparison with
similar experiences in other countries. It is possible to say that Energiewende is
the most participative process of energy transition in a capitalist state, whose
macro objective is to develop a policy based on environmental safer provision
of energy, self-sufficiency and future competitiveness. It means energy security
without geopolitical constraints.
One measure towards decentralization was to reduce monopolies in the energy
generation and distribution sectors. Four energy giants — Eon, RWE, ENBH and
Vatenfall — control the thermoelectric sector but split the renewable segment with
industries, small businesses, cooperatives, project developers, farms and citizens.
In 2013, small producers were responsible for 46% of renewable energy installed
capacity, compared to 13% of large operators, and 41% of strategic institutions
and investors (BORSCHERT, 2015).
Another relevant aspect is the decentralization achieved by placing the local
distribution systems under the supervision of city councils and due to large
community involvement in planning and fundraising. Individuals can invest
from €100 to €500 in green energy generation projects, which promotes popular
engagement in the defense of industry interests (BUCHAN, 2012, p. 10).
According to Quitzow et al. (2016), the development of state-of-the-art
technology for renewable energies finds its roots in communitarian projects and in
the economic model based on small and medium-sized businesses. Approximately
99% of the general enterprises in the country fit into the so-called Mittelstand,
responsible for 55% of GDP (BUNDESMINISTERIUM FÜR WIRTSCHAFT UND
ENERGIE, 2014).
Over time the green policy has been battling fossil-fuelled industries, politicians
linked to traditional energy inside and outside the country, part of the liberal
media and even radical environmentalist. For a renowned British magazine,
Energiewende meant expensive energy and increased carbon emissions due to
the replacement of nuclear by coal (THE ECONOMIST, 2014). “Although the share
of renewable energy in the German grid has increased since the year 2000, CO2
emissions have also risen since 2009. Is Germany trapped in the Energy Transition
Paradox?” (NOW, 2014).
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Virulent criticisms also come from the progressive side. Boisert (2013)
acknowledges that Germany was pioneer, but he sees its energy leadership as
one of today’s most demoralizing ironies.
The Energiewende is not the swift, bold advance that greens imagine but
a slow, timid, and inadequate response to the crisis of climate change.
It represents a failure of nerve, a failure of imagination, and a failure of
arithmetic. It is visibly failing now, and if it succeeds in all its stated goals it
will still fail. It is failing for a simple reason: the environmental movement,
whose signal triumph is its influence over energy policy, has rejected nuclear
power—the best source of clean energy we have”. (BOISERT, 2013).
The figure below indicates that the emissions indeed increased between 2009
and 2010, which might having be caused by growth in oil (and coal) consumption
as oil price fell during those years. Again between 2011 and 2013, what maybe
reflected the sudden shutdown of some nuclear power plants.
Figure 2: Greenhouse Gas Emissions in Germany
Fonte: CLEAN ENERGY WIRE, 2017
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Energiewende: german energy policy in times of green transition
The graphic information above reveals that 2016 was a negative year for
German emission reduction target. Harsh weather, growing economy and increase
in population — about 1 million refugees were allowed to live in the country in
2015 — could explain the downturn (WETTENGEL, 2016).
German energy policy has indeed many challenges. However, after more than
20 years of the resilient “Energie Konzept”, the mixing system of fossil fuels and
renewable energy has proven its maturation: today Germany has the world’s most
reliable electricity generation (BALL, 2017).
Many challenges need to be overcome, such as the distances between the
wind farms concentrated in the north of the country and the urban and industrial
centers in the south. The alternative is to increase and modernize the transmission
lines. It happens that the modernization and the ideal functioning of the network
depend on heavy and continuous investments as part of a long-term political and
economic strategy.
Vaclav Smil argues that energy infrastructure is one of the most expensive
investments in the world, and that the longevity and inertia of many energy
enterprises make it impossible for any complex national system to reconfigure itself
in three to four decades (SMIL, 2015). Quite a pessimistic view! Notwithstanding
many obstacles, the prospects are shiny for German energy policy.
The direction of change is clear. At every stage since the 1970s, when the anti-
nuclear movement saw the first stirrings of what would become the Energiewende,
its ambitions have been dismissed as impossible to deliver. At every stage that
has proved wrong. (…) The Energiewende has altered the energy mix in Germany
and broken the old business model of the power-generating utilities. But there is
much more to come (BUTLER, 2016).
Energy foreign relations
Sustainability alone does not explain such a radical policy. The foundations of
Energiewende were also established in the quest for less energy dependence, more
economic growth and in the search for the state of the art technology (QUITZOW
et al., 2016, p. 2). With 61.4% dependence on foreign resources, energy policy
means foreign policy for Germany. Therefore, the key word behind it is energy
security in the sense of low vulnerability of any kind.
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Figure 3: Domestic production and imports
Source: WETTENGEL, 2016.
As gas in Germany is often used for heating, and not as much for electricity,
Energiewende shall not affect imports in the medium term. Imported gas comes
through western and eastern pipelines, with strong geopolitical implications in
the second case.
The option for shutting down the nuclear power plants and the majority of
the mining industries by 2050 should underscore the importance of Russian gas.
Broadly speaking, Energiewende deepens relations with Russia for now and loosen
them in the long term.
Energy security, environmental concerns and economic growth explain
Germany´s interest in keeping Energiewende and in becoming a major energy
actor in its region as well as a green technology exporter.
One example of this effort is the creation of the Energy Export Initiative.
Commissioned by the federal government since 2002, the program helps German
companies to reach markets abroad.
To achieve these goals the country cannot depend on foreign fossil fuels
anymore. Russian has been a reliable partner so far, but a large volume of oil
comes from political instable areas such as the Middle East. Germany has coal
reserves but the dirty mineral must be left behind if environmental health and
climate change are considered.
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Therefore, part of the strategy is to become itself a reliable provider of
electricity. In the first semester of 2017, Germany exported 11% of its electricity
production to Central and East European countries (MORRIS, 2017).
Eventually, countries with low-cost renewable energy production will absorb
regional green market shares and even compete with German industries in Germany.
One-step in this direction is the EEG 2016, which allows neighbors states to supply
renewable energy to Germany as long as they participate competitively in the
auctions adopted with the reforms.
Maintaining and broadening the green shift in the next decades is crucial
to Germany economy and overall security. This road has brought (and will keep
bringing) opportunities for cooperation with countries such as China, which
has pursued a similar energy transformation in the last years. This scenario, as
shown in the next section, could also mean fierce competition in the next phase
of industrialization.
Besides the economic gains indicated in this paper, Germany also enjoys the
benefits of green energy as soft power. Apart from being an active player in all UN
climate change negotiations so far, the country has expanded global governance
in renewables.
One year after the first oil shock, the secretary of State of the United States,
Henry Kissinger, proposed an international institution to organize and defend
the interests of oil consuming countries. The plead led to the creation of the
International Energy Agency to increase predictability in order to avoid geopolitical
constraints and market disruptions. Considering its focus on finite resources and
rather negligent concern with renewables, the organization could also be named
“International Fossil Agency”.
A similar institution for green energy was not created until Germany tried
to test its soft power by convincing other countries that Energiewende could be
replicated worldwide.
A remarkable initiative to develop renewable energy abroad was the creation of
the International Renewable Energy Agency (IRENA), an international organization
whose existence is the result of German efforts at intergovernmental level. In
2007, while using its presidency on the EU Council and the G8, Germany started
to work for the creation of an organism outside the UN, where powerful forces
blocked any proposal of that kind.
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While Germany successfully promoted a 20% target for the expansion of RE
in the EU, the 2006 and 2007 sessions of the UN CSD proved to be a serious
blowback for the German strategy to promote RE on a global scale. Instead
of approving the desired time-bound targets for a global share of RE, the
session resulted without any agreement. While already an increasing number
of G77 supported RE, the Gulf States let by Saudi Arabia blocked a decision
underlining the importance of RE. After this experience, the Environment
Ministry decided to change its strategy. Instead of trying to push RE within the
UN, it decided to work on the creation of a new international organization for
RE outside of the UN framework, uniting like-minded countries. Under the
aegis of Karsten Sach, Deputy Director-General for International Cooperation,
the Environment Ministry mobilized political support within the German
Government. Together with the Development Ministry and the Ministry of
Foreign Affairs, it started an international campaign for IRENA’s creation
(ROHERKASTEN; WESTPHAL, 2013).
IRENA was finally developed in 2008 without the support of many countries,
including the emerging nations such as China, India and Brazil. The first two
signed to it later, but Brazil still resists membership as IRENA focus on solar and
wind, while the country favors hydropower and biofuels. Today, IRENA has 150
members and 27 are under process of becoming members.
Reproducing German green transition in other countries is definitely a
challenge. Low credit, underknowledge and the lack of an appropriate domestic
political system might block any chance in many nations. Who knows?
Specialists like Vaclav Smil are deeply pessimistic with renewable capacity
to adequately scale in order to satisfy energy demand in our modern societies.
I like renewables, but they move slowly. There’s an inherent inertia, a
slowness in energy transitions. It would be easier if we were still consuming
66,615 kilowatt-hours per capita, as in 1950. But in 1950 few people had
air-conditioning. We’re a society that demands electricity 24/7. This is very
difficult with sun and wind.Look at Germany, where they heavily subsidize
renewable energy. When there’s no wind or sun, they boost up their old coal-
fired power plants. The result: Germany has massively increased coal imports
from the US, and German greenhouse gas emissions have been increasing,
from 917 million metric tons in 2011 to 931 million in 2012, because they’re
burning American coal. It’s totally zany! (SMIL, 2013).
As the next section points out, more optimistic views show otherwise.
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Green industrial transition
Beyond regional gains, Energiewende might place Germany in a broader
competitive condition if global climate governance advances. A comprehensive
agreement as intended in COP 21 (Paris Agreement) would raise fossil costs,
favoring German industries to the detriment of many competitors in industrialized
countries. Both solar and wind industries have a high initial capital investment,
but the marginal cost approaches zero after depreciation.
As one of the global leaders in green technology, the country has achieved
this position by making huge R&D investments (private and public) in renewable
energy. Germany has strengthened its capacity to export products and services
for manufacturing solar and wind devices, trying to turn itself from a fossil fuels
dwarf into a green energy power.
Political studies on renewable energy focus the economic losses and gains
for different sectors and on how partisan agendas reflect the preferences of voters
and interest groups. In other words, (domestic) politics guides the discussion.
Normally absent from international relations analysis — except in debates about
climate governance — the issue is seldom observed from an international power
politics perspective.
A transition to green energy paradigm requires attention to the dynamics
of international politics on multiple levels such as economic, finance, trade,
technology, law, environment, human rights, and many others. Besides, one must
not forget the tight industrial competition among countries and on how energy
security (cheap, reliable and abundant) may define winners and losers.
For decades, the definition of security energy prioritized fossil fuels and its
implications for international security and world stability. After so many resource
wars in last and current centuries, few would disagree that — even in times of
abundance — fossil fuels are potential conflict-triggers. Mainly due to unequal
geographic distribution of resources that brings nations to geopolitical disputes
or to permanent dependence on highly politicized market.
German trajectory finds cooperation and competition with other industrial
powers such as China, which is inserted in the select group of countries that
seek to promote profound changes in energy systems. In 2015, China led global
investments in renewable energy, followed by the United States, and far ahead
of Germany and Brazil, respectively in sixth and seventh position (FRANKFURT
SCHOOL-UNEP CENTER / BNEF, 2016).
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Among the ten largest investors in this ranking, Brazil and Germany were
the only ones that reduced investments in 2015 compared to the prior year. In
the Brazilian case, the economic and political crisis that has been affecting the
country since then explain the fall. As for Germany, the reduction could be related
to uncertainties regarding the future of FiT, a proof that domestic system may not
be enough mature to be guided only by the invisible hand of the market.
In the United States, renewable energy sector gained emphasis during Obama
administration. As the democrat President expressed in the State of the Union
Address of 2010, “the nation leading the clean energy economy will command the
global economy” suggesting that the United States should empower itself to the role.
Despite the roller coaster of legislations that allowed and withdrawn incentives
for renewables after 2013, the U.S. the country invested $44 billion in clean energy
in 2015. The current scenario, however, discourages investments as President
Donald Trump promises to increase production of non-renewable sources and to
create jobs in the fossil sector.
As Republicans control both Houses in Congress after Trump´s election, it will
not be difficult for the President to deliver on campaign promises by discouraging
growth in renewable energy sector. If this perspective is confirmed, the U.S. will
step back from what Matthews (2017) calls the “green shift”.
In the author’s view, green transition means the destruction of an energy
system based on the exploitation of fossil resources, characterized by geographic
concentration, high production costs and geopolitical risks. On the other hand,
the manufacturing of renewable energy is justified by the reduction of costs,
geographic decentralization (energy produced anywhere and at any time) and
the absence of geopolitical threats. “The green shift is the latest episode of this
process of Schumpeterian industrial evolution”, he argues.
It encompasses more than energy policies on moral grounds. The main
purpose of the green shift is to achieve energy security and economic leadership
in the 21st century, when manufacturing costs will be the determining factor in
industrial competition.
A paradox of our times is that, while libertarian ideas of small government
gain track, a country with overwhelming state presence on economic activity
leads investments in renewables. I refer to China, which in 2015 invested 36% of
the global total, an amount equivalent to US$ 102 billion.
The cooperation in trade and technology between Germany and China was
crucial for transforming the Chinese energy system. By acquiring German products
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Energiewende: german energy policy in times of green transition
and services, China was able to start its own green transition and to become the
world leader in manufacturing of solar and wind energy.
Actions taken by the United States and the European Union against China in
the World Trade Organization — for alleged subsidies and dumping practices in
Chinese solar and wind industries — indicates the extension of the competition.
Beijing has tried to avoid those complaints by relocating part of its premises in
other countries.
Despite its divergent political system, are countries such as Germany and
China betting on clean energy to overcome environmental constraints, but also
as a strategy for a new stage of industrial capitalism? Are both nations investing
in the energy innovation that will sustain Kondratieff’s sixth wave (MATTHEWS,
2012), and reorganizing the productive base of the next world system leadership
(ARRIGHI, 1995)?
Matthews (2016) argues that future industrial leadership will only be achieved
through green shift.
Some advantages of renewable energy are not at all obvious and need to
be made explicit. Fundamentally, they are scalable and can be built in a
modular way — a solar panel, 100 solar panels, 1000 solar panels. As they are
replicated in this way, their powers continue to rise without cutting efficiency.
This cannot be said of nuclear reactors, which have an optimum operational
size — below or above which the plant is underestimated. Furthermore, as
they scale, they do not present greater and greater risks. Instead, they are
relatively benign technologies with no serious risks... More importantly, the
superiority of conventional renewable energies lies in their cost reduction
trends, which are linked to the fact that they are always manufacturing and
production products Where economies of scale actually play a role. This
means that they offer true energy security, insofar as manufacturing can in
principle be carried out anywhere (MATTHEWS, 2016).
The author points out, however, that the green transformation is being mainly
driven by emerging countries such as China and India. Energy policies of these
states do not reflect a sense of morality, but “strategies of national development of
priorities”. The rationality behind this strategy has less to do with public policies,
corporate interests or demand, and more with cost reduction that green energy
systems bring to power sector and to agricultural and industrial activities.
In a scenario of intense industrial competition that shall mark the current century,
the cost factor will be decisive for the industrialization and deindustrialization
Rev. Carta Inter., Belo Horizonte, v. 12, n. 3, 2017, p. 229-249
245
Solange Reis
of countries. Emerging nations in the East face the limits of growth, as fossil
resources do not increase in the scale needed for the economic development of
gigantic countries such as India and China. In addition, resource exploitation
requires involvement in geopolitical issues that add costs of a different nature,
such as military security.
In “Greening of Capitalism: How Asia is driving the next great transformation”
Matthews (2015) says that the third phase of Industrialization will determine
whether the industrial way of life will be able to continue providing (unequally)
wealth and well-being without destroying the planet. The answer does not lie in
moral principles of environmentalism or market opportunism.
A major structural transformation of capitalism requires state direction.
Considering the characteristics of Chinese political system, despite its
authoritarianism, China presents itself as the country with the potential to lead
the great transformation.
Capitalism is the vibrant technical-economic system that allows such
industrial dynamics. There is really no secret about why China is seeking
abundance of energy and resource security through its highly targeted
industrial strategies. The only mystery is why the West allows it to win in
the competition unleashed in the international political economy. Changing
the policy emphasis so that it engages directly with the economy through
industrial strategy and changing the rationality of renewable energy to
building energy security through its manufacturing would be an advance to
restore some equilibrium (MATTHEWS, 2015).
Those arguments are extensively detailed in his recent book “Global Green
Shift: When Ceres meets Gaia”. Renewable energy and information technology for
green energy system is ate the center of what Schumpeter would call a sixth wave
of creative destruction. It is not only a matter of substituting one technology for
another, as neoclassical economists would say; it is about reviewing the industrial
paradigm of our civilization (MATTHEWS, 2017).
Conclusion
The article explained German energy policy, known as Energiewende, from its
historical perspective and pioneering. Some aspects differentiate German strategy
from other examples in Europe and in the world.
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Energiewende: german energy policy in times of green transition
One factor is the active role of the state in planning and implementing
legislations, infrastructure and incentives. The project survived successive
government changes throughout the years, proving that its rationality is beyond
partisanship.
Other factor is the participation of social actors, such as individuals, farmers,
cooperatives and small entrepreneurs. Besides paying for higher electricity, those
stakeholders get direct involvement in green initiative either by installing small
solar and wind generators in its properties or by financing many of the projects.
Energiewende is also unique for its commitment to dismantle all nuclear plants
until 2022, an ambitious target that faces resistance of many economic groups
and implies more consumption of gas in the short term. Taking into account
Germany’s poverty in indigenous gas production, the replacement of nuclear by
gas increases its dependence on Russia, a gesture that triggers a lot of criticism
nationally and internationally.
Notwithstanding many barriers, Energiewende turned Germany from an energy
dwarf into a regional power supplier. The new condition and its prospects has
explained some changes in Germany´s foreign policy toward East Europe recently,
as in the case of Ukraine.
Maintaining the plan requires investments in modernization, infrastructure
and adequate regulations, a challenge that faces constant skepticism among much
of its opponents.
However, by implementing a profound energy transition Germany could place
itself among a select group of countries that will lead a new phase of industrial
capitalism. A pursue of “green shift” not on moral or environmental grounds but
as a quest for economic and political power.
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