Germany: The Renewable Energy Act (EEG) and The Energiewende
There are two leading policy documents that are shaping Germany’s environmental and climate targets.
The first, the Renewable Energy Act (EEG), incorporates a series of laws which regulate the market and development for renewable sources. The EEG was put in practice in April of 2000 and was largely successful due to its “feed-in tariff” mechanism, which provided direct compensation–from the state, using revenues from surcharges borne by end-consumers–to producers of energy per every KWh they generated from renewable sources. This market incentive was founded in Germany’s Renewable Electricity Feed-In Act (1991) and created global influence for environmental laws. Feed-in-Tariff policies were earlier introduced in Portugal and Denmark in 1993.
The EEG was developed by a social democrat and a green, both of whom were spokespeople for their respective parties in the Bundestag. It has since been modified several times, but recent reforms–with the Paris Agreement on Germany’s agenda–have been quite contentious with the public. Most debated was the decision to change the renewable energy market mechanism from feed-ins to auctions, which will be conducted by Germany’s Federal Network Agency. Feed-in tariffs (the money paid to producers of renewable energy) were originally quite high because the government wanted to create incentives for investing in renewable sources, attracting both large and small players (see figure next page). Polls suggest that end-consumers, by majority, were ready to continue paying higher electricity prices for the sake of the shift. According to Sigmar Gabriel, Germany’s Energy and Economic Minister, the switch to auctions is critical for Germany to be able to stabilize the price of renewables and manage grid expansion at a reasonable rate, as limits would be set on the expansion of renewables, like windfarms in northern Germany. The reforms also come as a way of aligning German and EU frameworks, as the EU Commission is looking for free-market solutions, accomplished with suppliers now having to sell their renewable capacity either by themselves or through third parties. However, critics have opposed this decision because (a) it will slow renewable production, which is currently at half of its intended rate; and (b) it will allow wealthy players to out-bid SMEs or citizen-owned projects. The first round of auctions, for which only on/off shore wind and PV solar will be included, are expected to begin January 2017.
Any out-bidding of citizen-owned projects will, in a broad sense, conflict Germany’s Energiewende–another crucial climate action plan–which seeks to democratize the country’s energy system. More specifically, it includes a series of targets that are designed to transition Germany’s energy supply into low-carbon and low-cost alternatives. At the forefront of this plan has been the phasing-out of nuclear energy, although skeptics have pressed the issue of decarbonization as well.
The introduction of this revised plan in 2010 arose largely from the findings of Gregor Czisch, a German physicist who pioneered in regenerative power systems, and Henrick Lund, a Danish energy systems expert. On the political level, a coalition of the Green Party, Social Democratic Party, and the Christian Democratic Party were responsible for pushing laws that formed its early phases during the 1990s. Specific goals for the Energiewende can be seen below:
Other countries have similarly adopted Energy Transition policies include Austria, France, Japan, and the UK. The decarbonization of Germany’s energy system is an element of upmost importance in the Energiewende, as the presence of coal power, according to a Green Party energy expert, will likely undercut attraction towards renewables. Additionally, the Energiewende is criticized to be too climate-centric and not enough involved in environmental issues, such as deforestation, which is a growing concern for the development of biomass and renewable farms. German policy measures, it would appear, could be improved if a common ground between marketable renewable expansion and empowerment of small-scale projects is found.