Energiewende "Made in Germany"

The energiewende marked a major turn in German energy and climate policy in two main respects. First, with respect to the energy mix, the energiewende aims at replacing coal and nuclear power with renewable energies. Second, with respect to governance structures, the energiewende aims at restructuring the traditional energy oligopolists and actively involving other stakeholders that were previously not involved in the policy process, such as citizen cooperatives, non-governmental organizations (NGOs), and others. This chapter provides a survey of German energy and climate policies leading up to the important decisions on the energy mix, climate objectives, efficiency, etc. The energiewende constitutes a break between two systems, in which the incumbent electricity system—dominated by oligopolists based on fossil fuels and nuclear power—was abandoned, giving rise to a renewables-based electricity system with a significantly higher share of distributed generation. The chapter describes the main trends and characteristics of German energy and climate policies from their inception in the late nineteenth century up to the present energiewende. Section 2.2 looks broadly at over a century of German energy policy, examining the governance structures and energy mix dominant in three key periods: (1) 1880s–1945, (2) 1950s–1980s, and (3) 1980s–2010s. The second main part of this chapter, Sect. 2.3 looks in more detail at the period between the fall of 2010 and the spring and summer of 2011. A focus is on the year 2010 and the Energy Concept 2050, which was voted into law by parliament in September 2010. The concept represents a curious combination of lifetime extensions for nuclear power plants and coal-based generation technologies on the one hand, and ambitious decarbonization objectives and a strong role for renewables (over 80% by 2050) on the other. The section then focuses on Chancellor Angela Merkel’s decision on the nuclear moratorium, and the subsequent passage of legislation by parliament to rapidly close down nuclear power plants following the Fukushima-Daichi accident. Another subsection provides a summary of the key objectives of the energiewende in both the electricity sector and the energy sector as a whole, including a list of policy objectives and concrete quantitative targets of the German energiewende to 2050. Section 2.4 concludes.

The German economic and industrial development in the nineteenth and twentieth century was based (among other things) on coal. After World War II, the reconstruction of both German states, too, was largely organized around the coal and steel industry. Therefore, it is a particular challenge, that the objectives of the energiewende require a complete phase-out of coal in only about two decades. This chapter focusses on the past transformation of the coal sector in Germany. It provides lessons to be learned for other countries undergoing similar transformation processes. Our main working hypothesis is that the coal industry was reduced gradually in all large industrial basins, both in East and West Germany, in a rather structured and orderly manner. What is left over today, in the middle of the energiewende, is but a marginal share of previous activity and employment. Conditions are different, though, between the rather comfortable situation in the Rhine and Ruhr areas of prosperous West Germany, compared to the East German coal basin Lusatia, which was hit particularly hard. Sections 3.2 and 3.3 report the history of hard coal and lignite, respectively, between 1950 and 2017, including the time of the separation between East and West. Section 3.2 describes the role hard coal played in the energy system and economy of the mining areas in Western Germany from the 1950s until 2017. Section 3.3 describes the role of lignite in Germany, focusing on the drastic decline of lignite in East Germany after reunification. It is shown that both in terms of production and employment, the largest part of the transformation process has already taken place, with a particularly rapid speed in East German lignite between 1990 and 2000. The following Sect. 3.4 analyzes the implemented political measures which accompanied the decline in hard coal and lignite production. Section 3.5 then derives some lessons learned from the transformation process for other regions, and Sect. 3.6 concludes.

The reduction of greenhouse gas (GHG) emissions, in particular CO₂, is a major objective of the German energiewende. There has been broad consensus on this goal for many years now—in contrast to the continuing discussion over the proposed shutdown of Germany’s nuclear power plants. The German government’s Energy Concept 2010 already aimed at a 80–95% reduction of GHG by 2050 (compared to the base year 1990). In contrast to other sectors such as transport, agriculture, and heating, the electricity sector is capable of reducing CO₂ emissions at relatively moderate cost through renewable energy sources. When excluding the option of carbon capture, transport and storage (CCTS) technologies, achieving ambitious climate objectives in Germany (and elsewhere) implies phasing out both hard coal and lignite. This chapter provides an overview of Germany’s GHG emission reduction targets in the electricity sector and the progress achieved so far. The electricity sector has the potential to lead the way in decarbonization, provided that the appropriate regulatory framework is in place. Due to insufficient price signals that can be expected to persist for the next decade, the European Emissions Trading System (EU-ETS) will not be able to achieve this objective on its own but will require support from appropriate national instruments. Section 4.2 gives an overview of Germany’s GHG emission reduction targets and their relation to European targets. Section 4.3 focuses on coal-fired electricity generation and its problematic role in the German energy sector. Section 4.4 discusses the influence of the EU-ETS as well as various additional national instruments, including a CO₂ emissions performance standard (EPS), a CO₂ floor price, and a phase-out law. In Section 4.5, we show that a medium-term coal phase-out is compatible with resource adequacy in Germany. The resulting structural change in the affected local basins can be handled through additional schemes, thus posing no major obstacle to the phase-out of coal. Section 4.6 concludes.

Nuclear power has been a major topic of energy policy debate in Germany since the 1950s, and it was a key issue in all energiewende discussions. The March 2011 closure of seven nuclear power plants (the oldest in Germany) sparked an intense debate over the economic effects this might have, particularly in terms of prices and supply security. This discussion has since been resolved: The plants were closed at a time of high overcapacities on German and European markets, and the economic effects of their closure were almost imperceptible. After 2013, the discussion turned to the other issues of dismantling the old nuclear facilities, storing the radioactive waste, and defining new corporate strategies. These challenges had been largely neglected since the 1960s in Germany (and worldwide) due to the low political priority of these issues and a lack of incentives for nuclear plant operators. This chapter therefore focuses on the two central issues arising with the closure of nuclear power plants in Germany: (1) the effects on German and European electricity markets; and (2) the complex process of decommissioning old plants and finding suitable solutions for storing radioactive waste and adapting corporate strategies to the new challenges. Section 5.2 describes the main steps in closing all of Germany’s nuclear power plants between 2011 and 2022. Section 5.3 discusses the effects of plant closures on German and European electricity markets based on a survey of the literature and our own modeling results on the moratorium. Thanks to significant overcapacities, the effects of both the moratorium (March 2011) and the final plant closures (by 2022 at the latest) have been modest and can be absorbed relatively easily through generation of power from other sources including renewable electricity, both in Germany and some neighboring European countries. Section 5.4 addresses what we consider to be the most important challenges of the final phase of nuclear power—decommissioning and storage—which have not received sufficient attention anywhere in the world. We identify the technical, financial, and institutional challenges of this process that are likely to continue well into the next century and also look at the implications for corporate strategies and diversification. Section 5.5 concludes.

At least since the 1980 study on the energiewende by Krause et al. (Energie-Wende: Wachstum und Wohlstand ohne Erdöl und Uran. Frankfurt am Main: S. Fischer), renewable energies have been considered a viable alternative to conventional fossil fuels, and renewable energy technologies were seen as a “soft path” towards a more sustainable energy system. The German government’s Energy Concept for 2050 declared the development of renewables as its number one energy priority. The share of renewables in primary energy consumption was to rise to above 60% by 2050 (2020: 18%, 2030: 30%, 2040: 45%) and targets for the share of renewables in electricity consumption were set even higher: at least 80% by 2050 (2020: 35%, 2030: 50%, 2040: 65%). Renewables have thus become a cornerstone of the current energiewende. This chapter discusses specific features of the German path toward a renewables-based electricity system and some challenges it is facing along the way. It also reports on the implications of a renewables-based electricity system for price formation and interrelations with conventional power plants. Section 6.2 recalls the development of renewables in Germany over the last 25 years from a niche source following the first feed-in law of 1990 to what has become Germany’s number one electricity source since 2014, contributing over one third of the total supply and leaving lignite, coal, natural gas, and nuclear behind. We also survey the employment impacts of renewables. In Section 6.3, we argue that a renewables-based electricity system works very differently than the previous conventional system, for example, with respect to price formation, the dominant weight of fixed costs, the disappearing wedge between “peak” and “base” load, and the increasing role of flexibility. Section 6.4 takes a look at the issue of costs in the renewables transformation of the energy system, both from an aggregate perspective and from the perspective of individual technologies. The section also compares the costs of renewables with conventional generation (coal and nuclear), taking a public economics perspective, considering, for instance, the external (social) costs. We find that the renewables-based energiewende is welfare-enhancing compared to the high social costs of the previous fossil and nuclear-based energy system. Section 6.5 concludes.

A significant improvement in energy efficiency is crucial for the success of the energiewende. Energy efficiency plays an important role in reducing primary energy demand and fuel costs, and in many cases, it constitutes the least-cost option for GHG emissions reduction. Other benefits arise from its positive impact on local air quality, human health, and productivity. Energy efficiency investments may trigger positive employment effects through growth in the the building sector, and in the longer term, household energy savings will boost spending in other sectors. This chapter summarizes the German approach to energy efficiency, both in general and at the sectoral level in areas such as building, industry, and transport. It also discusses obstacles that could prevent an increase in energy efficiency from a general viewpoint and in the specific case of Germany. Section 7.2 provides a survey of the energy efficiency targets identified in Germany’s Energy Concept 2050 and other documents, and discuss the results of this policy, which have been mixed to date. Section 7.3 then provides a sectoral analysis, looking specifically at the building, industry, and transport sectors. Section 7.4 looks at specific energy efficiency policies going forward, in particular the National Action Plan on Energy Efficiency (NAPE) and some key future challenges. Section 7.5 concludes.

The infrastructure required to assure a reliable, clean, and economic electricity system is among the crucial conditions that have to be established for the energiewende to succeed. This chapter summarizes issues surrounding electricity transmission in the context of the energiewende. Even though infrastructure is an important ingredient of the energiewende, its importance has been exaggerated in the policy debate and in the public debate as well. Often hailed as a “critical factor” in the energiewende—and sometimes as the final nail in its coffin—transmission infrastructure has not been a demonstrable obstacle to the energiewende thus far, thanks to the highly developed network inherited from the old system and its continuous improvement over the last decade. Even in the medium term—that is, into the 2020s—no serious roadblocks for the energiewende are to be expected, provided that the transmission system operators (TSOs) and regulatory agencies stick to the path of transmission expansion that has proven reliable so far. Sections 8.2 and 8.3 describe network planning and development from its inception in the 2000s until today. Over this period, a new method of transmission planning has been implemented, creating more transparency for transmission policies, which had not been open to public scrutiny under the old system. Section 8.4 then traces a decade of network development in Germany. As elaborated in detail, rates of transmission investment remain consistent over the years, and important connections, such as links between the former GDR and West Germany have been completed. Section 8.5 discusses the current debate of introducing multiple price zones in Germany. Moreover, it summarizes results of a study on the effects of establishing multiple price zones in Germany suggesting that there is no need to split the German electricity market into zones. Section 8.6 details an interesting recent development: the explicit integration of carbon dioxide (CO₂) constraints into network planning. Finally, Sect. 8.7 concludes.

While the first phase of the energiewende, focusing on the electricity sector, was largely successful, the second phase needs to focus on all energy usage, especially heat, transportation, and usage as a raw material in the chemical industry. In that context, intensified “sector coupling” will be required, accompanied by a further shift from fossil fuels to renewable ones. This chapter provides an overview of the upcoming challenges in the next phase of the energiewende, by focusing on the technical and economic challenges of coupling electricity, heat, and transportation, in an attempt to advance the low-carbon transformation. We apply the concepts to the ongoing energiewende in Germany. By intensifying the links between the sectors, one can harvest “low-hanging fruits” in terms of flexibility and fuel switching from fossil to renewable energies. This is a precondition to attain the ambitious targets of the energiewende with respect to CO₂ emission reductions. While this chapter focusses on Germany, the technical and economic arguments are valid at a broader scale, and apply to other transformation processes as well. Section 9.2 describes the basic idea of “sector coupling”, until recently a widely unknown concept, including a schematic stylized scheme. In Section 9.3 we describe how sector coupling might evolve in the transportation and heating sectors, and that far-reaching electrification is at the core of the process. Section 9.4 provides some concrete quantitative scenarios for sector coupling for the case of Germany to 2030 and to 2050, based on a rapidly growing body of recent literature. While there is consensus on the feasibility of reaching ambitious decarbonization targets, different models suggest different pathways of reaching them. The role of synthetic fuels (domestic and/or imported) is controversially discussed. Section 9.5 concludes.

The European Union has embarked on the transformation of its energy and electricity system to low-carbon energy sources, just like Germany and many other countries. This chapter analyzes the European strategy for low-carbon transformation in relation to specific aspects and features of the German energiewende. Due to the different preferences, objectives, and institutional settings of decision-making processes in Germany and Europe, lessons from the German context are not directly applicable to the European context and vice versa. While some lessons apply to both—such as the German experience with ambitious CO₂ reduction targets—others do not, such as the potential role of coal and nuclear energy in the longer-term energy mix. The chapter begins with a brief survey of European energy (and later climate) policies going back to 1951, with the decisions to establish the European Community for Steel and Coal (ECSC) and subsequently Euratom in 1957. Section 10.2 covers the creation of the European internal market in the 1990s and its application to the energy sectors (mainly electricity and natural gas); it also covers more recent discussions, such as the energy and climate package to 2020, the 2030 targets, and the parallel discussion about longer-term orientations up to 2050. Sections 10.3, 10.4, and 10.5 analyze the three pillars of European transformation towards a low-carbon energy system: coal with CO₂ sequestration, nuclear power, and renewables. In this context, we discuss a major difference between the European transformation to a low-carbon economy and the German energiewende: The two energy sources that Germany has banned from its energy mix, coal and nuclear, are still high on the European agenda. Meanwhile, the potential of renewables has been systematically underestimated in European scenario documents, due mainly to an overestimation of costs and an underestimation of the technical potential. Section 10.6 then compares two alternative scenarios for a low-carbon transformation in Europe: one is the EU Reference Scenario, which is based on the traditional triad of coal (with CCTS), nuclear, and renewables. In the other scenario, based on our own modelling work, neither CCTS nor nuclear are available at a reasonable cost and renewables carry the major burden of decarbonisation. Section 10.7 concludes.

Both in the German energiewende and in the European low-carbon energy system transformation, infrastructure is generally considered as a conditio sine qua non: a necessary though not sufficient condition for a low-carbon economy—and one without which energy transformation may fail. At second glance, there may be some doubt as to whether “big infrastructure” is really the appropriate way to approach the low-carbon transformation. The main reason is that in a carbon-intensive energy system, more infrastructure automatically implies more carbon emissions (sometimes called “carbon lock-in”). In this chapter, we analyze the role of physical infrastructure in the European low-carbon transformation, with a special focus on large-scale transmission infrastructure for electricity, natural gas, and CO₂. Although these infrastructures can play a certain role, they are not necessarily the critical factors in low-carbon transformation, and often low-cost measures such as improving regulation or tightening access rules are more effective than capital-intensive infrastructure expansion. Section 11.2 suggests that although a majority of authors see infrastructure development as a no-regrets option, there are also arguments against an oversupply of infrastructure. Sections 11.3–11.5 provide model- and case study-based analyses of different infrastructure sectors. Section 11.3 focuses on electricity transmission and compares the plans for pan-European electricity highways with other, more modest scenarios focusing on domestic upgrades and selected cross-country interconnectors. Section 11.4 is dedicated to natural gas infrastructure: Our results show no evidence of a substantial need for additional pipeline or LNG infrastructure, but rather a need for modest investment, given the diverse and global European supply of natural gas. Our analysis of infrastructure planning for carbon pipelines in Section 11.5 yields an even more striking result: Perhaps not a single cross-border pipeline may be required—except for perhaps a few in the North Sea—simply because the underlying technology, carbon capture, transport, and storage (CCTS), is unlikely to be used at the expected scale. Our conclusion in Section 11.6 is that the way forward is more likely to lie in regional and local cooperation in infrastructure.

Cross-border cooperation on energy policies is crucial for achieving the ambitious goals of the low-carbon transformation in Europe and the energiewende in Germany. Because the European electricity system is so densely interconnected, reform processes in one country affect the broader European market, whether through price effects, cross-border flows, or the sharing of backup capacity. Countries engaged in cross-border cooperation face the transaction costs of implementing new regulatory regimes and sometimes significant distributional effects. Spillover effects of investments in one country can be either positive or negative for neighboring countries. At the beginning of the low-carbon transformation process, Europe-wide coordination was the main driver of development, whereas today, regional cooperation among several neighboring countries plays an important role, and there are also cases of bilateral cooperation between countries over national energy policies. In this chapter, we analyze different forms of cooperation in the context of the European low-carbon transformation process and provide empirical evidence on some concrete cooperation schemes. The chapter focuses on regional cooperation schemes, as these provide plentiful evidence of developments and progress to date. Section 12.2 discusses potential fields of cooperation and specifies our classification of cooperation types. Section 12.3 focuses on the potential scope of regional cooperation in the electricity sector, and describes existing examples of cooperation, such as the Pentalateral Energy Forum (PLEF) and the North and Baltic Sea Grid Initiatives. Sections 12.4 and 12.5 provide model-based analysis of the concrete effects of regional cooperation: joint balancing markets in the Alpine region, and transmission expansion in the North and Baltic Sea Region. Section 12.6 draws lessons from the analysis and concludes.

Long-term scenarios of the low-carbon energy transformation in Europe are quite diverse. In this chapter, we provide a detailed discussion of scenarios leading to a far-reaching decarbonization of the European energy system to 2050. We use an updated version of the Global Energy System Model (GENeSYS-MOD), developed by our group to study various low-carbon transformation processes at global, continental, or national level. The modeling results suggest that a largely renewables-based energy mix is the lowest cost solution to the decarbonization challenge, and that the distribution of the carbon budget has a strong impact on the results. Our model calculations thus confirm bottom-up results obtained for the electricity sector, in Chap. 10, suggesting that the solution to the carbon challenge is the increased use of renewable energy sources, mainly solar and wind. Section 13.2 provides a non-technical description of the model, the Global Energy System Model (GENeSYS-MOD); it is an energy system model developed recently for scenario analysis, providing a high level of technical detail, and the integrated coverage of all sectors and fuels. Section 13.3 presents different GHG emissions pathways, related to a 1.5° increase of the global mean temperature, a 2° increase, and a business-as-usual (BAU) case with a much larger emission budget. For each scenario, we distributed the emission budget to countries according to different criteria, i.e. free distribution, share of European GDP, share of current emissions, or share of population. Section 13.4 presents model results, suggesting that renewable technologies gradually replace fossil-fuel generation, starting in the power sector: By 2040, almost all electricity generation is provided by a combination of PV, wind, and hydropower, using significant amounts of storage. The pathways for transportation and heat are more diverse, but they follow a similar general trend. The commitment for a 2 °C target only comes with a cost increase of about 1–2% (dependent on the emission share) compared to a business-as-usual-pathway, while yielding reduced emissions of about 25%. The different regions and demand sectors each experience different decarbonization pathways, depending on their potentials, political settings, and technology options. Section 13.5 concludes that with already known technologies, even ambitions climate targets can be met in Europe, at moderate costs, as long as strict carbon constraints are applied.

The energiewende “made in Germany” is a relatively recent phenomenon, yet with a long germination period, going back to the 1970s, and it has attracted broad interest in many spheres, including academia, industry, and policy making. The previous chapters have provided insights into specific aspects of the process, and have sketched out possible pathways for future developments. The chapters of this book share among them the conviction that, while many obstacles have yet to be overcome, the energiewende is well underway, e.g. increasing the share of renewables in the electricity sector, or taking nuclear power plants from the grid without adverse impacts; however, significant challenges remain, e.g. increasing energy efficiency, and reducing the carbon footprint of the energy system as a whole. From a public policy perspective, the energiewende is well justified because it enhances the welfare of society. The objective of this chapter is to draw some cross-cutting lessons from the first period of the energiewende. Until recently, the focus of the energiewende was on the electricity sector, but what is required is an energy system wide approach. There are at least three decades before us in which further reforms, technical innovations, and political consensus will be required to make the energiewende a true success. The empirical evidence from the recent past, together with a technical and political assessment of the feasibility of the next reform steps, allows us to formulate 15 lessons, both summarizing the previous chapters and opening up perspectives on the future. This will be done following the book’s structure: Section 14.2 looks at lessons from the long-term analysis of energy and climate policies (Part I of the book). Section 14.3 focuses on the lessons from the ongoing energiewende in Germany (Part II), and Sect. 14.4 provides lessons on the interplay between the German setting and the low-carbon transformation at the European level (Part III). Section 14.5 discusses the findings, provides an outlook on the next phases, and concludes.