Germany’s Great Green Gamble: Energy and Environmentalism in Transition

Post by Frank Uekoetter

A specter is haunting Europe: the specter of the Energiewende. One of the leading industrial countries has decided to forgo nuclear power, staking its future instead on renewable energies, and the rest of the world is trying to make sense of the decision. And with that country being Germany, we have the usual stereotypes at play: the sentimentallly green, oh-so-fearful of radiation, irrational German embarking on yet another Sonderweg; we will probably have to save their asses again. Energiewende is German angst reloaded.

There are certainly grounds for excitement. A lot is at stake in Germany’s energy transition. Money, for instance: Peter Altmaier, the German minister for the environment, recently suggested a price tag in the region of one trillion euros for the next 25 years. The transition is likely to change the structure of the energy industry, political networks, and our collective understanding of energy. However, what counts most in an international context is the prodigious potential of the Energiewende to influence other countries. If Germany can shift to renewable energy sources and remain an industrial powerhouse, there will be no more excuses for the advanced societies of the world.

The German energy transition is a great green gamble, a veritable leap of faith. Yet it helps to tone down the rhetoric a bit. At its core, energy is an eminently unemotional affair: it is about corporate and political power and the material essence of modern life. It would be grossly misleading to depict the energy transition as a sentimental journey. In the German context, it was the outgrowth of long-term trends, and maybe even the path of least resistance.

Current debates presume that the Energiewende is the result of Angela Merkel’s post-Fukushima decision to abandon nuclear power. However, such a reading underestimates the momentum of developments of the last decades. The energy transition is not a single event but the cumulative result of decisions that evolved over time.

First of all, the Energiewende is a result of the long decline of nuclear power in Germany. As I have shown elsewhere, Merkel’s grand decision of 2011 was merely the final step in Germany’s painful farewell to nuclear utopias. Since the 1990s, the phase-out of nuclear power was a matter of fact, camouflaged by a reluctance to make the policy official; the only contested issue was the speed of the phase-out. The Red-Green coalition limited the lifespan of nuclear power plants to 32 years in 2000. Merkel’s center-left government extended that lifespan after extensive haggling in 2010 but quickly restored the red-green policy after the disaster in Japan. As it stands, the last of the remaining nine reactors will go offline in 2022, which means that about of a quarter of pre-Fukushima generating capacity will disappear.

The second trend is the rise of the renewable energy sector. The penchant for renewable energy came out of the controversy over nuclear energy, but it has long outgrown its roots as a mere counterculture response to atomic age fantasies. Today renewable energy is a significant branch of business that gives work to some 380,000 people. One might speculate whether this boom was a somewhat natural development in a country that excels in engineering, but the point is that the Energiewende is also designed to support German industry, no small motive in times of economic distress.

The third trend is the least conspicuous but arguably the most important: the energy transition is poised to change the structure of the energy sector. For decades, German utilities operated as quasi-monopolies on their home market, with an elaborate patronage system making for stability. However, the European Union mandated a deregulation of the energy market in a directive of 1996, and consumers can nowadays switch their energy provider at will. New companies entered the market, including a number of colorful ones. As an example, let me mention the Elektrizitätswerke Schönau (EWS), which has its roots in a post-Chernobyl parents’ initiative in the Black Forest town of Schönau; the parents took over their hometown’s power grid and made their name as “electricity rebels”. Today, EWS is supplying nuclear-free electricity nationally to more than 135,000 customers.

Of course, we cannot know the future structure of the industry, but the current trend is clearly towards a more diverse ownership structure. In a sector with huge fixed costs, renewable energy sources have significantly lowered the threshold for investments: while coal and nuclear power remain the province of the corporate old guard, ownership of solar panels, windmills, and bioreactors is spread widely among small- and medium-sized investors. Thanks to a guaranteed price for energy from renewable sources, investments are low-risk, and vested interests are obviously eager to dismantle this subsidy. It is important to keep these interests in mind, as a strange debate over the social costs of the Energiewende has evolved out of nowhere over the last months. To be sure, equity is an important concern, but if we look at the disastrous performance of energy stocks since Fukushima, we can guess that there are other concerns. The empire will not go down without a fight.

We will not know the outcome of all this until a few years from now. Friends of the old energy system will gladly tell you about the risks involved – but then, every major policy decision is risky. During the harsh winter of 2011/12, when speculations were ripe about whether the reduced nuclear capacity would trigger a collapse of the power grid, Germany was actually exporting electricity to France – probably a sign of things to come. France’s nuclear reactor project in Flamanville, the only active construction site in Western Europe, is plagued by delays and cost overruns, and the country will need 40 reactors of the Flamanville type to replace its aging generation of nuclear power plants. And then there is Great Britain, which is currently negotiating with the French EDF group over the construction of several new reactors and seems poised to fulfill the company’s every wish for lack of alternatives. Thanks to its strength in the renewable energy sector, Germany has more options in play.

At the moment, all this is mere speculation. But we can already make some guesses as to what the energy transition will mean. New lines of conflict are developing as old ones are fading into the background, and we see new rules emerging in politics and society. I see six key challenges:

1. For a generation of anti-nuclear activists, Merkel’s post-Fukushima decision was the ultimate vindication. Unfortunately, that means that environmentalists are now stuck with an even mightier corporate giant: big coal. With nuclear power gone within a decade, coal remains the backbone of the large energy companies, both in terms of domestic lignite (one of the most carbon-intensive types of fuel by amount of energy, and a living anachronism in the age of climate change) and imported coal. The Green Party is seeking a ban on new open cast mines, and another controversy over coal subsidies, set to expire in 2018, is virtually guaranteed. Experience tells us that this will be hardball politics. Good luck.

2. Like every major development, the boom in renewable energy is displaying side effects: concerns about equity and ecological implications, for instance. It is likely that these side effects will grow in importance, and we are obviously lacking rules for dealing with them. Finding a balance between energy and other demands will be crucial for the success of the energy transition, and as it stands, it seems that we will need to find that balance on the march.

3. Subsidies are not only an issue of social justice. They also shape industries: a secure market makes it tempting to cut down on research and development and focus on lobbying. Interestingly, Merkel’s Energiewende coincides with a crisis of the German solar industry, which is wrestling with competition from China. This raises an important issue: how do you support a branch of industry without jeopardizing its competitive edge? Fixed prices were a good way to jump-start the renewable sector, but the next phase will need other incentives and instruments.

4. These new policies will not evolve in a vacuum: the corporate power of the big utilities will be the elephant in the room. Finding fair and effective policies will be a matter of political leadership, but the policies are unlikely to be implemented unless we make the debate more transparent: we need to know more about hidden interests and alliances. Upcoming negotiations will likely be a numbers’ game – in fact, they already are – and we will be flying blind unless we know where these numbers come from. And this is not just about those who are employed by big business. For academics with intellectual flexibility, heaping doubts on the energy transition is currently an attractive business model.

5. Transparency is crucial not only when it comes to the old guard. In a move that made headlines, conductor Enoch von Guttenberg left the Bund Umwelt und Naturschutz Deutschlands (one of Germany’s largest environmental NGOs, which Guttenberg had helped to found in the seventies), criticizing the league for its proximity to wind power interests. As green energy becomes big business, it risks becoming uncomfortably reminiscent of the old enemy. Transparency is no panacea here, but it is a requirement.

6. The biggest challenge probably lies in our collective understanding of energy. Western consumers are not really used to seeing energy as a problem: since the fifties, it was usually just there. However, benign disinterest is no longer an option in the twenty-first century, and learning that energy does have a face, and a price beyond the monetary, is bound to be a painful process. Smart grids that allow us to adjust consumption during the course of a day are a good idea, but only if smart consumers follow on their heels. In the age of the energy transition, we can no longer look at a plug with our customary innocence.

What all this comes down to is that environmentalism is entering a new phase. In the seventies and eighties, environmentalism developed as a protest movement: today’s environmental ministries, which act as a counterbalance to the ministries of commerce, transport, and agriculture, stem from and embody such roots. However, environmentalism has long moved from protests to solutions, and we are now witnessing the next stage. It is about comprehensive planning, about building and managing infrastructures, about balancing costs. In short, after decades of being the pain in the ass for managers of large technological projects, environmentalism is in charge.

The success of the energy transition depends on a lot of things: wise investors, far-sighted politicians, a vigorous fight against corruption, and so on. But it also depends on the evolution of a new type of manager. We know that we have the technology for green energy, but it remains to be seen whether we have people that can put these technologies into place while keeping environmental, political, and socioeconomic costs under control. Who knows: maybe a few years from now, one of Germany’s prime export products will be a new generation of environmental leaders.

Further Reading

Frank Uekoetter, “Fukushima and the Lessons of History: Remarks on the Past and Future of Nuclear Power.” In Europe After Fukushima: German Perspectives on the Future of Nuclear Power. RCC Perspectives 1 (2012): 9-31.

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Frank Uekoetter is an LMU Fellow at the Rachel Carson Center and a Dilthey Fellow at the Deutsches Museum.