German Energiewende – A Great Piece of Work?

As a grand finale to the May-June Council hosting by the University of Mannheim, the last word goes to 4 Mannheim students, selected participants in the Council on Business & Society’s 2015 Boston Forum case competition.

About the authors

True to the motto “constant strokes fell big oaks,” Philipp Emig, Nicolas Leicht, Fynn Schreiber and Thomas Simon try every day to save energy and actively reduce their carbon footprint. They use their bikes and public transport to go to university, avoid unnecessary standby modes of many technical devices and replaced all their light bulbs in their apartments with energy-saving bulbs. All of them study in the fourth semester of the B.Sc. Business Administration program of the University of Mannheim and represent their alma mater in the student case competition at the upcoming International Forum of the Council of Business & Society in Boston in September.

The Energiewende – the pillars

The pillars of energy transition?

The pillars of energy transition?

‘A Great Piece of Work’ – this is the slogan under which the Federal Ministry for Economic Affairs and Energy mentions one of the largest projects referring to energy in Germany.

But is it really that great? To provide an answer to this question, we want to take a closer look on the goals of the German energy transition – the so called energiewende – how they shall be achieved and finally evaluate them.

Focusing on the German government’s objectives concerning this plan, it can be described as being based on two large pillars.

The first pillar is about producing the energy we want to use. In Germany today we still are relying largely on nuclear power plants, which contribute around 15% to our generation of electricity. However, this situation will have to undergo and is indeed currently undergoing a dramatic shift. This is due to the fact that in wake of the Fukushima disaster in 2011, Angela Merkel has committed to shutting down all of Germany’s nuclear reactors by 2022. Additionally, renewable energy, which contributed about 26% in 2014, is target of a massive expansion program and scheduled to account for 80% of the electricity supply by 2050.

The second pillar, on the contrary, refers to how we use our energy – namely Germany aims to boost energy efficiency in order to be able to reduce the emission of greenhouse gases by 90% by 2050. Here, the wish is to engage in modern technologies that make more of the energy we generate in order to minimize any energy wastage.

These main targets of the German energy transition are to be achieved by a huge package of actions including the following most critical and controversial of these.

offshore wind turbines in silhouette at twilight, square frame

The wind – decentralized and lean

To begin with, the energy supply of the future in Germany can be characterized by a decentralized and lean energy net, as opposed to the existing structure which is based on large net but with few power plants. Smaller wind farms and other forms of renewable energy shall provide the vast majority of our energy which of course have to be supplemented by some larger plants to ensure the security of energy supply. On the other hand the government has placed restrictions on the building of new houses and factories to ensure that only the most efficient technologies will be accepted and that businesses as well as citizens themselves will contribute to make Germany a more energy-efficient place.

The Challenges to business and society

In addition, the fundamental Fukushima U-turn led to the big challenge of how to establish a new and sustainable energy mix. Traditionally the German mix consists of a large fraction of fossil fuels, meaning coal and gas. In particular, the expanded usage of those as substitutes for the frowned upon nuclear energy, has led to a higher level of greenhouse gas and carbon emissions than before. This has two dangerous effects. Firstly, it questions the entire strategy of creating a new energy mix as a whole because it seems to fail one of its major objectives – reducing carbon emissions. Secondly, and related to that – when thinking in a global context – this has a negative psychological and signalling effect for other countries striving for an energy change and a concept for sustainable energy because Germany as a role model is unable to contribute to the climate target formulated in the Kyoto Protocol. Regarding the German government’s u-turn, many criticize that the decision appeared to be made hastily without any coercion to do so. Certainly it was a popular decision many Germans supported back in 2011. However, seen from an economic perspective it has endangered companies’ capacity for safe planning and overnight demolished a huge amount of economic potential. On the other hand, one could argue that the large energy companies have benefitted from governmental subsidies for many years without seriously caring about a nuclear exit.

Business, Society, and the Planet in our hands

Business, Society, and the Planet in our hands

So why do not simply change to renewables? They reduce emissions and are collectively accepted as something good; so it seems obvious. However, the problematic question is who will pay the price for this in a monetary as well as non-monetary sense. The second issue can be explained best by having a closer look at the resistance against the construction of wind parks. Even if the large majority of Germans generally accepts using wind energy, which is already the most commonly used and most important renewable energy source, those who are directly affected by wind parks living in direct neighbourhoods are up in arms. According to latest statistics approximately 1,000 action groups are currently engaging against the building of wind parks, which is just one of many complex issues to resolve in order to successfully implement the long-time energiewende project.

By Philipp Emig, Nicolas Leicht, Fynn Schreiber and Thomas Simon

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