Clean Energy Wire – Informed Comment https://www.juancole.com Thoughts on the Middle East, History and Religion Tue, 20 Oct 2020 05:32:28 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.15 Germany aims at becoming “pioneer” in CO2-neutral aviation https://www.juancole.com/2020/10/germany-becoming-aviation.html https://www.juancole.com/2020/10/germany-becoming-aviation.html#respond Sat, 17 Oct 2020 04:04:47 +0000 https://www.juancole.com/?p=193891 By Sören Amelang | –

( Clean Energy Wire ) – Germany wants to extend its landmark energy transition (Energiewende) to the skies to become a trailblazer in climate-friendly flying. At a roundtable with industry, unions, researchers and the federal states, government representatives discussed the future of the aviation industry, and emission-free flying was a central topic of the talks, in addition to the numerous support measures for the industry, the economy ministry (BMWi) said in a press release. It said the government already supported the transition with a significant top-up of existing research programmes, for example the implementation of the national hydrogen strategy, which “also benefits” the aviation industry, to “make Germany a technological pioneer in CO2-neutral aviation.”

Climate-neutral flying by 2050 is technically feasible, but will still require enormous research efforts and close cooperation between policy makers, industry and scientists, according to the German aeronautics industry and the country’s Aerospace Centre (DLR). “An energy transition in aviation with the goal of zero emissions is possible by the middle of the century and requires a comprehensive innovation push,” said the DLR in a press release accompanying a white paper drafted jointly by DLR researchers and the German Aerospace Industries Association (BDLI). The shift “will require a diverse mix of technologies with extensive developments in the areas of sustainable fuels, new configurations, battery and fuel cell technology as well as various hybrid propulsion solutions and new gas turbine concepts,” the DLR said.

DLR executive board member Rolf Henke said “it is now time to open a new chapter” in the industry. “Our ‘white paper’ shows the way to emission-free flying for the ‘Green Deal’ of aviation.” The transition will create high-tech jobs, promote social prosperity in Germany and Europe, and result in “fascinating products,” but still requires major research efforts, he added. “In particular, trial aircrafts will be an essential element in the areas of electric flying, hydrogen, new fuels and new aircraft configurations,” Henke said. BDLI vice president Reiner Winkler said his industry faced two unprecedented challenges simultaneously: the economic crisis triggered by the corona pandemic and the pending shift to climate-neutral flying.

The report says battery electric concepts are a promising option for urban air mobility and for regional aircraft for very short trips. “Aircraft with hybrid drive concepts based on fuel cells will replace today’s aircraft on short and medium distances,” the DLR forecast. For medium and long distances, sustainable fuels in combination with new gas turbine concepts offer the best potential, the centre said, adding that the direct use of green hydrogen is becoming a long-term focus. “In the long term, the use of turbo-hybrid electric drive concepts and even fuel cells is also conceivable on long-haul routes,” the DLR said.

Sören Amelang is a staff Correspondent for Clean Energy Wire. During his 15 years at the news agency Reuters, he wrote about international business, economics and politics. He was lead writer for Reuters’ German coverage of the financial crisis and the ensuing debt crisis in Europe. He holds a BA in Development Studies from Liverpool University and an MA in International Relations from the University of Sussex.

Via Clean Energy Wire

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1 in 4 New Cars in Europe will be Electric by 2025 – Study https://www.juancole.com/2020/09/europe-electric-study.html Sun, 13 Sep 2020 04:03:15 +0000 https://www.juancole.com/?p=193140 ( Clean Energy Wire) – One in four cars produced in Europe in 2025 will be fully electric, a study by the Chemnitz Automotive Institute (CATI) has predicted. The researchers say factories across Europe will churn out more than two million electric cars by the middle of the decade, more than half of which will be produced in Germany.

While the overall car market has been shrinking in the first half of 2020, to a significant extent due to slumping demand during the coronavirus crisis, the share of e-cars is rising and has now reached almost four percent of new registrations in Germany. “We currently see a scale-up of e-mobility, but this still happens with the brakes on. But this will be changing in the next two years,” the researchers argue, adding that carmakers urgently need an electric boom to stay below the EU’s CO2 emission limits to avoid heavy fines.

In 2019, about 276,500 e-cars were produced at 17 locations in eight European countries, and the researchers say there will be a doubling of capacity by 2022 at 35 locations in eleven countries. By 2025, Germany alone will produce about 1.1 million e-cars per year.

Germany already is Europe’s biggest car producer but the country’s famed automotive industry has suffered greatly from the ‘dieselgate’ emissions fraud scandal and the technological shift in the industry towards alternative engines, which many large carmakers have adopted in earnest relatively late.

Most carmakers now are preparing a huge increase in the sale of e-cars and the government hopes to bring ten million of them on the road by 2030. However, due to the pandemic’s economic impact and other more structural difficulties, the industry and especially supplier companies have called for direct state support to survive the current turmoil.

Via Clean Energy Wire

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Nearly 10% German New Car Registrations will be Electric this Year, up 130% https://www.juancole.com/2020/09/nearly-registrations-electric.html Sat, 05 Sep 2020 04:02:16 +0000 https://www.juancole.com/?p=192990 By Sören Amelang | –

( Clean Energy Wire) – The share of new electric vehicle registrations in Germany reached a new record in August. The number of new purely electric vehicles (BEV) rose 220 percent from last year, to 16,076 vehicles. Their total share is now 6.4 percent, the country’s Federal Motor Transport Authority KBA said in a press release.

Registrations of hybrid cars rose 130 percent to 46,188 vehicles, resulting in a share of 18.4 percent. Of these, 17,095 cars were plug-ins (PHEV) – an increase of 450 percent to a total share of 6.8 percent. Overall, new car registrations dropped 20 percent to 251,044. Forty-seven percent of these were petrol cars, and around 28 percent had a diesel engine.

The Centre of Automotive Management (CAM) forecast that 250,000 electric vehicles, which includes BEV and PHEV, will be registered in Germany this year – an increase of 130 percent which would result in a share of 8.9 percent.

“In 2020, electric mobility in Germany will benefit considerably from the federal government’s innovation premium, which has increased the price competitiveness of e-vehicles and also raised the acceptance of e-mobility,” said the institute’s head Stefan Bratzel. “However, the automobile manufacturers and the German government must ensure that plug-in hybrids make a positive contribution to climate and environment not only on paper but also on the road,” he added.

Recent tests by environmental NGO Environmental Action Germany (DUH) have revealed that many hybrid vehicles’ emissions can far exceed those stated by the carmakers when driven with a combustion engine. Many activists also lament that a large number of plug-in company cars are rarely driven in electric mode because users continue to use their company petrol credit card.

Via Clean Energy Wire

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Volkswagen Expects Electric Vehicles to Soar in wake of Pandemic https://www.juancole.com/2020/07/volkswagen-electric-vehicles.html Tue, 21 Jul 2020 04:01:06 +0000 https://www.juancole.com/?p=192149 By Alex Dziadosz | –

( Clean Energy Wire) – Volkswagen does not expect the pandemic to slow the introduction of its flagship e-car model ID.3, Carsten Germis writes in the Frankfurter Allgemeine Zeitung. The company’s e-mobility sales and marketing manager, Silke Bagschik, told the newspaper the coronavirus is “more likely to accelerate the transition to e-mobility” because of increased environmental and social awareness.

According to the article, there is already a waiting period of almost one year for the ID. 3. Customers in more European countries would be able to place orders from Monday onward,as markets such as the Netherlands and Norway were “unbelievably hungry” for the model, Bagschik was quoted as saying.

Since the revelation of its role in the dieselgate emissions fraud scandal, VW has embraced electric mobility more vigorously than most carmakers. Under its CEO Herbert Diess, it has started a major transformation in its business.

The ID.3, its first fully electric model, is based on a new vehicle platform and is supposed to be its door opener for the mass use of e-cars.

In March, it was reported that the mass production of the model was being hampered by various difficulties, including problems with the car’s software. Frankfurter Allgemeine Zeitung reported that despite a pandemic-related production stoppage lasting several weeks, VW expects to build “approximately” the planned 100,000 ID models from September—mostly including the ID.3s but also the ID.4, a fully-electric SUV.

They hope to deliver pre-orders from September to the over 30,000 customers who had already pre-ordered, the report added.

Alex Dziadosz, a journalist based in Berlin, has written for Harper’s, The Economist, Businessweek, The Financial Times, and Slate.

Via Clean Energy Wire

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Over Half of Germany’s Power Use in 1st Half of 2020 was from Wind and Solar, as Coal Sank https://www.juancole.com/2020/07/germanys-power-solar.html Mon, 06 Jul 2020 04:02:01 +0000 https://www.juancole.com/?p=191904 By Julian Wettengel | –

Renewables covered more than half of Germany’s power consumption in the first six months of 2020, according to a first estimate by think tank Agora Energiewende*. As coal use dropped and demand was low due to the coronavirus crisis and energy sector emissions fell significantly. Germany will most likely reach its original target of reducing greenhouse gases by 40 percent this year compared to 1990 levels. Agora Energiewende called for a massive renewables expansion to ensure emissions continue to fall even after the impacts of the pandemic come to an end. [CORRECTION: 2020 climate target is over 1990 levels.]

Onshore wind power generated more than 20 percent of Germany’s power in the first half of 2020.

The coronavirus-related drop in electricity demand, a slump in coal use and strong winds and long periods of sunshine have pushed the share of renewables to a record 50.3 percent of power consumption in Germany in the first half of 2020, think tank Agora Energiewende said based on a first analysis of prelimary data. Renewables produced 8 percent more power than during the same period last year, while lignite production fell 37 percent and hard coal a staggering 46 percent. German electricity exports dropped about two-thirds.

Economy minister Peter Altmaier called the high renewables share “good news for climate action” in a message on Twitter.

Agora Energiewende cited preliminary data showing that the energy sector significantly reduced CO₂ emissions – by 30 million tonnes of CO₂ – largely due to the pandemic’s effects on demand and power prices. Germany will “most likely” reach its original 2020 target of a 40 percent reduction in greenhouse gas emissions compared to 1990, think tank head Patrick Graichen told news agency dpa, confirming earlier estimates. Agora Energiewende warned, however, that this was no climate policy success and that emissions could rise again. In order for emissions to fall permanently, many wind and solar plants would have to be built, the think tank said. However, the wind sector in particular remains sluggish. The latest rounds of tenders for new wind power plants on land were again massively undersubscribed.

The economic crisis caused by the coronavirus pandemic will sharply slow economic activity and the associated greenhouse gas emissions in Germany. The wide range of current economic forecasts is making detailed predictions for CO₂ output difficult. However, economists say comparisons with the 2009 recession can provide some early indications of where emissions might be headed, and Germany may now well exceed the government’s original 2020 target of a 40 percent emissions reduction compared to 1990.

Meanwhile, the impact of the coronavirus on the German electricity sector is far from over, writes Frankfurter Allgemeine Zeitung. Weekly electricity consumption has remained about 10 percent below 2019 levels, with only some ups and downs but no recovery, according to data from energy industry association BDEW. “This reflects that in many areas of industry – the largest sector of electricity consumption – production has not yet resumed at the usual level,” the BDEW said.

Germany reaching its 2020 target is “remarkable”, especially because the ambitious climate policy has not left the country worse off, Mojib Latif, head of marine meteorology at the Helmholtz Centre for Ocean Research Kiel, told weekly magazine Der Spiegel. It could thus serve as a role model. However, on a global scale, climate action is still insufficient, the climate researcher said. The coronavirus crisis offers the opportunity to introduce the systematic change necessary for sustainable greenhouse gas reductions, he added. “Whether the coronavirus crisis helps in the long run depends on us.” As one of the world’s strongest economies, Germany could lead a “coalition of the willing” on ambitious climate action that bets on renewables, digitalisation and new business models, he said.


Graph shows German power mix in H1 2020. Source: Agora Energiewende. Source: Agora Energiewende.

Coal increasingly under pressure – Öko-Institut

The share of renewables in power production, meanwhile, was at about 49 percent in the first half of this year. They generated about 126 billion kilowatt hours electricity from January through June, with almost 60 percent coming from wind turbines and 20 percent from solar power, dpa reported based on data from utility E.ON.

Natural Gas production increased by 11 percent and gas plants are “on the brink of” producing as much electricity as coal plants, said Agora. Coal production fell by 40 percent compared to the first half of 2019, and was responsible for less than one fifth of German power production, said Agora.


Graph shows changes in German power generation in H1 2020, compared to H1 2019. Source: Agora Energiewende. Source: Agora Energiewende.

At the end of last week (3 July), German parliamentarians werescheduled to vote on the coal exit law, ending a two-year process that started with a multi-stakeholder commission recommending the closure of the last coal power plant in 2038 at the latest. The legislative draft stipulated more than 4 billion euros in compensation payments for lignite operators and early shutdown remuneration for hard coal plants, to be decided in auctions.

Researcher and environmentalists have said that the proposed legislation would not prevent an earlier exit from coal should market conditions turn coal plants uneconomical. Low gas prices and high CO₂ prices in the CO EU Emissions Trading System (ETS) have caused a slump in coal use in Germany.

“Coal power production, including lignite, is under increasing pressure,” said the Institute for Applied Ecology (Öko-Institut) in an analysis seen by Clean Energy Wire. While Germany’s remaining lignite units have largely generated constant amounts of electricity over the past years, production has “significantly declined” since autumn 2019. The institute expects the current development to continue in view of such determining factors as low gas prices, lower power demand, more renewables and CO₂ prices. The trend is likely to intensify over the next 10 years, due in part to the proposed European Green Deal, which would likely entail a strengthening of the ETS.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.

Julian Wettengel is a staff Correspondent for Clean Energy Wire. Before joining the team, he served as a parliamentary assistant to the Chairman of the Foreign Affairs Committee in the European Parliament. In this role, he was responsible for the preparation of speeches, articles and briefings for the chairman. Prior to his time in Brussels, he supported a professor at the George Washington University as a research assistant. Julian has also worked for a number of TV productions as camera assistant, sound operator and researcher. He holds a Master’s degree in political science from the University of Kiel.

Featured Photo: Photo shows wind turbines in Brandenburg, Germany in the sunset. Photo: CLEW/Wettengel 2020.

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How the Coronavirus could be a Climate Game Changer if it shifts 30% of Jobs Online https://www.juancole.com/2020/06/coronavirus-climate-changer.html Sat, 13 Jun 2020 04:02:50 +0000 https://www.juancole.com/?p=191479 By Sören Amelang | –

( Clean Energy Wire) – The coronavirus pandemic has boosted digitalisation because it forced many people to do without business trips, work remotely and shop online, which offers new opportunities for climate protection, according to analysis commissioned by Germany’s environment ministry. “We are experiencing a break with many routines we had before corona,” said environment minister Svenja Schulze. “Nobody wants life to stay the way it was during the pandemic. But some new routines we should maintain, because they serve the environment and quality of life.”

The analysis conducted by the think tank Wuppertal Institute for Climate, Environment and Energy and the consultancy EY says it appears plausible that 25 to 30 percent of all jobs can be done remotely. “It seems realistic that in the long run 10 percent of all commuter traffic can be replaced by an expansion of the home office and 30 percent of all business trips by virtual meetings,” the report says. “Overall, this would lead to an eight percent reduction in passenger traffic. The possible reduction in office space that is expected from EY real estate experts could also create new potential for the design and use of urban areas in the long term.”

Online transactions increased up to 60 percent during the pandemic, but many consumers searched in vain for regional and local online choices, the researchers found. They said this trend offered an opportunity to stabilise investments in regional value chains and to use the momentum for structural change to reduce emissions. But the authors also say the significant increase in data traffic underlined the need to reduce emissions in the sector. “The surge we’re seeing in data traffic is just a harbinger of more. We need energy-efficient data centres and climate-friendly cloud infrastructures for administrations and companies,” Schulze said.

Greenpeace Germany head Martin Kaiser called on the government to speed up the energy transition in the face of this digitalisation trend. “Only if the growing electricity needs of a digital economy can manage without climate-damaging coal as early as 2030 and is increasingly covered by sun and wind will people and nature benefit from this development.”

Sören Amelang is a staff Correspondent for Clean Energy Wire. During his 15 years at the news agency Reuters, he wrote about international business, economics and politics. He was lead writer for Reuters’ German coverage of the financial crisis and the ensuing debt crisis in Europe. He holds a BA in Development Studies from Liverpool University and an MA in International Relations from the University of Sussex.

Via Clean Energy Wire

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New German Coalition Gov’t Turbocharges Renewable Energy https://www.juancole.com/2020/05/coalition-turbocharges-renewable.html Sat, 23 May 2020 04:02:58 +0000 https://www.juancole.com/?p=191055 By Julian Wettengel | –

( Clean Energy Wire ) – The German government has agreed to remove key hurdles to the rollout of renewable energies that had begun to slow the country’s landmark energy transition. The deal between chancellor Angela Merkel’s conservative CDU/CSU alliance and its coalition partner, the Social Democrats (SPD), settles disputes over minimum distances between wind turbines and nearby settlements, as well as support payments for solar power installations. The agreement followed many months of political wrangling that had triggered increasingly desperate calls by the affected industries and energy experts. Energy associations welcomed the compromise, but environmental activists called it a “bad compromise”.

Germany’s governing parties have ended months of wrangling over the future course of renewable energy expansion in the country by agreeing on minimum distance rules for wind power and abolishing a cap on solar power support. The agreement removes key hurdles to the renewables rollout seen as necessary for reaching the country’s climate targets. The compromise by chancellor Angela Merkel’s CDU/CSU alliance and the Social Democrats (SP) now largely leaves it to the country’s 16 states to decide whether they want to introduce such minimum distance rules of up to 1,000 metres from residential areas or allow construction at shorter distances. The support cap for solar power, on the other hand, would “promptly” be removed altogheter.

“Today is a good day for the energy transition, for climate action and in terms of an important economic contribution to overcome the coronavirus pandemic,” said economy minister Peter Altmaier at a press conference.

German environment minister Svenja Schulze told Spiegel that the agreement is a milestone that paves the way for the country’s coal exit. In a message on Twitter, the minister said the deal “will give renewable energies the necessary boost.”

The dispute about wind power distance rules and the solar cap had been going on already for several months before the coronavirus crisis further slowed down the legislative progress. Resolving both hurdles is key to enabling Germany to expand renewables to reach the government’s target of 65 percent in power consumption by 2030, laid out in the 2019 climate package.

Expansion of onshore wind power, the German energy transition’s most important power generation technology, fell to the lowest level in 20 years in 2019, mainly due to regulatory hurdles and local opposition. To ensure more acceptance by residents, the government’s climate cabinet last year had decided to introduce minimum distance rules from the nearest settlement and provisions that allow municipalities to receive part of the profits from wind parks. But critics immediately said the introduction of a nationwide minimum distance rule for wind turbines would have brought expansion to a standstill and would endanger the energy transition.

Under the agreement, the coalition aims to put a provision in the building code that will enable states to introduce minimum distance rules of up to 1,000 metres to nearby homes. “This will increase acceptance in the population,” said minister Altmaier. The states now have to decide on the details of the rules individually, such as how many houses constitute a settlement – a point of contention among the government partners that greatly contributed to the delay.

The solar power support cap was put in place in 2012 due to worries that costs of the technology would skyrocket. Introduced before costs for solar power started to plummet considerably over the last years, the cap stipulated that smaller new facilities – those up to 750 kilowatt capacity, which do not have to participate in auctions for renewables support – would cease to receive remuneration under the Renewable Energy Act (EEG) once total solar capacity across Germany reaches 52 gigawatt. The industry expects this to happen by mid-2020, and had warned the cap would threaten further expansion. Altmaier said the removal of the cap would be attached to a legislative text already in parliament to speed up the process.

The government partners also agreed to introduce better coordination between the states and the federal government to continuously monitor progress on the path to reaching the 2030 renewables target (65% of power consumption). And they agreed to speed up planning and permitting processes for energy projects. “Especially in light of the coronavirus crisis we see the need to speed up investments,” said deputy parliamentary group heads Carsten Linnemann (CDU/CSU) and Matthias Miersch (SPD) in a joint statement. Core elements would be digitalisation of the processes and the early participation of citizens.
A “month-long deadlock has come to an end” – energy industry welcomes agreement

Energy industry association BDEW commented that a “month-long deadlock has come to an end.” The “cutting of the Gordian knot” had been urgently necessary for the further successful expansion of renewable energies and thus for climate protection, the lobby group said, adding that it now was up to Germany’s states to take advantage of the clause that allows them to deviate from blanket minimum distance rules. The BDEW said the decision also signalled a much-needed boost for business confidence in the renewables sector that could play an important role in overcoming the imminent recession due to the coronavirus pandemic.

The German Renewable Energy Federation (BEE) likewise welcomed the deal as an “overdue signal” for companies which want to invest in renewables. The immediate removal of the solar support cap averts the looming standstill for PV expansion, said BEE. “Thousands of jobs will be secured and important investments will be triggered, which can serve as an economic engine especially in the coronavirus crisis.” BEE also said that the wind distance rules leave enough leeway to the states to “re-ignite” expansion.

Carsten Körnig, head of solar power association BSW Solar, said the agreement had to become law as early as next week to “ensure that the solar cap is removed just in time.”
“Much ado about nothing”

However, not all reactions were positive. Sascha Müller-Kraenner, managing director of Environmental Action Germany (DUH), spoke of a “bad compromise”. The impasse on the solar support cap had already caused damage in the solar industry and blanket distance rules – even on a state level – do not increase acceptance, but make wind park construction more difficult, he said.

Friends of the Earth Germany (BUND) said the agreement was “much ado about nothing”. It represented a step in the right direction, but fell short of what is necessary. “A real breakthrough would have been a comprehensive reform of the Renewable Energy Act [EEG] which stipulates ambitious expansion targets and paths for solar and wind energy,” said the NGO’s Antje von Broock.

Via Clean Energy Wire

Featured Photo: Photo shows wind turbines and power lines and flowers in Germany. Photo: CLEW/Wettengel 2020. Photo: CLEW/Wettengel 2020.

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Coronavirus Effect: In One Year, Share of Coal in German Public Power Supply Cratered to 16% from 30% https://www.juancole.com/2020/05/coronavirus-effect-cratered.html Sun, 17 May 2020 04:02:20 +0000 https://www.juancole.com/?p=190931 By Freja Eriksen | —

( Clean Energy Wire) – Coal’s share in Germany’s net public power production fell to around 16 percent in April 2020, shows data by Fraunhofer ISE’s Energy Charts. The institute’s Energy Charts project does not include data on the amount of power the generating facilities consume themselves to operate, or the power German industry produces and consumes without it being fed into the public grid. Fraunhofer ISE says their data represents the power mix that actually supplies German homes.

The country’s fleet of hard coal power plants is largely lying idle while lignite plants are mostly running with one unit per site in order to secure heat supplies, writes Jakob Schlandt in the energy and climate newsletter Tagesspiegel Background. Lignite plants produced around 4.31 terawatt hours of electricity and hard coal plants around 1.31 TWh out of 35 TWh total power production.

In April 2019, coal’s share amounted to about thirty percent. Low power demand due to the coronavirus and high generation from renewables has pushed coal out of the market, while carbon allowance and hard coal prices did not fall enough to compete with low gas prices, Mirko Schlossarczyk, partner at consultancy Enervis told Tagesspiegel Background.

In April, renewable electricity production repeatedly exceeded power demand in Germany. Data provided by Germany’s Federal Network Agency (BNetzA) showed that power generation by wind, solar, hydro and bioenergy installations exceeded demand on at least three days – on each occasion for several hours around midday.

All texts created by the Clean Energy Wire are available under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)” .

Via Clean Energy Wire
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Climate after corona: Germany’s green stimulus package could boost the economic recovery https://www.juancole.com/2020/04/germanys-stimulus-economic.html Sun, 12 Apr 2020 04:02:54 +0000 https://www.juancole.com/?p=190249 By Benjamin Wehrmann | –

( Clean Energy Wire ) – The coronavirus crisis is driving many economies around the globe into recession, leading policymakers to draw up unprecedented spending plans to cushion the impact and enable recoveries. Activists, environmental think tanks and others warn that battling the economic slump must not come at the expense of fighting climate change. Many even see an opportunity to reset the economy on a more climate-friendly path with “green stimulus packages” that align spending with emissions targets – for example by investing in sustainable infrastructure, or tying company bail-outs to commitments to decarbonise. But the pandemic has already made climate policy a lower priority for governments and the public in Germany and across Europe. Calls to loosen emission regulations to boost economic activity are growing louder, setting the stage for intense debates in the months to come.

A false dilemma: Climate action and the economy after the coronavirus

Policymakers, economists and environmentalists are gearing up across the globe to get plans in place to kick-start the hard-hit economy in the wake of the corona crisis with hundreds of billions in climate-friendly stimulus. While some climate activists and energy transition experts see this as a golden opportunity to drive urgently needed investment in low-carbon technologies, many also fear that money will rather flow into old industries, as lobby groups and politicians are calling for relaxed rules to ease businesses way back to normality.

Policymakers are scrambling to contain the lung disease COVID-19 that is caused by the virus and limit economic damage, with drastic lockdown measures stopping public life and letting industrial production largely ground to a halt in dozens of countries at once. Many nations have quickly announced unprecedented economic support packages, raising concerns that the response to the crisis could undermine other policy aims. How the money forked out is invested could determine the success of decarbonisation efforts long after the pandemic has been overcome.

So-called green stimulus packages are seen as a way to ensure that climate action doesn’t fall prey to the pandemic, but emerges from it stronger than before. They could speed up investments that would have become necessary anyway over the course of the next decade, as Germany gradually phases out both nuclear and coal power and boosts the number of electric cars on the road. Also, they do not need to invent solutions from scratch, but can focus on sectors where environmentally-friendly alternatives are widely applicable already.

Potential road maps for investment already exist, including Germany’s Climate Action Programme and the EU’s Green Deal. Both plans touch upon almost all facets of economic activity, offering many options for policymakers to draw on when designing a long-term recovery plan. As Europe’s largest economy and its most important industrial location, Germany’s handling of the false dilemma between economic stability and decarbonisation will have a large impact on how well the region can launch a successful recovery in line with climate targets. Environment minister Svenja Schulze sought to give assurances that climate action will not fall behind in the crisis, saying any recovery package should be based on the goal of “creating an economy that completely rests on renewable energy sources.”

“The climate policy ambitions formulated by the government in the context of its Climate Action Programme should not be relaxed even in the current situation,” Karen Pittel, head of the ifo Centre for Climate, Energy and Resources in Munich told Clean Energy Wire. She said short- term support measures taken after the 2008 crisis to keep small and medium-sized companies afloat could also prove helpful in the coronavirus crisis, but should only be carried out in line with long-term goals like climate policy.

She warned that denigrating the importance of climate projects could send a dangerous signal to industries that often have to plan years ahead as they decide whether to invest in building renovations or other energy-related measures. This could prompt emissions to bounce back at even higher levels, and could make it even harder or more expensive to reach climate targets while hampering the long-term economic recovery, Pittel said.
Climate on the backburner

Several states have already called for putting climate policy on the back burner, arguing that projects like the Green Deal pose additional obstacles to economic recovery. Likewise, industry associations have said tighter environmental standards could hinder their ability to react to the coronavirus crisis, calling for a relaxation of some regulations.

The pandemic is disrupting what was supposed to be a crucial year for climate action and has driven climate action from the top of policymakers’ priority lists, potentially disrupting the climate-friendly transformation of critical sectors. The postponement of the COP26 UN climate summit to 2021, along with many other climate-related events, could also reduce the sense of urgency in international climate diplomacy.

In Germany, the coronavirus has halted progress on some of the country’s most important climate policies, including the completion of the coal phase-out law, the introduction of carbon pricing, and urgently needed reforms to renewable energy policies. Thomas Bareiß, conservative state secretary in the economy ministry, rejected any criticism that the government is not moving fast enough to resolve key issues blocking solar and wind power expansion, arguing that there are “more urgent” matters to deal with.

Other conservatives called for suspending the aviation tax planned in Germany’s Climate Action Programme for at least one year, while ro-business party FDP questioned the introduction of a national price on carbon emissions in heating and transport, a core element of the country’s future climate policy. An op-ed in the conservative German news magazine Focus called environmental policies an “eco-luxury” and “money-burning mega projects” that would consume funds needed for “the truly important things.”

At the European level, a Polish government official called for removing the EU emissions trading scheme (ETS) while Czech Prime Minister Andrej Babis said the European Green Deal should be scrapped altogether, as attention should be focussed on the coronavirus instead. US President Donald Trump, meanwhile, called the idea to include environmental aims in recovery packages “ridiculous,” arguing they play no part in getting people back to work again.

Political support for climate action could also decline in the wake of the virus, driven by those voices who say there is no room to focus on anything except a swift economic recovery. There is a precedent for this: after the financial crisis in 2008, climate change as a topic dropped steeply in importance during debates in Germany’s parliament and would not bounce back to pre-crisis levels for almost ten years.
Climate change (blue) as a debate topic dropped steeply in the German parliament in the wake of the financial crisis (red). Source: Zeit Online
Climate change (blue) as a debate topic dropped steeply in the German parliament in the wake of the financial crisis (red). Source: Zeit Online
Corona crisis could be “unprecedented opportunity” for low-carbon technologies

But the International Energy Agency (IEA), has said that after immediate needs are met, the pandemic response could in fact become an “unprecedented” opportunity to steer investments into long-term economic recovery strategies based on decarbonisation. It’s an approach the German government seems to be embracing.

German Chancellor Angela Merkel said Europe will need an ambitious recovery programme after the coronavirus crisis, signalling that Germany is ready to “do its share” to achieve an internationally-coordinated economic revival once the “hardest part” of the crisis is over. “At the same time, we need to do the right thing regarding climate action, which has not disappeared as an issue,” Merkel assured. Finance minister Olaf Scholz said a stimulus package oriented toward international climate targets and Germany’s goal of becoming carbon neutral by 2050 would “make sense,” as soon as the most pressing phase of the pandemic has ended.

A green stimulus package would combine crisis spending to restart the economy with environmental goals in mind. Proposals include clean energy tax credits, requirements that bailed-out industries like airlines commit to emissions cuts, and investments in green infrastructure, among many others. This approach could both ensure that climate action is not neglected during the crisis, and help Germany stay competitive in energy transition technologies, a sector that could be worth about 23 trillion dollars by 2030, according to the World Bank.
Germany’s GDP and emissions both bounced back after the 2008 crisis – but energy transition investments allowed economic growth to decouple from CO2 output.

Germany’s GDP and emissions both bounced back after the 2008 crisis – but energy transition investments allowed economic growth to decouple from CO2 output.
Traditional stimulus programmes bound to fail this time

Depending on how long governments must keep lockdown measures in place to slow the virus’ spread, the economic damages could far outstrip the 2008 financial crisis. Germany’s Council of Economic Advisors (Wirtschaftsweise) estimated that the country’s gross domestic product (GDP) will shrink by up to 5.4 percent this year due to worsening credit conditions for companies, investment reluctance, supply chain disruptions, and greatly diminished household spending. Economic research institute ifo said that each additional week of lockdown measures will slash GDP by up to 1.6 percent. The European Central Bank (ECB) estimated the Eurozone economy could shrink by up to 10 percent in 2020.

Many countries quickly embarked on unprecedented economic support programmes to cushion short-term impacts and avoid long-term damage. In a first reaction, the German government set up a “protective umbrella” worth 600 billion euros and a supplementary budget worth 156 billion euros, 50 billion of which are reserved for supporting small businesses and the self-employed. These figures will likely be increased if lockdown measures and other obstacles to economic activity persist.

The European Commission has said its next long-term budget will be a new “Marshall Plan,” modelled after the far-reaching stimulus packages that rebuilt Europe after the Second World War. Meanwhile, the ECB announced a 750-billion-euro pandemic emergency programme to buy up bonds and securities to avoid defaults in the Eurozone. Supplementary provisions made by the European Commission will allow member states to bypass fiscal discipline rules – a relaxation long considered a red line by countries with reputations for thrifty monetary and economic policy, such as Germany.

But traditional stimulus measures aimed at providing short-term jolts to economic activity are likely to fail this time due to the concurrent collapse in both supply and demand caused by the lockdown measures, Germany’s economic advisors said. However, they stressed, households and businesses alike would benefit from “early announcements” on how the economy is supposed to get going again after constraints imposed during the pandemic have subsided.
Green boost for a post-pandemic rebound

While the social lockdown and industrial shut-downs are set to cause a significant drop in greenhouse gas emissions in 2020, experts expect CO2 output to bounce back in the eventual recovery. Think tank Agora Energiewende* estimated that Germany’s 2020 CO2 output will probably fall by up to 15 percent this year. However, the think tank warned that this is likely to be a one-off event, and emissions will spike again once the economy recovers.

The same was true in the wake of the global financial crisis: after dropping by 1.4 percent in 2009, global emissions jumped 5.9 percent in 2010 while the fossil-fuel intensity of the world economy increased. Depending on the speed with which economic activity resumes after the corona crisis, the apparently inevitable 2020 recession could be followed by a rapid rebound next year, with GDP growth nearing five percent, Germany’s economic advisors said. Climate-friendly projects could fall short in the recovery if uncertain investors rattled by the economic collapse shy away from in renewable power sources, energy-efficient buildings or low-carbon industries.

From the onset of the lockdown measures, environmental groups and energy market professionals therefore called for a forward-looking approach to government support for struggling businesses and initiate much-needed transformation across all sectors. “Amid the corona crisis management, we should not forget much bigger challenges for our civilisation,” Germany’s environmental agency UBA warned.

Global warming, resource depletion and the loss of species already put a strain on global ecosystems, the agency said, but added that the crisis response also offers a chance to review traditional business practices and aim for “a more sustainable and future-proof restart.” UBA head Dirk Messner argued the coronavirus has proved that structures and behaviour that seemed immutable can in fact be altered rapidly if people accept the necessity, a lesson that could be very valuable in the much more long-term response to climate change.

Agora Energiewende proposed an investment programme worth 100 billion euros to simultaneously tackle emissions reduction challenges across different sectors and quickly encourage activities in construction, heavy industry and renewable energy production. Environmental group Germanwatch cautioned a stimulus package should be designed jointly by Germany’s so-called climate cabinet, a group of ministers responsible for climate-relevant policy areas, rather than by the economy ministry alone.

Germany could do a lot to help make the European Green Deal a template for the EU’s economic recovery plan, ifo’s Karen Pittel said. The government could push for a swift and non-bureaucratic implementation of investment incentive programmes or forge its own alliances in the energy and transport sector. The economist warned individual companies will have a hard time deciding whether to aim for short-term security or long-term stability with regard to climate-related investments, and so the onus is on the government to provide “Policymakers have to give a clear signal for climate policy,” she argued.

Via Clean Energy Wire

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.

All texts created by the Clean Energy Wire are available under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)” .

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Bonus video added by Informed Comment:

EU Debates: “EU Commission: Covid-19 increases urgency of spending on Green Deal transition #JustTransitionFund”

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