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Merkel’s German Energy Plan Mixes Old and New with Amped Renewable Goals

Leon Kaye | Thursday September 9th, 2010 | 0 Comments

By many accounts, Germany is the European Union’s renewable energy leader.   It outpaces other European nations in wind energy capacity, energy generation from photovoltaic technology, solar thermal installations, and biofuel production.  Feed-in tariffs have helped expand solar energy’s reach into electricity generation, market incentives have boosted renewables’ roles in residential and commercial heating, and tax breaks for biofuel producers have teamed with Germany’s legacy of innovation and engineering to create a clean tech market that is most of the world could envy.  As the EU sets its goals for increased renewable energy capacity in 2020, Germany has often met or exceeded its goals along the way.

Now Chancellor Angela Merkel’s government has issued a 40 year energy plan that it describes as a “revolution in the field of energy supply.”  If all goes to plan, the Merkel government claims that Germany’s energy mix will become the most environmentally and most environmentally sound worldwide—while keeping energy affordable for homes and businesses.

The Nine-Point program will ramp up Germany’s goals of increasing the production of renewable energy, up to 80% by 2020.  Meanwhile, the government acknowledges that fossil fuels and nuclear energy will be necessary until cleaner technologies can take their place.  The plan includes extending the plan of a couple nuclear power plants, and that is where Merkel and her coalition is catching some flack. 
Local utilities are upset, claiming that the extended life of four nuclear power plants are a giveaway to large energy companies.  Germany’s business elite is livid over what it sees as an excessive energy tax.  Renewable energy advocates are also fuming at the possibility that Germany’s four largest utilities—one of which is a subsidiary of a Swedish firm—will poach a disproportionate share of the profits that the nuclear-generated electricity will provide.  Merkel claims that half of the profits will go to the state in the form of a fuel tax that will benefit the development of renewable technologies; meanwhile, a German think tank believes the plan could funnel as much as US$164 billion to the energy companies’ coffers through 2030.

The controversy will be another headache for Merkel.  She has weathered criticism over bailouts of German banks and the Greek government; the President resigned after some ill-received comments about German troops in Afghanistan; and she and other leaders are squabbling over how to lift Germany out of its economic doldrums.

Nevertheless, Merkel has also deserves credit for repeatedly expressing concern over a reliance on energy from cantankerous Russia; and while her plan is not perfect, it acknowledges some painful realities:  moving towards a carbon-free economy overnight is not possible; and the proposed investments in renewables are aggressive compared to what is happening here on the other side of the pond.  Sometimes the measure of a politician’s success is when he or she irritates both the left and the right; Merkel’s plan, attacked now, may very well be seen as a huge step in another decade.

When you visit a large renewable energy conference or trade show, the Germans and Chinese are often dominant in attendance and at the exhibit hall booths.  We’ll all understand the reasons why in another 10 years.


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