*Lindsay Baxter, PEC Program Manager for Energy & Climate, recaps her third and final week studying energy policy in Germany as part of her three-week McCloy Fellowship in Environmental Policy through the American Council on Germany.*
As I wrap up 21 days of interviews and site visits in Germany, the greatest challenge I may face is how to summarize all of my findings.
Luckily, I have time to continue my research, synthesize my findings, and prepare a final report. So for today, I will offer just a few key themes based on the meetings and conversations I’ve had.
The thought that I keep having over and over again is “It all depends on what your goal is.” A key issue with Germany’s energiewende is that, while the feed-in-tariff has been exceptionally successful at growing domestic renewable energy production, the country has less success with reducing CO2 emissions. And by all accounts, if a goal is reduction of CO2, there are certainly more cost-effective ways to go about reaching the goal.
There could be multiple goals of our renewable energy and energy efficiency work in Pennsylvania such as job creation, energy independence, reduced electricity pricing, grid stabilization, not the least of which is CO2 reductions. Any energy policy should be crafted to achieve as many of these benefits as possible, but I believe it is appropriate to choose a primary focus. I believe the key goal must be reduction of carbon dioxide emissions to prevent further climate change.
When PEC produced its Climate Roadmap for Pennsylvania in 2007, it recommended adoption of a target of 80 percent CO2 reduction by 2050. A well-defined CO2 goal does not limit us, but rather empowers our state leadership to make good decisions about how to most cost-effectively meet that goal.
I’d like to think that my research is particularly timely as Pennsylvania develops its implementation plan to comply with the federal Clean Power Plan, which may include CO2 trading, incentives for renewable energy, and energy efficiency strategies. I hope that PEC will be able to play a role in these conversations and that I will be able to share lessons learned through this research.
A few additional key points:
- “Who learns from whom?” While we often think of countries like Germany as the leader (for good reason) from whom we can learn, many of the people with whom I met reminded me that there is much to learn from the United States. While renewable energy is more developed in Germany, smart grid technologies are further advanced in the U.S. A continuing cross-culture exchange can only benefit efforts in both countries.
- It is an oft-stated fact that flexibility will be the key attribute of the future electricity system, as both supply and demand will need to ramp-up and slow down. This continued to come up in my conversations with all parties. Policies must enable market-signals to reward flexibility.
- It is also no surprise that the desire for long-term certainty for investments came up. This, in large part, is why Germany’s feed-in-tariff has been so successful, as the tariff is locked in for a period of 20 years, providing a guaranteed return on investment for renewable energy projects. However, other aspects of the energiewende have lacked this same certainty. For instance, the exemptions from the renewable energy surcharges for energy-intensive industries are only good for a period of three to five years. Industries cannot make long-term investment decisions with the risk of being subjected to very high electricity surcharges.
- For better or for worse, the energy policies of Germany have had very real impacts on its neighboring countries, both on grid infrastructure and on electricity markets. Similarly, energy policies in Pennsylvania could have impacts on its neighbors that share the same grid in the PJM Interconnect. A piece of advice given time and time again is to collaborate with those neighbors (to the extent possible) in developing targets and policies.
- There have been worldwide effects resulting from Germany’s energiewende, perhaps most notably a sharp decline in the prices of renewable energy equipment, like solar panels. Again and again this came up, often being referred to, at times tongue in cheek, as “Germany’s gift to the world.” Imagine the impact an energy transition in the U.S., both larger and more energy-intensive than German, could have on renewable energy, and perhaps more importantly, battery storage technologies, across the world.
There is so much more I could share, but I have to save something for my final paper. In closing, this has been an incredible experience. I am grateful to the individuals who so generously shared their time and expertise (as well as schnitzel and bier!). I look forward to continuing a dialogue and perhaps even hosting some of them in Pittsburgh or Philadelphia in the future.
In closing, I offer my thanks to the American Council on Germany for the opportunity to engage in this Fellowship, and to my employer, the Pennsylvania Environmental Council, for its support of this research.
Mit freundlichen Grüßen,