In 2010, the German government announced a bold new plan to transition from fossil fuels energy to one primarily based on renewable sources. This plan, dubbed Energiewende (German for energy transition), set targets from reductions in carbon emission and a gradual phase-out of fossil fuels – especially coal. The following year, after a tsunami struck the coast of Japan, causing a nuclear meltdown of the Fukushima power plant, a complete phase-out of nuclear power by 2022 was added to the plan’s targets, a move celebrated by many environmentalists.
Germany’s Track Record
Germany has long been at the forefront of renewable energy deployment. Thanks to generous subsidies and policy support, it was able to increase its share of renewables in electricity production from 6% in 2000 to 44% in 2020. The nation had previously introduced first-of-its-kind feed-in-tariffs, which guaranteed electricity producers a fixed price for solar, wind, and biomass for 20 years while these technologies were still maturing and not yet economically viable. The country was even able to recently meet its reduction targets of 40% fewer total emissions than in 1990, and emissions per capita have been falling.
However, behind much of this progress and impressive figures are hidden costs that reveal how the picture could have been even brighter for Germany. Notably, the decision to phase out nuclear power by 2022 may have prolonged the use of coal, whose phase-out is not set to occur until 2033. Reliance on imported natural gas has also increased, which has caused political tensions. Additionally, Germans pay among the highest rates for electricity globally, and despite trending downward, the country’s per capita emissions remain considerably higher than many other European nations.
Now, with emissions rising again after COVID-19, questions are arising whether Germany can stay on track to become carbon neutral by 2045. While some see Germany’s recent story as a success that should be copied worldwide, others think the country’s shift to renewables will come with hidden financial and environmental costs. There is truth to both sides, and lessons can be drawn from both sides of the story for other countries seeking to chart their path on the energy transition.
How Germany Financed Its Renewable Transition
A key reason why Germany was able to deploy the number of renewables it did was due to the fee-in-tariff. This not only helped bring down the costs of solar and wind energy for Germany but for the whole world, to the point where solar power is now, in many cases, the cheapest in the world. Without these policies to protect renewable technologies while they are new and less profitable, the number of renewables being used today could be significantly less.
To pay for this scheme, the German government levied a tax on consumers, a significant reason why electricity rates are so high, even though currently Germany has some of the lowest-cost electricity generations on the planet. Furthermore, despite the remarkable progress in solar and wind in the past decade, they are still, by definition, intermittent sources (i.e., they only work when the sun is shining and the wind is blowing). Battery technology that could store the power generated from these sources is still not mature enough, resulting in Germany turning to other power sources when renewables cannot generate sufficient energy.
The Issues with Germany’s Strategy
As Germany seeks to accelerate its energy transition, several potential problems arise from a renewables-focused strategy. The most glaring is the energy capacity that other sources of power provide when renewables are unable to do so. In 2010, coal provided 42% of Germany’s electricity and nuclear 22%. A decade later, in 2020, the figures were 23% and 11%, respectively. While some people look at the decline in German emissions and point out the rapid decline in coal use as a success, nuclear energy use declined faster, despite it being an emissions-free source of energy. Just last year, Germany even opened a brand new coal plant to the dismay of many, which helps maintain its title of having the most active coal plants in Western Europe.
The country’s decision to phase out nuclear energy and rapidly close several plants contributed to its rapid decline, but likely at the cost of burning more coal than was necessary. One study showed that this was the case and revealed that the decision came with the additional cost of increased air pollution surrounding population centres. The use of natural gas share for electricity also increased last decade from 14 to 16%, as has its share in other uses such as heating and transport, and demand is expected to rise. For natural gas, Germany relies heavily on imports. Russia is a key supplier and is in the process of completing the Nord Stream 2 pipeline that pipes gas under the Baltic Sea directly to Germany. This has caused tensions with the US and other partners, who fear Russia is using this energy dependence as a political weapon.
The result of all of this has been that Germany’s per capita and total emissions are still higher than other European nations, and it could see itself become energy-dependent on Russia, with whom its relations have soured. Much of this was expected as Germany has a more extensive industrial base than its neighbours and is not endowed with its own fossil fuel resources. Yet, at least some portion of this could have been avoided had nuclear energy not declined at a faster rate than coal.
Moving Forward with a Different Route
Building nuclear power plants is expensive and time-consuming, and prioritizing new cheap renewables over a new nuclear power plant is understandable from a policy and economic perspective. However, the phase-out that has occurred over the past decade has been of plants that are still fully operational and have many years left in their capacity. If the goal is to reduce emissions as quickly as possible, Germany’s decision to phase out nuclear power is somewhat contradictory. Incidents like the Fukushima disaster can conjure up feelings of fear that the next nuclear accident could occur anywhere. However, the reality is that there have been surprisingly few cases of nuclear reactors malfunctioning. The radioactive waste produced by nuclear reactors has also been cited as a potential risk associated with nuclear energy, even though its disposal and storage are highly regulated and there have been no significant accidents to date. Meanwhile every year, air pollution from burning fossil fuels takes millions of lives globally, making nuclear by far the safer option.
Despite some of the obstacles Germany now confronts as it seeks to fully eliminate fossil fuels, it is likely too late for nuclear energy to remain part of the energy system, and its complete phase-out looks all but certain. Had the German government been able to withstand the public pressure to switch off nuclear plants following the Fukushima disaster, nuclear power could provide the necessary backup to the intermittency of wind and solar energy. Such a decision would have only made Germany’s track record of ditching fossil fuels more impressive as it seeks to inspire the rest of Europe and the world to aggressively adopt renewables as it did.
As renewables’ share of the energy mix continues to grow, Germany may soon face challenges; it will have to confront the intermittent nature of renewables and determine how fossil fuels could factor into this gap. This is not necessarily a reason for pessimism, but Germany may find itself taking the more difficult path down the energy transition.
