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Report: Germany’s Clean Energy Spending Outpacing Returns

Germany, once an undisputed frontrunner in the clean energy revolution, is on the verge of losing its foothold in the international race to go green, according to a recent report that evaluated the energy and climate policies of 24 select countries.

Although Germany ranks among the Top 10 performing countries based on the sheer expansion of its renewable energies, the report—commissioned by GE from the Handelsblatt Research Institute—places the country in dead last when accounting for other factors such as environmental sustainability, reliability of supply and cost efficiency.

“This has to be the biggest surprise of the whole study,” the report says. “In the last five years, in comparison with other countries, Germany has made hardly any progress creating a climate-friendly and at the same time a secure and cost efficient energy system.”

The report ranks countries based on two criteria: A performance ranking, which compares countries on how well they avoid harmful emissions like CO2, and a dynamic ranking, which compares the clean energy progress each country has made over the past five years.

To achieve both a good performance and dynamic ranking, a country has to show progress in all evaluated areas. For example, a reasonably priced, secure energy supply are of no use to a country that has only modest success in reducing CO2 emissions or vice versa: Major progress expanding sustainable energy sources does not on its own lead to a good ranking if accompanied by sharply rising electricity costs.

German Chancellor Angela Merkel and Vice Chancellor and Economy and Energy Minister Sigmar Gabriel ® arrive for the weekly German
government cabinet meeting on April 8, 2014 in Berlin, Germany. High on the morning’s agenda was reforms to Germany’s Renewable Energy Law.
Photo: Sean Gallup/Getty Images

The polarity of Germany’s rankings comes as the country’s leaders are experiencing pushback on the so-called Energiewende program, a national campaign to have the bulk of domestic energy supplied by renewable sources by 2050, as The New York Times reports.

Much of the criticism is due to what some have said are outsized energy costs for homeowners and businesses.

“There has been a kind of waking up to the fact that the premises of the Energiewende, however well-intentioned they are, no longer hold because the world has changed,” energy industry analyst Daniel Yergin told The Times.

Sweden topped the performance rankings, followed by Norway and a three-way tie between Austria, Switzerland, and Denmark.

While Germany’s performance ranking in the bottom half of the Top 10 might not meet the country’s own perception of itself as a leader, the report says, it’s not all bad if one considers the resources available to the nations ahead of it. Austria and the Nordic countries at the forefront, for example, all enjoy a high level of economic development in addition to geographic conditions favorable to wind and water power that Germany does not, the report notes.

In the dynamic rankings, Denmark led the pack. The U.S., Italy, Hungary, and Spain rounded out the Top 5.

Cars speed past a coal-fired power plant operated by Swedish energy conglomerate Vattenfall on February 25, 2014 in Berlin, Germany. Consumer
energy prices have risen approximately 80% in the last ten years in Germany, and many critics blame the rise on the high cost of investment into
renewable energy sources. Photo: Sean Gallup/Getty Images

The report noted that Denmark has been at a high level of climate-friendly energy production since 2007, and pointed to what it deemed the excellent results of the U.S. as surprising given that the country is often portrayed in a negative light abroad in regard to its energy policy.

The U.S. made gains in wind and solar power, the report noted. Fracking technology has expanded gas exploration, but the effects of that development are not reflected fully in the report.

The abundance of cheap natural gas in the U.S. stands in stark contrast to the situation in Germany, where energy prices are on the rise for businesses and consumers. Those who compare the numbers have found Germany’s expensive energy policy a tough sell when compared to cheaper alternatives outside the country.

The dead last dynamic ranking reveals where cracks are beginning to show in Germany’s clean energy revolution. Over the last five years, the country has combined energy costs that are far above average with output that is far below it.

Only three of the 24 countries that Handelsblatt reviewed have seen their home electric rates go up more than Germany’s has. And only five saw rates rise as much as Germany’s did for business-related energy costs.

Given Germany’s dismal dynamic ranking over the last five years, the country can no longer be considered a pioneering voice in the global discussion of clean energy, the report notes.

The report included six actions the country should take to improve its outlook.

  1. Use political clout to bring about a joint European energy policy.
  2. Set incentives for reducing carbon dioxide emissions.
  3. Expand government-sponsored research and development of modern energy technology.
  4. Set incentives for energy efficiency in homes and businesses.
  5. Move heavy freight transportation from road to rail wherever possible.
  6. Create a three-way energy policy objective that includes a “distribution of burden” clause.

Other countries have caught up, the report notes. In spite of major expansions and investments in the renewable energy space, Germany has not been able to provide a commensurate level of value for its citizens.

“Germany has the innovation abilities to develop the necessary technologies,” said Stephan Reimelt, CEO GE Energy Germany in statement. “To benefit from them, we need to set the right course today.”

Report: Germany’s Clean Energy Spending Outpacing Returns was originally published on Ideas Lab

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