Germany has a new governing coalition this year, and the new Energy and Economics Minister Sigmar Gabriel says the entire Energiewende needs to be relaunched. Craig Morris has no problem with that opinion – as long as we remain focused on the right outcome.
As I recently argued, German politicians currently seem excessively focused on protecting consumers from rising power prices. At the end of December, Gabriel announced that the entire energy transition needs to be “reloaded,” and he seems exclusively focused on rising power prices. He is quoted in the press as saying, “The energy transition must not hamper German industry in the long run.”
None of this makes much sense on a factual level, unfortunately. Retail power prices are rising, but the picture for industry differs depending on whether we are talking about firms that are exempt or not from the renewables surcharge. And Germany’s neighbors are worried about unfairly low prices in Germany, with Dutch aluminum firm Aldel filing for bankruptcy at the end of December because no direct power connection to the German grid could be provided in time.
Obviously, German industry power prices are above average within the EU (and near the top for residential), so we should keep an eye on rising prices. But prices should not be our main concern; if they remain stable anyway (in line with inflation), as I forecast, it is merely opportune for politicians to take credit for the inevitable. Reaching our goals for 2050 should be the focus.
There are three main goals: first, the share of renewables in electricity is to increase to “at least” 80 percent; second, the share of renewables in total energy supply is to increase to “at least” 60 percent; finally, greenhouse gas emissions are to be reduced by “at least” 80 percent – all of this by 2050.
Does the new governing coalition still take these goals seriously? Judging from the new “corridors,” no. The term “at least” in current German law is apparently to be replaced by a ceiling, at least for the (new) interim targets of 2025 (40-45 percent renewable electricity) and 2035 (55-60 percent).
Up to now, Chancellor Merkel has not exactly been committed to lowering carbon emissions either, a target that would take us outside of the power sector, meaning that the energy transition would – finally – have to focus on oil consumption for heat and motor fuels. Should Germany not follow Denmark’s example and outright ban new oil boilers? And how far can the German government go in forcing its powerful car manufacturers to switch from luxury to thrifty cars? Likewise, a commitment by the German government on a more significant carbon price would be helpful.
And what about capacity markets, which Germany is apparently to have in a couple of years? Will they be focused on promoting the kinds of technologies that will be needed for, say, 55-60 percent renewable power just two decades from now? Should we not kill two birds and include a carbon price in eligibility for capacity payments? Would capacity markets not be a good place to promote power storage as well?
We have written about most of these issues before, so just follow the links provided for more information. No doubt, the political reality will fall short of what could be done, and we will comment on events here for you from our own critical perspective throughout the year.
For now, we wish you all the best for your own transition into 2014!