Cuadernos Orkestra 2016/15_ENG ISSN 2340‐7638 The German energy transition (Energiewende) Policy, Energy Transformation and Industrial Development Álvarez Pelegry, Eloy Ortiz Martínez, Iñigo Menéndez Sánchez, Jaime May 2016 Energy Documents*1 Álvarez Pelegry, Eloya; Ortiz Martínez, Iñigob; Menéndez Sánchez, Jaimec C/ Hermanos Aguirre nº 2. Edificio La Comercial, 2ª planta. 48014 Bilbao Tel.a: 34 94.413.90.03‐ 3150. Fax: 94.413.93.39. Energy Documents 2016 E‐mail: [email protected] Tel.b: 34 94.413.90.03‐ 2130. Fax: 94.413.93.39. E‐mail: [email protected] Tel.c: 34 94.413.90.03‐ 2129. Fax: 94.413.93.39. E‐mail: [email protected] JEL codes: H2, J63, L5, N74, O13, Q4, R28, R58 Keywords: energy transition, Germany, regulation, industry, costs. The opinions, analyses and remarks contained in this document are those of the authors and do not necessarily reflect the opinions of the institutions of which they form part. All mistakes are attributable to the authors. The authors wish to thank Claudia Suárez Diez and Macarena Larrea Basterra for their assistance in this project. They would like to thank too the many professionals from different sectors who have shared their knowledge and offered suggestions, allowing us to compare and contrast different ideas. These include Peter Birkner, Rodnan Karim García Ramírez, Alfonso González Finat, Uli Daniel Kalim, Fernando Lasheras, Pedro Antonio Merino García, María Teresa Nonay Domingo, Ramon Rodríguez, Alan Thomson and Dirk Vetter. *1 Document: Text used to prove, edit or indicate something (Casares). A piece of written or printed matter that provides a record or evidence of events […] (Concise Oxford English Dictionary). “Energy Documents” is a series which includes papers that are endorsed or produced by the Energy Chair of Orkestra, Energy Chair of Orkestra PRESENTATION Emiliano López Atxurra President of the Committee of Sponsors of the Energy Chair of Orkestra‐BIC In the European Union and particularly in the French‐German axis the energy transition has taken centre stage in the debate on energy policy. Historically, such transitions have occurred when the structures of energy sources have been Energy Documents 2016 modified in different regions or countries, or when technological changes have brought about important transformations, thus creating opportunities for new energy sources and relegating others in importance. In Europe, countries such as Germany and France have initiated processes of change in their energy structures from different perspectives. The transition in Germany is particularly important for two reasons: firstly, because of the country’s importance and weight in Europe; and secondly, because the process of energy transition and transformation is linked –sometimes structurally– to industrial policy. As this study shows, these processes of change began several years ago in Germany and have gained greater momentum since the 21st Conference of the Parties on Climate Change, held in Paris at the beginning of December 2015. For a number of reasons of varying importance, including a recognition of the preeminent role of Germany within the Union and because of its role as a reference point in industrial and technological policy centring on energy and mobility, and because of its particular defence of its industrial model, the Energy Chair of Orkestra felt it would be of interest to make an in‐depth and wide‐ranging analysis of the issue of German energy, rigorously identifying what the Energiewende involves, what its aims are and at what phase it currently stands. “The German Energy Transition (Energiewende). Policy, Energy Transformation and Industrial Development” addresses key aspects of this important process from an all‐embracing perspective. The report is divided into four basic blocks: the first deals with policy; the second with the energy structure in Germany; the third with the concept and details of the Energiewende; and the fourth with industrial matters. The study concludes with some reflections and final considerations. The first block (on policies) reviews the background and reasons for energy transitions and goes on to analyse the political framework and the important role the authors believe the Greens have played in the process. To understand the Energiewende it is important to know the current situation and historical development of the German energy transition. The second block therefore The German Energy Transition provides analysis of primary and final energies, examining oil, gas, coal and electricity in detail to give a comprehensive picture German energy structure. The third block, which constitutes the core section of the report, deals with the Energiewende itself. It identifies the basic objectives and the way in which they are being developed, looking at key issues of the energy transition in Germany and sketching out the future vision contained in the horizon to 2050. It also analyses key basic regulation, entering into some detail on the mechanisms of the “feed‐in tariffs” for renewable energies and how they have developed. Given the impact of this process on increases in electricity prices, it also analyses Energy Documents 2016 trends in prices, particularly for the high energy‐consuming industries most affected by the process. No less importantly, this section also contains a discussion of the implications and difficulties that have arisen. The last block, before the final reflections and considerations, examines the industry surrounding renewables, with a comprehensive analysis of wind energy, photovoltaics, biomass and biogas. The authors provide a detailed list of German companies operating in these sectors, analysing the effect of the energy transition on the renewables industries. In order to put this issue into context, a review of the perspectives of both European and German industrial policy is also provided. The study thus allows a broad first‐hand analysis from which the authors draw a number of reflections and final considerations in the final chapter. Given the importance of the energy transition and energy efficiency, a discussion of Germany’s position with regard to EU industrial and energy policies may be useful, offering relevant reference points for the future design of our energy and industrial policies. I would like to conclude by thanking the team that have prepared this study –Eloy Álvarez Pelegry, Iñigo Ortiz Martínez and Jaime Menéndez Sánchez– for their commitment and dedication to the work of the Chair. Energy Chair of Orkestra CONTENTS 1. INTRODUCTION .............................................................................................................. 1 I. POLICY 2. PRECEDENTS AND CAUSES .......................................................................................... 7 2.1. Precedents ........................................................................................................................... 7 Energy Documents 2016 2.2. Motivations. An initial approach ............................................................................. 13 3. THE POLITICAL CONTEXT AND THE GREENS ..................................................... 16 3.1. General political context ............................................................................................. 16 3.2. The Greens ........................................................................................................................ 18 II. ENERGY 4. ENERGY STRUCTURE .................................................................................................. 22 4.1. Energy. Primary and final .......................................................................................... 22 4.2. Oil .......................................................................................................................................... 26 4.3. Gas ........................................................................................................................................ 31 4.4. Coal. Lignite and hard coal. ........................................................................................ 35 4.5. Wind energy, photovoltaics and biomass ........................................................... 39 4.6. Electricity .......................................................................................................................... 42 III. ENERGIEWENDE 5. OBJECTIVES. VIEW AND IMPLICATIONS............................................................... 69 5.1. Basic objectives .............................................................................................................. 69 5.2. A vision for the future. Horizon 2050 ................................................................... 74 5.3. Key points for the Energiewende ............................................................................. 78 5.4. The cost of renewables ................................................................................................ 84 6. RELEVANT BASIC REGULATION .............................................................................. 88 6.1. Chronology of the main regulatory measures ................................................... 88 6.2. Actions in the regulatory field .................................................................................. 90 The German Energy Transition 6.3. Feed‐in Tariffs (FiTs) ................................................................................................... 96 7. ELECTRICITY PRICES ..............................................................................................