More bad news for Germany’s Energiewende this week. Angela Merkel received the annual report from her government’s Commission for Research and Innovation, and its conclusion was stark: “the Renewable Energy Law promotes neither climate protection nor innovation.”
The report states that although Germany’s share of electricity from renewable sources has risen from 7% when the law was passed in 2000 to 23% in 2013, it has come at too high a cost. Remunerations paid by consumers to subsidize the cost of renewables rose to 23 billion Euros in 2013 and makes up one-fifth of the cost consumers pay on their electricity bills.
Furthermore, the Commission rejects climate protection as a valid justification of the Renewable Energy Law. It explains that because industrial CO2 emissions are already capped in the EU’s emissions trading scheme, Germany’s build-out of renewables just moves emissions to other sectors or other European countries.
But does the law promote innovation into new renewable technologies? No again. The law guarantees a set price to renewable electricity suppliers to help them compete against fossil fuels, but this also means there is no incentive to innovate beyond the existing technologies. An innovator would earn the same amount as an existing supplier, but would have to bear all the related risk as well.
The authors of the report dramatically conclude that “a continuation of the Renewable Energy Law cannot be justified.” The questions remains how Angela Merkel and her government will respond to these findings. Her government has invested not only money, but political capital in the Energiewende and she is unlikely to abandon it. But momentum is building to dramatically reform the law to improve on these major shortcomings.
Read the full report (in German), or a summary in English.