Global Economics

German Green Tech Is Envy of the World


In a commentary, RWE Innogy CEO Fritz Vahrenholt says Germany's head start in cleantech is a huge asset, but a global climate deal is still essential

By Fritz Vahrenholt

The most important climate conference of the last decade can no longer fail. Even before the negotiations at the global summit in Copenhagen end, it's already clear that the meeting is a huge success for the human race: There is virtually no country left that seriously doubts the goal of limiting global warming to 2 degrees Celsius. The prospects for climate protection measures are better now than they've ever been. Almost all countries have announced plans to curb emissions in some form—apart from the oil-producing nations which would be the main beneficiaries if Copenhagen were to fail.

Admittedly, there's a lot of trickery and deception going on in the wrangling over how the burden should be distributed. The 17 percent emission cut pledged by the US by 2020 using 2005 as the baseline turns into a piddling 2 percent if the 1990 baseline year used by the Europeans is applied. China's figures too are only impressive at first glance: a 40 percent reduction, but only based on the fictional gross national product of 2020. In reality, the Chinese are announcing a massive increase in emissions. And Russia's promise of a 30 percent cut requires virtually no effort because they already saved much more than that in the course of their economic restructuring following the collapse of the Soviet Union.

Nevertheless, states now feel they have to name minimum targets. That alone is a big step forward. Copenhagen will increase the international pressure and force countries to start speaking the same language on climate change. Germany in particular is leading by example. Its pledge to cut CO2 emissions by 40 percent by 2020 relative to 1990 could serve as a model for other countries. In addition, Germany is one of the few countries that actually adhered to the Kyoto climate agreement—even if we did profit significantly in this respect from dismantling the industries of the formerly communist east.

German CO2 Cuts Alone Will Have Negligible Impact on Climate

Whatever Germany does to save CO2 will have virtually no impact on global warming. It makes no difference if Germany churns out 100 million tons of CO2 more or less in 2020 because China alone will be producing four billion tons more by then. China will also overtake Germany in terms of per capita CO2 emissions by 2020.

Germany's main contribution to solving the climate problem will be in the form of technological innovation. Our country already leads the way in developing machines and products that consume less energy, in carbon capture systems, in highly efficient wind turbines and ever-improving storage techniques. Apart from Danish firms, German companies are currently the only ones capable of building systems for large offshore wind farms. The Americans, Chinese and British can't do that.

The Danish stastician Bjørn Lomborg is wrong to claim that the age of renewable energies is still far off. The changeover to a new power technology takes around 30 years. That was true of nuclear energy and it's also true of alternative sources of energy. In the last 15 years, wind power has advanced to such a degree that we expect it will be able to compete directly with coal, gas and nuclear power in the coming years, without subsidies. If engineers develop new storage methods to balance out the weather-related output swings, wind power alone will enable us to reach our national emissions targets.

Minimizing CO2 Emissions Is the Primary Goal

Biomass is also close to being competitive with convential sources of energy. The decisive factor is what happens to the price of fossil fuels. Biomass won't need subsidies if oil prices exceed $150. Its potential is only limited by the amount of land available to grow the crops necessary to produce it. In Germany, fuel, electricity and biogas from our fields will soon account for f5 to 10 percent of our energy output. By contrast, the use of solar power will focus on solar heating in the coming years.

Inventions developed by German engineers are the envy of the world. But all the great inventions won't have an effect without an international emissions trading system. Only global emissions will lay the foundations for low-emission technologies to establish themselves everywhere on this planet. It is essential for our survival that we find the most effective and affordable way to reduce CO2. That's the only way we'll manage to halve CO2 emissions by 2050.

Hasty, expensive and showy measures such as light bulb bans, photovoltaic roofs in foggy Germany or hydrogen cars won't help to slow global warming. By contrast, an emissions trading system covering all sectors and regions would automatically encourage economies to take the most efficient steps to prevent CO2—insulating buildings, modernizing gas and coal-fired power stations, and the widespread installation of heat pumps.

But how will innovative technologies such as offshore wind parks, electric cars or fusion reactors be brought to market? Emissions trading alone won't be a sufficiently strong driving force. In order to give new technologies the push they need, we require the kind of development programs we devised in Germany with the Renewable Energy Sources Act under which the electricity user helps pay for the use of renewable energies. It's a successful model that has turned Germany into one of the world's most important markets for wind power. We lead Europe in terms of installed wind power capacity. Without the Renewable Energy Sources Act, there wouldn't be any multi-megawatt machines Made in Germany.

But the energy act has also provided false incentives that are costing us all a lot of money. German electricity customers pay €2 billion per year to promote photovoltaic systems—for a period of 20 years. In this way, a total of €40 billion is being wasted on silicon solar cells that will never competitively produce electricity in Germany. We will spend decades committing financial resources to building structures that won't help us protect the environment. This money could be far better invested and deliver a far greater reduction in CO2.

Wouldn't it make sense to invest in photovoltaic systems and solar thermal energy plants in regions where the sun shines three times more often and the cost of producing power is therefore three times cheaper? European electricity customers would surely be more willing to help finance the ambitious Desertec project to produce solar power in North Africa. It would also make much more sense to finally start developing storage solutions for weather-dependent wind power. One idea would be to get a large fleet of electric cars on the road as quickly as possible. They could be charged up with low-cost wind-generated power at night, a time when much of the power generated by wind turbines goes wasted.

Unfortunately, the German government hasn't set itself very ambitious goals in this respect. The planned number of one million electric cars by 2020 is too small. We mustn't close our eyes to any new visionary technology. The fusion reactor, for example, seems to have been completely forgotten; the government is doing far too little to support research in this area. Who is to say that it won't at some point become a key factor in solving our energy problems? The government's budget for funding energy research was halved in the 1990s to around €400 million. An industrial nation like Germany needs to do far more than that. We need a massive expansion of energy-related research without taboos.

A lot of financial resources will be required to solve these problems. Much too much money has been wasted on photovoltaic development. It's high times those funds were redirected at new and better future technologies.

The government was wise to discover nuclear power as a source of funding for the new technologies. Prolonging the running times for the nuclear reactors hated by so many will free up billions of euros for that purpose. In addition, reactors can be powered up and down far more flexibly than most other forms of power stations. That makes them a highly effective way to complement the weather-dependent wind turbines. Switching off nuclear power stations entirely endangers the expansion of wind power.

Once the threat posed by global warming is great enough, new alliances will emerge of which we can only dream of today. It's the job of governments to turn these dreams into reality.

Fritz Vahrenholt, a professor of chemistry, is the chief executive of RWE Innogy, a subsidiary of energy group RWE that operates wind farms and biogas plants. This commentary originally appeared on Spiegel.de/international/.


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