Tuesday, March 11, 2014

The Energiewende is about Democracy and Technology (but not Fukushima)

Much hash is made of the Fukushima 2011 catastrophe in trying to explain the Energiewende, Germany‘s energy transition to 100% renewable energy. It is time to put events and policy decisions into their historical context.

The period 2009-2011 is at the heart of frequent misrepresentations and misunderstandings.

The CDU/CSU/FDP won a majority in the 2009 elections to the German federal parliament on a platform including an extension of the running-times of existing nuclear power plants, but the election was not fought over that. The "nuclear question" was a side-issue that no-one took seriously in a contest over economic and social policy during the Euro crisis.

The legislation extending the running time was introduced and adopted in parliament as part of a legislative frenzy in 2010; there was no time for public or adequate parliamentary debate: it constitute "Legislative Ambush". The new law was challenged as being unconstitutional on (at least) two separate arguments by the Länder as well as the federal opposition parties; the cases were dropped when the law was repealed but the constitutionality of the law may be tested in possible future cases over compensation for nuclear plant operators for the 2011 phase-out law. The legal challenges meant that no significant investment was made to the nuclear plants even after the law was adopted.

As a consequence of the legislative ambush, the old "Grand Societal Conflict" over the nuclear question, that had been settled with the negotiated phase-out agreement of 2000, was re-opened. The Greens a few months later polled just under 30% and were threatening to overtake the CDU as the most popular party across Germany. The running-time extension was a complete blunder, not only in terms of industrial and energy policy but also electorally. (I had the pleasure to attend a Mittelstandsforum in Munich a few days after the law was adopted, with about 300 predominantly conservative owners and managers of SMEs in the room.  Even when it would have been perfectly safe and acceptable to speak out for nuclear power, no-one did.  Not one!  Some were scathing about the new law, and most of the (average millionaire) participants simply shook their heads in disbelief over the federal government's evident stupidity.)

Had the CDU defended the nuclear extension much longer, they might have lost all electoral chances for a generation, thus was the power of the nuclear issue in the politicization of young people (teens and twens). It was clear to observers that the running-time extension would be reversed, whether by the then government, through the courts on the basis of the constitutional challenges, or as a result of the next federal election (which might then have produced a Green chancellor!). Fukushima provided a face-saving opportunity for Angela Merkel to regain control over events, do the right thing (by the majority on the conservative part of the political spectrum as well as elite opinion), and re-instate the nuclear phase-out approximately as it was before.  The nuclear plant operators had reason to be happy; they actually won additional running hours and power output to sell to the grid, as is shown by comparing the 2011 law with the terms of the nuclear phase-out agreed in 2000.

The Energiewende is successfully reducing greenhouse gas emissions in Germany, and stimulates the development of technologies and business models that may be used for energy transitions also in other countries.

It must be said and put in context that the industrial decline of Eastern Germany also helped reduce emissions, but that process had a steep price in economic, social, and political terms. It was not a wind-fall. Germany used the opportunity to rejuvenate the productive capital stock. If about half the emission reduction is the result of Eastern Germany‘s industrial collapse, the other half is due to public policies since unification.

For historical reasons, there is too much lignite in the German energy system, including for power export.  Lignite mining and its conversion into electricity has a nasty habit of forming strong path-dependencies, in the case of lignite on the basis of laws essentially unchanged since the 1930s.  The way to drive out lignite is to improve energy efficiency, build up renewable energy supply and storage, and shift to a smart grid.  In addition, at least some large (continuous) industrial power users need to become "swing consumers" like Trimet did in aluminum recycling, but BASF is refusing to contemplate for its multitude of processes requiring steam or power or both.

It must also be admitted that there is still enormous energy wastage in Germany, including in energy-intensive industries; energy efficiency is not a successful field of public policy. The focus is too much on (capital-intensive) retrofits rather than (smart and inexpensive) policies stimulating energy-efficiency in behavior.  The technology-forcing power of standard-setting is not being used enough. That could not be changed as long as the Federal Ministry of Economic Affairs is responsible, with its senior officials believing that energy-saving is bad for the national economy, depresses GDP, and reduces tax-take.

My bet is that the "Federal Ministry of Energy", currently being incubated in the Federal Ministry of Economic Affairs under the leadership of State Secretary for Energy Rainer Baake, will become independent and enlarged after the next federal election in Germany in 2017.  The country will then be able to break with the inherited totalitarian or state-monopoly-industry reflexes in its energy system and policy-making, and will be free to shift further towards a distributed energy supply structure with real-time price signals stimulating changes in supply and demand.  Then, the power-and-gas system, more tightly linked to the transport sector than today, will become efficient in its dynamics, in the aggregate behavior of all its users as befits a democracy and market economy.


I have written an earlier essay entitled "Germany, Fukushima and Global Nuclear Governance": http://www.ecologic.eu/7436.

More background: http://www.ecologic.eu/4140 and http://www.ecologic.eu/2984

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