What is holding Germany back in the energy transition?
In my view, a sufficiently strong impetus must come from the CO2 price. A start would be for there to be a CO2 price for everything. At the moment, there is only a market price for the electricity sector and energy-intensive companies. In the industry, transport and building sectors, the government is working with a fixed price that will rise over the next few years. At the same time, there are sector savings targets that will not be achieved with these fixed prices. Regulatory action is being taken here. This makes it confusing and leads to distortions. Why should there be different prices for CO2? Regardless of whether the CO2 comes from heating, cars or electricity generation: there must be a price and it must be consistently structured in such a way that the savings targets are achieved. This would create incentives to reduce CO2 emissions everywhere and for everyone.
This would make electricity and heating more expensive – is that politically feasible?
The state would also have revenue from the CO2 taxes, which would give it the opportunity to use this revenue in a targeted manner. In my view, pots should be formed: for social compensation, for transformation processes in the economy and for sustainable infrastructure investments. The pot for social equalization could, for example, transfer an equal amount to every person registered in Germany. If a smaller home with several people has a small additional expense for CO2 levies and at the same time receives income from the levy, this household is even better off. A large house with high energy consumption and few residents will spend more than it earns. In both cases, however, there is an incentive to save energy and reduce CO2 emissions.
Higher CO2 taxes are of course difficult for companies that consume a lot of energy and want to survive on the global market. How do we get them on board?
About the level playing field idea. We need to take a look: Where and against whom are these companies competing? They have two groups of competitors. On the one hand, there are the traditional competitors. There are home games and away games. In home games in Germany or Europe, the companies are not only competing with other Europeans, but also with competitors from countries with no or only low CO2 taxes, for example the Indian steel producer. I like to compare free CO2 emissions with unwanted doping. In order to create fair conditions here, the Indian steel producer has to pay a CO2 doping levy for doping in the production of its products that it wants to import into Europe. This process is called CBAM (Carbon Border Adjustment Mechanism) and is currently being prepared in the EU. Of course, it is also important to ensure that non-European suppliers do not use resource shuffling to feign clean production. The company must operate cleanly overall. Doping for away games – i.e. free CO2 emissions – is of course also undesirable there. The CO2-free products that are sold from Europe to the rest of the world should nevertheless remain competitive there. There would therefore have to be a refund or something similar for exports in order to create a level playing field. Europe must speak the same language here and adapt international trade rules to the new reality of climate overheating and the fight against it.
And what is the second competitor?
Substitute products. If a material with high CO2 emissions and therefore high costs can be replaced by another material with lower costs in the future, this is definitely desirable. The CO2 price provides impetus, environmentally friendly materials become more economical. It must be more attractive to rely on solar energy than on coal, for example. It must be worthwhile to design your own products in such a way that they produce less CO2 during production. Ignoring the economic follow-up costs is simply no longer an option.
Which three points should the new federal government tackle first?
With regard to the solar industry, the first is the EEG surcharge. The EEG levy on self-consumption must be abolished. This applies not only to your own roof, but everywhere. If I generate clean solar energy on my own land, this responsible action must not be penalized. If I feed the electricity into the grid, I have to pay for grid usage, that’s right. After all, I am using the grid. But the electricity I consume myself must be exempt from the EEG levy. Incidentally, the exemption should not only apply to self-consumed electricity, but generally to electricity generated close to consumption, e.g. when Kurt Meier PV GmbH supplies electricity to Kurt Meier Schreinerei GmbH in the building below. The second important point is that the federal government’s expansion targets must be significantly increased – to at least 20 GW/a. At the same time, the tariff degression must be adjusted. What do I mean by that? The current regulation is as follows: there is an expansion target, which until recently was 2.5 GW. The more this target is exceeded, the more the remuneration decreases. Now this limit has already been raised and around 5 GW/a is being added, with the result that the remuneration rate is already falling very sharply. The target value and thus the reference value for degression must therefore be adjusted to 20 GW. In order to achieve the right basic speed, we must now adjust the remuneration once in a noticeable step and then let the breathing cap work in accordance with the established processes.
The third important task is to open up the area and speed up the approval processes. If we want to achieve the transformation we need, we have to prioritize the big goal over the smaller sensitivities. In order to achieve the urgently needed expansion in the little time we have, we could, for example, reverse these processes. At the moment, the federal government says that the federal states can specifically release areas. That is an opt-in variant. Some people may be familiar with this from the data protection discussions on websites. In order to release an area now, the municipalities have to be heard. This leads to lengthy processes. An opt-out variant would be better, in which many land categories are approved per se for solar expansion throughout Germany and then the federal states are given the freedom to actively restrict these areas. In this case, the federal states themselves would have to argue why certain parts of their land should not be usable, which would rarely be the case.
What role does globalization play in this?
Because we have allowed globalization to continue unchecked – and I am by no means against globalization – over 90 percent of global production of solar cells and modules has shifted to China. This makes the industry very susceptible to disruption, and right now we are clearly noticing this in reduced and delayed deliveries and painful price increases. In this strategic area of the world’s most important future power generation technology, policymakers would be well advised to find ways to bring production back to Europe. We must find a way to avoid being at the mercy of the conditions and arbitrariness in China. The European value chain must be revitalized and existing skills strengthened. I am not talking about continuous support scenarios. We need an intelligent industrial policy so that our industry can operate sustainably on the global market.
Can we become climate-neutral in Germany?
Absolutely. The current electricity demand for the whole of Germany in kilowatt hours could be covered if we were to provide around 1.5 percent of the land area with photovoltaics. This can be done on roofs, with regular ground-mounted systems, with intelligent agri-PV and so on. If we take a broader view and also want to replace primary energy – in the steel industry, in the chemical industry, etc. – we would need around 5 percent of our land area for the 2,000 TW/h or so. That would be a solar-only approach and would also require power lines and storage facilities. But not ONLY solar is used. Germany can therefore be completely self-sufficient in kilowatt hours. With all industrial processes. Even though I’m a fan of electricity, it often makes a lot of sense to use solar thermal energy for low-temperature applications in households, industry and district heating. Of course, we can also make the conscious decision to import synthetic fuels and hydrogen. Why not?
Do we have the memory for it?
No, not yet. I think it makes sense for us to greatly expand the connections to our neighboring countries. In this way, electricity can be traded flexibly. And we must continue to work on building up storage in various forms. We have obvious storage systems – batteries, electromobility – and we have pumped storage plants, but these do not have infinite capacity. Hydrogen storage will have to play a major role. Then there are the small storage systems in the private sector and in industry, which of course must not be ignored either. There are solar thermal storage systems for the home and cold stores that can be run even colder when energy is cheap, so that they can switch off the cooling units when energy is expensive. However, storage systems should be considered much further. For example, manufacturers who have energy-intensive products that are not produced continuously can choose the times of production more sensibly against the background of weather or electricity price forecasts. There are many possibilities that we have to bring together as an overall picture. We need to develop an eye for this and learn how to integrate these options in a meaningful way.