What Germany’s energy transition means for the United States

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The US now has the real chance to replace Germany as an energy transition leader, already investing more than Germany in both wind and solar

Germany’s energy transition has created a global market for renewable energies. This is now enabling other countries to follow suit, in particular the United States.

Germany’s energy transition – or Energiewende – has created a global market for renewable energies, such as wind and solar, by promoting the rapid build-up of these technologies through a stable policy framework. As a result, the cost of both wind and solar has dramatically decreased over the past few years. This is now enabling other countries to follow suit, in particular the United States. Germany can be proud of this development, as it will in turn benefit from further technological and innovative breakthroughs from others in this field.

The German government has established regulations that call for wind, solar and biomass to make up 80 percent of the country’s power supplies by the middle of this century. Today, these generate around 28 percent of the country’s electricity demand. True, Germany did pay a price for the Energiewende by investing in renewables when these were still relatively expensive. Now, however, Germany ranks as a worldwide technology and policy leader in this field. And it has reduced the cost of these technologies so much that they can now compete successfully with conventional power generation.

The United States, on the other hand, has long struggled with implementing adequate and stable renewable energy policies. Their share of renewables made up only 7 percent of the country’s electricity mix in 2014. However, we are beginning to witness a staggering change, caused by President Obama’s Clean Power Plan and certain states’ efforts to push their renewable energies through so-called Renewable Portfolio Standards (RPS). Only last week, California’s Governor, Jerry Brown, announced that his frontrunner state would cut carbon emissions by an additional 40 percent by 2030 and by 80 percent, with a 50 percent share of renewables in its electricity mix, by 2050. California’s 2050 climate goals are thus the same as Germany’s with a slightly lower renewables goal.

Devastating consequences of climate change

California’s push towards stricter climate standards and a more ambitious renewables build-up can be directly linked to the ongoing drought that has severely hit the state’s economy with its large agricultural sector. Here, renewable energies are being increasingly recognized as a way to strengthen California’s economy now suffering from the devastating consequences of climate change.

Furthermore, we are seeing how Germany and the United States are increasingly decoupling their economic growth from their fossil fuel consumption and carbon emissions. Take Germany in 2014 for example: Germany’s GDP grew by 1.6 percent while its fossil fuel consumption and carbon emissions fell by almost 5 percent respectively. The United States’ power sector is also experiencing a similar trend in generating more electricity while emitting less carbon. In 2015, US utilities will likely produce 0.51 tonnes of carbon for each MWh of electricity produced, compared with 0.66 tonnes in 1970.

Energy experts believe that 2015 will mark a record-breaking year in the United States’ renewable build-up: 18 GW of renewable energy generation capacity will be added to the system, of which 9 GW will be solar and 9 GW new wind installation. For the first time in history, renewable energy installations are overtaking conventional energy installations, taking advantage of the fact that renewables are increasingly becoming cost-competitive with conventional energy sources. In the United States, solar technology costs have decreased by 80 percent and wind technology by 60 percent since 2009. No longer are renewables solely regarded – and at times dismissed – as idealistic and environmental; they actually make economic sense. Texas – the US leader in wind generation – is a perfect example for this: its companies are investing in wind only because it is the cheapest power source available, even compared with natural gas.

US could replace Germany as an energy transition leader

This is also good news for the climate: Germany’s Energiewende could never manage to tackle the global challenge of climate change on its own. Yet by decreasing the technology costs for wind and solar in particular, the economic benefits of the Energiewende have become “exportable” to other countries. Clean energy transitions can now offer a valuable and economical solution to the global climate challenge. Faced with acute climate challenges in the form of the recent drought in California, the fresh water crisis in the South, and the almost annually reappearing wild fires in the western part of the country, the political pressure to act on climate change may be felt more acutely in the United States than in Germany over the coming years. And the response is now facilitated by the economic bonus of going renewable.

As a result, the United States now has the real chance to replace Germany as an energy transition leader, already investing annually more than Germany in both wind and solar and widening its focus beyond just electricity. The United States is already implementing aggressive fuel standards in the transportation sector and is planning for a smart new grid infrastructure as the base for its clean energy revolution. America’s entrepreneurial culture encourages the dynamics of innovation, and clean tech start-ups are playing an increasingly vital role in this energy transition. The car manufacturer Tesla’s announcement to produce low-costs batteries for the car and home, as well as smart green IT from Google and Apple, is likely to further revolutionize the way we use electricity.

That, in turn, will impact the clean energy efforts of other countries. Germany has started the process through making these technologies affordable and competitive with conventional sources of energy. Now the US is giving it another push. Renewables are being chosen no longer for their sustainability, but for their economic benefits. The debate therefore no longer has to focus on the futile question of whether climate change is real and man-made or not, but whether renewables make economic sense. The good news (for the climate): they increasingly do! Germany can be proud of having started the ball rolling – and the United States can be proud of now running with it.