A work in progress: the transition to renewable energy – conference report

Ecological modernization is the key to a just society of the future. The core project of such a modernization is the transformation of the energy system - as it was discussed at the conference "Work in Progress: Energy Transition".

Programmflyer der Tagung "Baustelle Energiewende"

The transition to renewable energy has moved well beyond a project of the “Green lunatic fringe”, as Ralf Fücks noted in his opening remarks. The expansion of wind and solar systems is going forward not only in industrialized countries, but worldwide. Falling costs are the main driver of this development.

China is currently the world’s largest investor in renewable energies; it is also leaving others in the dust in the field of electric mobility. New information technologies are advancing novel business models. The issue at hand is steering a development that will shape the world of the future. The German government is facing fundamental decisions in this regard.

The building blocks are already clear, explained Phillip Vohrer, Managing Director of the Renewable Energies Agency. His examples: It is no longer a matter of a few utility companies generating huge amounts of electricity in nuclear, gas and coal power plants and delivering it to their customers through an expansive grid.

Power is increasingly being generated decentrally in numerous small units. Consumers themselves are becoming producers, and not just homeowners, but also tenants are taking part in the transition – the German government having passed a law that lets tenants as well as landlords benefit from renewable energy generated on their buildings. Energy services providers such as Clean Energy Sourcing are testing virtual power plants that will use information technology to quickly link thousands of decentralized generating units.

Now, according to Vohrer, renewable energy must also make progress in the areas of heating and mobility. One concept to that end is power-to-gas, which uses water, electricity and carbon dioxide to produce synthetic natural gas. Fücks noted that the transition to the new energy world can only succeed if relevant parts of the economy are on board. It might take a new energy consensus beyond the nuclear phase-out.

Fossil fuels out of lines, drives and buildings

In any case, the global transition cannot be stopped, said Professor Claudia Kemfert at the beginning of her keynote. Kemfert heads the department of energy, transportation and the environment at the German Institute for Economic Research (DIW) in Berlin. Following U.S. President Donald Trump’s exit from the Paris climate agreement, the mood could be summed up as “now more than ever!”.

#Energiebaustelle conference: Claudia Kemfert says a transition to renewable energy cannot be stopped.

In early June, Trump announced that he would no longer implement the Paris Agreement adopted by 195 states. He said the agreement was unfair to the United States and would cost U.S. jobs. The announcement has left his country largely isolated.

With the Paris Agreement, the international community wants to ensure that global warming does not exceed 2°C above 19th-century levels. Its central pledge is a transition to a carbon-neutral economy by the middle of the century.

More and more fossil fuel companies have already had to file for bankruptcy and not everyone is pleased about that, Kemfert observed. The energy researcher, who published the book Das fossile Imperium schlägt zurück (The Fossil Empire Strikes Back), says that the old energies will not go out without a fight. However, decarbonization in power generation, transportation and industry is inevitable.

According to DIW’s model calculations, nuclear power is not economically rational and does not have a future. When taking the risks to humans and the environment, the costs of future decommissioning and disposal, and the necessary expenditure on infrastructure, research and development into account, nuclear power is a costly proposition.

CCS technology, which is intended to capture carbon emitted by coal power plants and store it underground, is not economically viable, and gas only of limited use as a bridge technology. Kemfert has no doubt that renewable energies are the future of power generation. However, she criticizes the German government for hampering renewable energy by imposing a ceiling on its expansion in the Renewable Energy Sources Act, while much more clean power will be needed in the future.

With its 2050 Climate Protection Plan, the German government has set a binding CO2 emissions reduction target of 55% by 2030 relative to 1990 levels, broken down according to sectors of the economy (power generation: -61-62%, buildings: -66-67%, transportation: -40-42%, industry: -49-51%, agriculture: 31-34%). Kemfert sees three major consequences:

To-do list for policymakers

Firstly: “We need to phase out coal quickly.” All that has been established so far is that starting in 2017, old lignite power plants with an installed capacity of 2.7GW will be transferred to a capacity reserve and subsequently shut down.

Secondly, phasing out fossil fuels in transportation will be decisive. The boldest thinking about the future of transportation to date is coming from the tech elite in Silicon Valley, California. “German car firms are too old-school,” said Tesla boss Elon Musk. The German auto industry is struggling with modernization and policymakers have so far failed to counteract this, Kemfert said.

Yet the German Advisory Council on the Environment had developed an expert opinion containing a concept for a transportation revolution as early as 1973. The ideas are out there.

Kemfert’s third point: the need to save energy in the building sector. Too little is being done at the moment, yet an investment of nine billion euros would result in eleven billion euros savings in energy costs.

Kemfert noted that solar, wind, biomass and hydropower would have to be coordinated in such a way that they can guarantee security of supply at all times, with digitally controlled grids and suitable storage facilities. The work in progress of the energy transition is a “major construction site”.

It is up to Germany to proceed wisely in order to find others in Europe who will also take up the fight. In her view, the transition to renewable energy is a peace project that creates participation, acceptance and democracy – not only in Germany, but in many other countries as well.

Moving ahead with Europe’s energy transition – mind the Trump

Megan Richards gave the second keynote. Richards is Director of Energy Policy of the Directorate General for Energy (DG Energy) of the European Commission. DG Energy, which is headed by Maroš Šefčovič and Miguel Arias Cañete, is responsible for building the European Energy Union.

Richards is therefore one of the construction supervisors of the European transition to renewable energy. “We must reach our goals together,” she says. At the European level, discussions currently focus on the “winter package”. The European Commission released this 1,000-page strategy paper for the EU’s energy policy late last year.

According to the package, the EU should consume 30% less energy by 2030 relative to 1990 levels. The current target is 27%. Richards is convinced that the introduction of renewable energies will not impact the economy, as many say. Energy consumption will go down, but growth will accelerate.

She believes that the necessary investments will create 400,000 jobs. Energy can be saved above all in the construction sector. The energy supply should become less dependent on imports. Furthermore, electricity consumers should be entitled to smart meters.

A particularly controversial element of the package: the requirement by which renewable energy normally should first flow into the grid would be dropped. This should only apply to new installations, however, and not to small systems. The negotiations are in progress.

Fundamentally, Richards agrees with the famous dictum of Apple founder Steve Jobs: “A lot of times, people don’t know what they want until you show it to them.” For Richards this means that we need to create the demand – to forge ahead. She emphasized that she is expecting Germany to lead this march.

The big picture – loose ends and how to bring them together

Patrick Graichen, Director of the Agora Energiewende think tank, is developing visions for the future of clean energy. With “Energiewende 2030 – The Big Picture” Agora has released an 80-page paper outlining goals and strategies for the transition’s second phase. The decisive question is how the financing of renewable energy will be organized.

Switching to invitations to tender would be a sound move. It will still be necessary to test whether these should be open to a variety of technologies. Energy researcher Kemfert, for example, advocated inviting tenders for “secure power” to ensure that hydraulic accumulators and necessary new technologies would also be addressed.

In any case, Graichen said, the necessary investments are dependent on the development of coal, oil and gas prices. In his view, a price of 30 to 50 euros per ton of CO2 would be a precondition for the market-driven expansion of renewable energy.

Agora Energiewende calculates that power consumption will be slightly higher than today by 2030 due to the increased use of electricity for heating and transportation – even though society has not yet clarified what shape an ecological modernization of electricity, heating and transportation will take.

The pivotal question: how do you feel about phasing out coal?

Oliver Krischer and Michael Vassiliadis encountered one another on the electricity panel. The green energy expert Oliver Krischer grew up in the coal country of the Rhineland. He believes that open-pit mining and its wholesale destruction of the countryside is no longer acceptable today, even without the climate debate.

The North Rhine-Westphalian state government – at the time a Social Democrat-Green coalition – had already decided in 2010 that no new open-pit mines would be permitted. The Conservative-Liberal coalition that has been in power since June 2017 does not intend to change that decision: it is no longer a question of whether coal will be phased out, but when and how.

Policymakers must make the phase-out plannable and start very quickly to prevent friction, i.e. major upheavals. The Greens want to get out of coal completely by 2030, with the twenty dirtiest power plants to be shut down by 2021, however.

Michael Vassiliadis, Chairman of the IG BCE, the trade union for mining, chemistry and energy, disagrees with this urgency. He agreed that Germany will indeed have phased out coal by 2050.

Even the smoke screen put up by Vassiliadis – a de facto lobbyist for the coal industry – repeatedly contained the term “coal phase-out”. We’re getting there! @boell_stiftung #energiebaustelle

On a global scale it did not matter, he claimed, as its CO2 contribution only amounted to 0.35%. Would it not be better to focus on innovation, grids and storage than to force the transition by regulation? He also questioned whether it would be worth the social hardships. According to Vassiliadis, his people – the 22,000 employees of the lignite industry – are asking themselves “what the hell is this about?”

The trade unionist was not persuaded by Krischer’s argument that the average age of RWE energy group employees is 46 years, meaning that most of them will be in “well-deserved retirement” by the time coal is completely phased out. According to Vassiliadis, renewable energy currently has a 30% share of Germany’s electricity mix, and that this required an investment of around €550 billion.

The money “has had to be taken away from something else – that cannot be ignored.” He called for the clean-energy transition to be managed with balance and consideration. The German government will be setting up a commission on structural change that is slated to find solutions in 2018. Unfortunately, the public has not yet been informed of its makeup and precise mandate.

Parallel to the electricity panel, similarly intensive discussions took place in the respective panels on the future of heating and transportation.[1].

“We need to think about ecological modernization in terms of investment cycles”

Rainer Baake is regarded as one of the major architects of Germany’s transition to renewable energy. The Green Undersecretary of the Social Democrat-led Federal Ministry of Economics and Technology has long since spelled out what the transition to a carbon-neutral world could look like.

His most important point: the need to always think in terms of investment cycles. A coal power plant has a service life of 40 years. In other words, anyone putting money into lignite mining now is making a bad investment.

Furthermore, anyone still building houses that depend on oil and gas needs to be aware that those houses will need conversion in a few short years. Another example: if only vehicles without carbon emissions are to be on the road by 2050, it will be necessary to ban the registration of new vehicles with fossil-fueled internal combustion engines from 2030 onward.

Baake called for making an economic success story out of the necessary transition and communicating it as such. Moral arguments about crops destroyed by drought, flooded coastal cities and threatened people will not be enough by themselves to win over a majority. He used to speak of the transition in terms of burden sharing; today he calls it “opportunity sharing”, referring to a variety of new business models.

What needs to be done in the next legislative period

Simone Peter, Jochen Flasbarth, Ulf Gehrcken and Sönke Tangermann addressed this question in the final panel. Gehrcken is Senior Vice President Corporate Energy Affairs of Aurubis AG, one of the largest copper producers and the world leader in copper recycling. Copper is the metal of the clean-energy transition, he noted.

Tons of it can be found in wind turbines. The transition to renewable energy is actually a “stimulus package for the copper industry”. And what is going wrong? Gehrcken emphasized that companies need a reliable framework: Will they still be EEG-exempt next year? Will a national CO2 price be imposed next year?

Companies don’t know for certain, and that is hampering investment. High energy prices and climate protection in Germany are not a competitive advantage. “We sell one ton of copper for the same price, no matter where. No one asks you how high your costs were.”

Jochen Flasbarth, Social Democrat Undersecretary in the Federal Ministry of the Environment, responded that Germany’s industrial competitiveness should not be reduced to the factor of energy costs. The availability of a skilled workforce, transportation infrastructure and stable democratic conditions are at least as important.

Industrial companies like Aurubis mistrust the volatility of clean power generation. The “cold doldrums” are notorious in this regard: January can be cold and the demand for energy high. Yet when the weather is calm and the skies overcast, wind turbines and solar panels are left idle.

In its Strom 2030 (Electricity 2030) strategy paper, the Federal Ministry of Economics explained that the power supply would be secured by imports from neighboring countries. That is not enough, said Sönke Tangermann, board member of Greenpeace Energy. He referred to a study recently published by Energy Brainpool, a Berlin-based energy market consultancy.

Tangermann pointed out that periods of calm weather can extend across all of Europe, and that Germany must be largely self-reliant in such cases. The government must address this by providing incentives for suitable investment, for example in synthetic natural gas energy storage and the associated infrastructure.

Jochen Flasbarth criticized the current Chancellery Chief of Staff Peter Altmaier for having unleashed a “hysterical controversy about electricity prices” in his time as Environment Minister. The Ministry of Transport also did not score well in his view, having delivered virtually nothing in terms of reducing emissions.

Flasbarth stressed the need to decide on the second phase of the transition to renewable energy: “If Germany doesn’t take its climate targets seriously in the next coalition agreement, they will not simply go away.” Sooner or later, the decision will become urgent, and that is “never a good thing”. Green Party Chairperson Simone Peter agreed that we urgently need to act.

The bottom line: we have a choice as to how this work in progress will take shape in the future. We are far from having fully exploited this opportunity for a new development stage of industrial society.

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[1] Reports on the heating and transportation panels will soon be available on this website.