Raw Power

Germany’s green energy shift is more fizzle than sizzle

Despite spending billions, it is falling behind other European countries.

The Odervorland wind energy park near Sieversdorf, eastern Germany | Patrick Pleul/AFP via Getty Images


Germany's enormously expensive Energiewende green energy transformation is sputtering. The numbers tell the story.


High power prices, continued coal dependency and a “poor CO2 emissions record” mean Germany is falling behind other countries in shifting away from fossil fuels, according to McKinsey’s new global Energy Transition Index. In Europe, 11 countries including Sweden, Austria, Denmark, the U.K. and France do better in cutting coal dependency and greening their energy systems.

Renewable power last year surged to 36 percent of the country's electricity use, according to the Agora Energiewende think tank. But while renewables grew in the power sector, they didn't make major strides in transport or heating, so they account for just over 13 percent of energy use.

Missing EU targets could trigger hefty fines from the European Commission.

"Germany as a pioneering country is on the brink of failure," Patrick Graichen, the head of Agora Energiewende, said in a January assessment.

The European Commission’s latest country assessment, published earlier this month, found that Germany is at “considerable risk” of missing its national energy efficiency target of 20 percent by 2020. For now, it is still expected to meet its 2020 renewable energy target of 18 percent, although Germany's renewable energy lobby warns the country might miss that goal too.

Germany is also set to fall short of its national climate target of cutting greenhouse gas emissions by 40 percent by 2020. The new coalition government effectively abandoned that goal, instead focusing on meeting its 2030 target of reducing emissions by 55 percent. Germany is also expected to miss its emissions reduction target for sectors such as transport and buildings.

Missing EU targets could trigger hefty fines from the European Commission.

“Germany, as far as energy policy is concerned, is the biggest fraud globally,” said an EU official. “The public image of German energy policy is very green, but if you check the data, it’s a different story.”

The cost of green

For years Germany was one of the world's energy transformation leaders. It was German cash that helped finance the technology revolution that has turned solar and wind into viable technologies that now generate increasingly cheap power.

But for consumers, that has come with a cost. Many households grapple with ever more expensive electricity prices, bearing the cost of shuttering nuclear power plants early and building up renewables.

"Many consumers can't get rid of the feeling, 'I support the Energiewende and pay a lot for it, but climate protection isn't really advancing,'" Klaus Mueller, head of the German consumer lobby Verbraucherzentrale Bundesverband told German radio earlier this month.

"An average four-person household has to pay more than double for power in 2017 compared to 2000," Mueller said, adding that retail customers feel they're bearing the brunt of the cost of transformation, which is added to their power bills, while big industrial users get off much more lightly.

The powerful German business lobby BDI is also unhappy, saying in a recent report that high electricity costs, delays in boosting the energy efficiency of buildings, and a “lack of vision” on transport are "worrying German industry.”

Transport's diesel dilemma

There are a lot of reasons for Germany's troubles.

Greenhouse gas emissions in Germany have stagnated for three years in a row, rather than falling. That's largely to do with rising pollution caused by transportation, as well as a failure to reduce emissions in the buildings sector as energy consumption went up thanks to the economic recovery.

The car industry is Germany's largest, and one of the reasons the country is an export juggernaut | Andreas Gebert/Getty Images

“While emissions in the electricity sector declined slightly in 2017 as a result of the reduction in coal-fired power production, CO2 emissions increased in the transport, building and industrial sectors, owing to greater oil and natural gas consumption,” said Agora Energiewende's Graichen.

The problem with transport is likely to grow as the number of cars on the road increase. Souring opinions on diesel engines further weigh on emissions. Diesel cars emit less greenhouse gases than those powered by gasoline, which is why the country's politicians and car industry saw diesel as a panacea to deal with global warming.

But the Dieselgate scandal hammered the reputation of diesel cars, and there is growing concern about the smog that diesel generates. As cities consider banning older diesel cars, sales have fallen off a cliff.

The share of diesel-fueled passenger cars in Germany was 39 percent last year, down from about 46 percent in 2016, according to the German type approval authority KBA. At the same time, average CO2 emissions rose slightly.

"Germany missed bringing electric cars on to roads," said Claudia Kemfert, who runs the energy and transport section at the German Institute of Economic Research.

Coal's continued grip

Despite the billions spent on wind and solar, the country is still hooked on coal, relying on it for almost 40 percent of its electricity. Coal provides the backup power needed when the wind doesn't blow and the sun isn't shining, something that will become even more crucial when the last nuclear plants close in 2022.

"In order to have an energy transition, you have to build up renewable energies, but then you also have to reduce coal, step-by-step,” Kemfert said. "That happened too late in Germany."

Coal is still politically powerful, employing thousands, especially in economically strapped regions in eastern Germany.

The Jaenschwalde coal-fired power plant near a lone wind turbine | Sean Gallup/Getty Images

Its continued grip helped torpedo the first round of coalition talks late last year. Chancellor Angela Merkel's conservatives were unable to strike a deal with the Greens and the liberal Free Democratic Party after the liberals balked at a coal phaseout.

Turning from coal to cleaner natural gas as a backup power source also creates problems — this time with the neighbors. Getting access to Russian gas is a key reason for Germany's support for the Nord Stream pipeline running from Russia under the Baltic Sea. But for much of Central Europe, the planned Nord Stream 2 pipeline is a geopolitical weapon for Moscow to dominate its old empire.

Missing links

A lot of Germany's renewable power, especially powerful offshore wind, is generated in the north of the country. The difficulty is getting that electricity to industrial regions in the south like Bavaria.

For years Germany annoyed neighbors like the Netherlands, the Czech Republic and Poland by sending surges of electricity through their networks. They've now taken short-term measures to reduce the disruptions until the necessary transmission links are built. The operators' grid infrastructure plan foresees up to 4,000 additional kilometers of transmission lines by 2030.

It's clear that an upgrade is needed. Transmission system operator Tennet last year spent nearly €1 billion to stabilize the German electricity network, more than in the previous two years.

But domestic opposition is making it difficult for Germany to build its own north-south and other new interconnectors. The project has faced delays as people battle the idea of ugly high-voltage power lines besmirching pretty landscapes. Now much of the interconnector is due to run underground, ramping up costs.

Germany's energy lobby BDEW lashed out at local opposition, calling it "totally counterproductive" and warning it risks driving up costs and undermining the Energiewende.

Future targets

The new government is going to have to figure out how to get the green transformation back on track.

Despite the country's troubles, government and industry promise that Germany will eventually go green.

The new coalition government has vowed to boost the share of renewable power to 65 percent by 2030, from the previously agreed 50 percent.

The foundation for wind turbines under construction near Jacobsdorf, eastern Germany | Patrick Pleul/AFP via Getty Images

Peter Altmaier, the new energy minister and a member of Merkel's Christian Democratic Union, has promised to make the "expansion of the grid a matter for the boss." He also said power prices for mid-sized businesses will fall.

Volkswagen's recent pledge to spend €20 billion on battery contracts and to begin making electric cars at 16 sites worldwide shows the car industry is taking steps to shift its business model — which could help secure a long-term drop in Germany's transport emissions.

Proponents of a swift coal exit, however, shouldn't hold their breath. Altmaier also said that ending coal power won't "happen suddenly and abruptly, but step-by-step over several decades."
