How did Germany Surpass the United States in Renewable Energy Development?

When I set out on my transatlantic climate fellowship I really wanted to understand what it was that had allowed countries such as Germany to surpass the United States at such lengths in terms of renewable energy development.  In addition, visiting a country such as the Czech Republic afforded me the opportunity to learn from a country more similarly situated, although advancing faster, than my home state of North Carolina.  In many of my discussions those who I spoke with were surprised to learn how unoptimistic I was at the possibility of policies similar to theirs, such as a feed in tariff, being implemented in North Carolina.  The differences I observed fell into three primary categories: Cost of Energy; Structure of Utilities/Baseload Needs; and Mandates from Above. 

Cost of Energy

North Carolinians enjoy a very low cost for their energy and keeping this cost low, regardless of the environmental impacts etc., has been a mainstay political item as well as a mandate to the Utilities Commission that regulates the investor owned public utilities in the State.  As a result, investing in renewables is cast as raising electric rates, a turn out that is unacceptable politically in the minds of many.  The low cost of electricity is also a reason that energy efficiency efforts may lag behind as well since the incentive to reduce consumption surely increases as the cost of energy increases.  This creates a vicious cycle that stymies renewable energy generation and investment.  As long as coal and nuclear remain the lower cost energy source, they will be preferred under the current system for electricity generation, thus investment that would lower the cost of renewables is not made the price remains high and the market becomes impenetrable.  While North Carolina does have a Renewable Energy Portfolio Standard, it is relatively weak (12.5% of which 5% can come from energy efficiency) and was passed with the blessing of the utilities in conjunction with granting the utilities better financing methods for coal and nuclear plants.

Structure of Utilities and Baseload Needs

Several of my discussions in both Berlin and Prague focused on the regulation of the utility sector.  The feed in tariffs in both Germany and the Czech Republic have guaranteed connection to the grid and long term contracts for small renewable energy producers.  Such a guaranty does not exist in North Carolina; in fact even net metering laws in North Carolina make it difficult for even an individual to recoup money from the utilities for energy from a solar panel on a House that puts electricity on the grid for example.  The structure of the utilities regulation as well as the rhetoric surrounding renewables is very different.  While no doubt the utilities are a massive force in both Germany and the Czech Republic, they do not appear to politically have the stranglehold locally that they do in North Carolina. 

My observations led me to believe that to defeat this in North Carolina there must be two things, first a mandate from above (discussed below) and second plain and simple – education.  Many legislators in North Carolina believe that renewable energy will not reduce carbon emissions at all because of the need to back up all renewables with baseload.  This belief stems from the utilities argument that because of unreliability renewable must be constantly backed up by coal or nuclear.  This clearly is not the case as evidenced by several towns in Germany and across the board emission reductions in Europe caused by renewable investment.  However, the simple fact that this is an untrue assertion does not take away its danger.  Education through the use of real life examples from areas where this argument was made in the past and proven to be false when renewables were invested in can be a strong asset in this fight.

Mandates from Above

One of the most difficult things to accept is the political reality that a policy such as a feed in tariff is nearly impossibility in North Carolina.  While other states have implemented such policies the fact of the matter is that the political heft that the utilities have over State politics simply makes the passage of such a policy a non starter.  When I discussed how these policies came to be in Germany and the Czech Republic it was clear that for such a policy to happen in the North Carolina it would need to be spurned by a Federal mandate.  The EU mandates are what really drove the implementation of the feed in tariff in the Czech Republic and the German prototype passed with small hydro in mind before the boom of renewables.  This kind of good fortune is not possible here since the secret is out and the utilities are well aware of what can be done using a feed in tariff now.  As I returned to my work on the State level in North Carolina in the weeks following my trip I have run into several cases in just the past few weeks where good quality renewable energy projects have had difficulty securing power purchase agreements from the investor owned public utilities.  This difficulty and uncertainty greatly disincentivises such projects and makes moving from traditional forms of electric production harder than it should be.  Local politics and special interests will not allow these policies to be implemented on the State level, especially when it is argued that they will put the individual State at a comparative economic disadvantage with other States.  Perhaps the greatest lesson I learned on the trip and in my several meetings was a renewed sense of urgency for the passage of a national mandate that would force States to act on a level playing field.

Education

Finally, the trip afforded me to see many different types of education on issues ranging from Baseload capacity and carbon offsets to simply educating the public about climate change. This remains a vital element of all climate and energy movements and seeing how other groups have embraced individual programs to educate the public or have addressed common arguments against policy, such as the statement that renewables do not reduce carbon emissions due to the need for Baseload back up, has greatly strengthened my ability to face these issues here.  Whether it be through the structure of the programs themselves or actual examples I can now speak intelligently to that disprove a statement, the transatlantic climate fellowship afforded me a great deal of education on issues and events I would otherwise not have been exposed to.

Dan Conrad is one of three 2010 Transatlantic Climate and Energy Fellows. Dan is policy analyst working with the North Carolina Conservation Network and can be reached at dan(at)ncconservationnetwork.org

This fellowship has been supported by European Commission. The EC is not responsible for the content of the fellowship’s research or findings.