Germany

1
Germany
Energy Law Spring 2004

• Huzaifa Husain
• Volker Bergner
• Jamie Lipsey
• Onsiri Sodabanlu

2
Agenda

• Primary Sources and Energy Consumption
• Nuclear Phase Out
• Renewables
• Energy Policy
• Climate Change
• Supply Security
• Economic Efficiency
• Future

3
Primary Energy Consumption by Source
(CAGR -0.35)
1990
2002
Source Arbeitsgemeinschaft Energiebilanzen, own
analysis Note Electricity trade balance was
excluded
4
Primary Energy Consumption by Sector
2002
1990
Source Arbeitsgemeinschaft Energiebilanzen, own
analysis Note Electricity trade balance was
excluded
5
Electricity Generation by Source
CAGR -0.08
2002
1990
Source Arbeitsgemeinschaft Energiebilanzen, own
analysis Note Electricity trade balance was
excluded
6
Nuclear Phase Out

• Nuclear power makes up 30 of electricity
  generation
• June 11, 2001 Government and nuclear industry
  agree to phasing nuclear plants
• Each nuclear plant will be shut down after 32
  years in operation
• By 2021, Germany is scheduled to be nuclear-free
• Final repositories must be operational in 2030

7
Renewable Energies Potential

• Target Double renewables share by 2010
• No detailed targets for each renewable
• Main efforts wind power, solar energy and
  hydropower
• Governmental incentives spurred growth
• Utilities promote renewables to end-users
• Long-term potential 50 of electricity
  generation (2050)

8
Renewable Energies

• 1991 Electricity Feed Law (amended 1994)
• Forces utilities to buy all electricity from IPP
• Feed in price calculated as of retail
  electricity price
• 1998 Energy Industry Act
• Ceiling for quantity of electricity from
  renewables
• 2000 Renewable Energy Act
• Guaranteed feedin prices (cost-based) until 2020
• Sharing of burden among network operators

9
Energy Policy Objectives

• Environmental Compatibility Externalities
• Supply Security
• Economic Efficiency
• Nuclear Phase Out

10
Environmental Compatibility

• Energy Dialogue 2000
• Climate Change Mitigation
• Promotion of Energy Efficiency
• Continue use of Domestic Coal Lignite
• Promoting Renewable Energies
• Creating a level playing field for energy
  companies
• Creating more competition in energy market

11
Climate Change

• Centerpiece of Germanys Energy Policy
• Issues
• Nuclear power phase-out
• Coal subsidies
• Emissions Reductions Targets
• National Reduce C02 25 by 2005
• Kyoto Reduce greenhouse gases 21 between 2008
  and 2012

12
Climate Change Externalities

• Methods to Combat Climate Change
• Voluntary agreements with Industry
• Taxes
• Ecological Tax Reform, aka the Eco-Tax
• Motivation Theory of Two Dividends
• Limited impact on labor market
• Inefficient internalization of externalities
• Beneficial treatment for some energy sources
• Exemption rules for energy-intensive industries
• Tax-incentives for low-emission cars and houses
• Technology
• Renewables and Co-Generation

13
Supply Security

• Reduce import dependency by Promoting
• Indigenous Fossil Fuel
• Renewable Energy
• Energy Conservation
• Adequate Energy Infrastructure
• Market Liberalization
• Secure Domestic Production

14
Economic Efficiency

• Technical and Financial Support Project
• Industry
• Voluntary agreements
• Residential Building
• Regulatory measures
• Transportation
• Voluntary agreements
• Gasoline to Diesel in passenger vehicle
• Promotion of rail transportation

15
The Future

• GHG emission reductions on track
• Replacement of Nuclear energy will be a challenge
• Aspiring renewables growth goals
• Reduce coal subsidies
• Economic and social consequences
• Reform ineffective energy excise tax system
• Promote similar measures in EU and G7 countries