EMISSIONS CUTS

Germany to Miss Climate Change Targets

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Was it all a bunch of hot air?
  • Why it matters

    Why it matters

    If a green-energy leader like Germany misses its emissions targets, other countries might follow suit and slack off on their targets too, undermining the Paris climate accord.

  • Facts

    Facts

    • By 2020, Germany will reduce carbon emissions by 32 percent, eight percent less than the target set by Berlin.
    • By 2050, Germany will reduce carbon emissions by 58 percent, far short of the goal to cut emissions by 95 percent.
    • If the energy transition isn’t accelerated, fossil fuels will make up 70 to 75 percent of the energy system in 2050, according to the Renewable Energy Federation.
  • Audio

    Audio

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Germany is in the middle of a high profile, ambitious energy transition plan, but the country will still fall far short of its carbon reduction targets, according to the Renewable Energy Federation.

In a new study obtained by Handelsblatt, the federation reports that by 2020, Germany will have reduced its carbon emissions by 32 percent, eight percent short of the target set by Berlin. Even more troubling, Europe’s largest economy will have cut its emissions 58 percent by 2050, not nearly enough to comply with the Paris climate accord.

Under the Paris accord, 195 nations agreed to keep global warming under two degrees Celsius. To achieve this goal, carbon emissions must be cut 95 percent by 2050, according to the study.

“The agreement was bought by agreeing to forgo binding goals,” Hubertus Bardt, managing director of the Cologne Institute of Economic Research, told Handelsblatt. “As a consequence, the momentum that everyone is hoping for won’t emerge.”

In response to the backlash over rising prices, Chancellor Angela Merkel sought to slow the energy transition.

Germany has been a world leader in the switch to renewable energy sources. In aftermath of the 2011 Fukushima nuclear disaster in Japan, Berlin moved to rapidly phase out atomic energy and significantly reduce the country’s dependence on fossil fuels.

Under the Renewable Energy Sources Act, Germany has set a goal of producing 80 percent of its electricity from green power by 2050. The federal government imposed surcharges on the electricity bills of consumers and businesses, using the additional revenue to subsidize wind and solar power.

In the first half of 2015, Germany generated 34 percent of its electricity from wind, solar, hydroelectric and biogas, according to the Cologne Institute of Economic Research.

The surcharges, however, skyrocketed. In 2015, households consuming 3,500 kilowatt hours of power paid an additional €270 ($299), compared to €200 just a few years ago. In total, subsidizing green energy cost consumers and businesses an additional €30 billion.

Subsidizing renewable energy also led to an electricity glut and a collapse in wholesale prices, hitting Germany’s major utilities hard. Both E.ON and RWE have launched spin-offs, dividing their fossil fuel and renewable energy operations into separate companies. Sweden’s Vattenfall has tried with great difficulty to sell its brown coal operation in eastern Germany.

In response to the backlash over rising prices, Chancellor Angela Merkel sought to slow the energy transition. In 2014, the federal government reformed the Renewable Energy Sources Act, doing away with fixed prices for renewable electricity and easing the surcharges for many businesses.

As a consequence, almost no new solar power plants were built in the first half of 2015 and a third fewer on-shore wind turbines were installed. Meanwhile, the collapse in global oil prices has made burning carbon cheap again. In 2014, the price of oil was $110 a barrel, today it’s about $34 a barrel.

Despite the attempt to ease surcharges, many companies are still dissatisfied. Sixty-nine percent of family-owned businesses gave the federal government a grade of “D” or worse for its energy policies. That’s according to a 2015 survey of 521 members of the association of family-owned businesses.

Germany is still coming up short in reducing carbon emissions from transportation and heating, according to the Renewable Energy Federation. Last year, a study by PricewaterhouseCoopers found the heating and transportation sectors lagged far behind the electricity sector in emissions cuts.

“The current discussion is focused too heavily on the electricity sector,” Norbert Schwieters, director of PwC’s energy industry division, said at the time. “The energy transition can only succeed if the electricity market is effectively linked to the heating and transportation sector.”

Without an acceleration of the energy transition, fossil fuels will still constitute 70 to 75 percent of the energy system in 2050, according to the Renewable Energy Federation’s study. But convincing consumers and businesses to shoulder additional costs will prove politically difficult.

And in the absence of binding goals under the Paris climate accord, even a green-energy trailblazer like Germany might opt to miss its emissions target.

“The extent to which the individual countries will actually fulfill their climate protection promises is still uncertain,” Johann Wackerbauer, with the Institute for Economic Research, told Handelsblatt.

 

Silke Kersting reports for Handelsblatt from Berlin, focusing on consumer protection, construction, environmental policy and climate change. Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. To contact the authors: kersting@handelsblatt.com and stratmann@handelsblatt.com

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