Climate change and the future of U.S. and EU energy policy
On August 27, GMF and the Heinrich Böll Foundation (HBF) hosted the first in a series of cosponsored events on Capitol Hill regarding climatechange and the future of energy policy in Europe and the U.S. A group of more than twenty staffers from both the House and Senate were briefed by Mr. Wilson Rickerson, Principal at Rickerson Energy Strategies, and Dr. Christine Wörlen, Head of Renewable Energies at the German Energy Agency (dena).
The discussion focused on renewable energy policies in Europe and the United States, with a particular focus on Germany's successful Renewable Energy Law (EEG). Since 2000, Germany has doubled its share of renewable electricity, and achieved its mandatory target of 12.5% by 2010 in mid-2007. As the world leader in installed wind power capacity as well as the largest photo-voltaic (PV) market, Germany is poised to aggressively increase renewable energy production and decrease carbon emissions with upcoming revisions to the EEG. The broad goal is to increase its renewable energy share to 20% by 2020, with wind energy predicted to achieve parity with conventional power by 2015.
Both Dr. Wörlen and Mr. Rickerson cite EEG as the driver behind Germany's successes in transforming its energy landscape and stimulating renewable energy innovation. Particularly important is the system of feed-in tariffs under EEG, whereby renewable energy producers have the right to access the power grid and are guaranteed minimum rates for their energy for twenty to thirty years. Digression of the rates paid over time encourages eco-power producers to get online quickly, and increased rates for more expensive technologies rewards innovation. The burden of slightly higher energy costs is distributed evenly among consumers across the board.
On balance, the EEG has resulted in lower prices of electricity as more expensive power stations no longer need to cover demand, with 2006 savings estimated at € 5 bn. Other positive results have been the expansion of the renewable energy industry in Germany, with approximately 500,000 new jobs projected by 2020, and the avoidance of external costs associated with climate change, forest devastation, health consequences, and increased pollution.
Mr. Rickerson addressed the U.S. take on renewable energy as it relates to the European experience. In this energy context, the EU fits a role similar to the federal U.S. government, and the EU Member states to the individual U.S. states. Feed-in tariffs are the instrument of choice for Germany and most European countries, but there has been contentious debate over the relative merits of feed-ins versus Renewable Portfolio Standards (RPS), stemming from concerns over the effects of energy policy convergence across the EU. RPS has been more widely accepted as a tool by states in the U.S. as it is more market driven. However, Mr. Rickerson pointed out that the U.S. does have limited experience with fixed-price incentive structures and interest is growing among policymakers.
Both speakers emphasized that Germany's success should be instructive to the United States. The recent advances made in renewable energy in Germany are marked by the expansion of industry, increased efficiency, and innovation. Dr. Wörlen closed by noting that all this was achieved in a country the size of Wisconsin.