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The Embarrassing Truth About Germany’s Green Energy Transition

Daniel Wetzel, Die Welt

Germany, an ecological pioneer and model pupil in climate protection? That was probably never true. In the first global energy transition ranking, Germany is not even among the top ten in Europe.

The chief planners of the German “Energiewende” have already drawn the consequences: “Only together can France and Germany bring their respective energy transitions to success”, the Berlin institute Agora Energiewende surprisingly explain in a new study.

In a joint paper with the French Institute for Sustainable Development and International Relations (IDDRI) in Paris, the think-tank financed by private climate protection foundations warns that Germany and France will have to “move in unison” as far as the transition to green electricity is concerned, otherwise “distortions” and “imbalances” threaten.

However, this is new: from the promotion of green electricity through the Renewable Energy Sources Act to the phase-out of nuclear power and the coal phase-out plans, Germany, until now, has always pursued its energy transition on its own, without consulting its European neighbours.

Now the planners realise: It won’t go on like this. To “maintain security of supply at a high level in both countries”, there must be “closer cooperation between Germany and France”.

Pioneering role? My foot

The World Economic Forum (WEF) had already established in recent days that Germany alone cannot cope with the energy transition. At a conference in São Paulo, Brazil, the Forum presented the first global energy transition index.

For this comparative index, the management consultancy McKinsey & Company, together with the WEF, calculated the status of the energy transition in 114 countries using 40 indicators.

The result is embarrassing for those who have always claimed Germany’s international pioneering role in the transformation of green electricity and shocking for those who believed it. Germany is only 16th in the world list of the best energy transition countries, and even within Europe, the German ‘Energiewende’ is not even among the top ten.

The McKinsey ranking took into account a country’s natural energy resources only marginally. For example, the high proportion of hydropower in Norway is only included in the “System Performance” category.

However, the initial political, economic and social conditions were assessed completely independently of the geological advantages or disadvantages of a country in the “transition readiness” category. Weighted, both aspects together make up the total value in the ranking.

Position 110 of 114 in terms of structure

The most important component of the German ‘Energiewende’ is the state-guaranteed feed-in tariff for green electricity projects, which is anchored in the Renewable Energy Sources Act (EEG). To date, all German governments have adhered to this law introduced by the Greens and Social Democrats in 2000, although it has only recently been extended by a cost-saving tendering model.

Today, however, eleven countries in Europe alone have an energy system that is more ecologically friendly than Germany: Sweden, Norway, Switzerland, Finland, Denmark, Austria, the UK and France. When Germany ranks twelfth here, this is mainly due to the poor rating in the category “Structure of the energy system”: Here, Germany ranks 110th out of 114.

“This is mainly due to Germany’s dependence on coal-fired power: its share is still 42 percent – not least because it has made a major contribution to baseload supply since the decision to phase out nuclear power,” states the WEF-McKinsey study: “In the category ‘Environment and climate protection’, Germany ranks 61st worldwide – mainly because of its high CO2 emissions.

Emissions in Germany last amounted to 906 million tonnes: “This means that the figure has stagnated at an unchanged high level since 2014”.

Germany lies behind Paraguay or Indonesia

In the category “System Performance”, which measures the progress of the energy transition in the dimensions of environmental and climate protection, economic efficiency and supply security, Germany ranks 44th – behind countries such as Paraguay, Slovakia and Indonesia. Among other things, the high electricity prices for private households (82nd place) and smaller industrial customers (110th place) are responsible for this. 

Against the background of non-declining CO2 emissions, the ‘Energiewende’ costs are extremely high by global standards, the McKinsey experts state: German private households currently pay 30.8 cents per kilowatt hour, 46.6 percent more than their European neighbours.

Industrial electricity prices in Germany recently rose by 0.7 percent, while prices in Europe fell by 0.5 percent. Overall a serious competitive disadvantage: The price level here of 9.72 cents per kilowatt hour is already 14.8 percent above the European average for industrial customers.

Germany should above all strengthen emissions trading, which ensures the most economically efficient measures for CO2 reduction across borders, says McKinsey. Within the European emissions trading scheme, Germany could learn how to improve from Denmark (fifth in the global ranking) and the UK (seventh) in particular.

But there are also points for nuclear power

Both countries had successfully reduced their dependence on coal: Denmark from 91 to 28 percent, Great Britain from 65 to nine percent. At the same time, both countries increased their flexible power generation from gas and hydropower. The UK will also greatly increase its share of nuclear power in the future.

Denmark was even without nuclear power and hydropower resources, successful in reducing per capita emissions by almost 44 percent within ten years – Germany only managed 6.5 percent during this period. One of the most important measures in the UK is the introduction of a national minimum CO2 price for electricity generation.

Another positive aspect is that the UK has established a capacity market for safe electricity generation: “Both measures complement each other and support the phase-out of coal by 2025, which was decided in 2015”.

Germany’s self-imposed targets are considered unrealistic

Overall, Germany is only mediocre in the international ranking despite good general conditions, the McKinsey experts conclude. In the overall global ranking, Costa Rica, celebrated by climate protectors for its green electricity policy, still ranks 20th behind Germany.

The USA ranks 25th, Italy 35th, Turkey 58th, Poland 67th, Russia 70th, Venezuela, South Africa and Zimbabwe at the bottom.

In addition to the international evaluation, McKinsey also measures the progress of the German energy transition every six months using 14 indicators. In the latest update of the German Energy Turn Index, eight out of 14 policy targets in this area were classified as “unrealistic”, only five as “realistic”, while in one area, the construction of cross-border power lines, there was a “slight need for adjustment”.

Full story (in German)