inge lippert: energiewende, employment and industrial policy

Dr. Inge Lippert, Department „Industry, Services & Structural Policy“ 1

„Energiewende“, Employment and Industrial Policy

Presentation held at the conference „Energiewende: What can Finland and Europe learn from the energy revolutions in Germany and Denmark?

May 29 2013, Helsinki/Finland


„Energiewende“ – Towards a New Energy System


RES - Catching-up-Process Since 2000

� Germany: Not a forerunner of renewable energies in the past(mainly fossil based energy mix)

� Change in 2000: first decision to phase out nuclear energy and adoption of the RenewableEnergy Sources Act (EEG) by red-green government

� Beginning of a fast catching up-process toward renewableenergies

Source: Economist

Today: 25%


Dynamic Expansion of RES sinceIntroduction of EEG

Source: BMU (2013)

� Renewable Energy Sources Act (EEG)

� Introduced by the red-green-Government in 2000

� 3 Main Principles:

1. Priority feed-in of electricity from RES

2. Guaranteed feed-inpayments (fixed for 20 years)

3. EEG cost apportionment


Germany‘s Electricity Mix - First Half of 2012

Source: BDEW

� Wind power: +19.5%

� Biomass: +7.5%

� PV-Solar: +47%

� Hydropower: +25%

� Other Renewables: +10%

The share of renewable energy resources in electricity supply has risen significantly Changes compared

to 2011


The DGB-Perspective

� The German Trade Unions greatly welcome the withdrawal fromnuclear power energy

- DGB has prior to Fukushima already requested a nuclear energy phase-out

� We share the aim to transform the energy system towards renewableenergies

- Opportunity to achieve a socially and environmentally sustainable lowcarbon economy

� The transition process must:

- be socially just (no drifting apart of „winners“ and „loosers“) and

- not undermine the industrial base (no de-industrialisation, entire valuechain in Germany)


Coherent Energy and Industrial Policy –DGB Priorities

� Guaranttee a safe, reliable and sustainable energy supply� diversify energy sources bypromoting RES

� Establish policy and measures to encourage investments in energy infrastructure

� Develop a transformation program to encourage investments in new industrial policies based on low carbon emissions and innovations to increase energy efficiency (in industry, buildings, transportsector)

� Establish policy and measures to avoid negative social consequenses of the transition process(anticipation and management of industrial change, employment programs)

� Ensure just prices for private consumers and industry (socially fair, affordable, based on fair rates of return and no excessive profit taking)

� Create new and quality jobs contributing to sustainable development

� Establish permanent consultation of social partners on social and economic impacts of climatechange policies


Challenges of the Energiewende:

1. Investments


„Energiewende“as a Driver of Sustainable Growth

15 bn €KfWNew Gas Power Plants

75 bn € within the next 10 yearsKfWModernisation of Buildings

200 bn € by 2030

335 bn € by 2030

BMU

HWWI

Total

20-25 bn € within the next 15 years

National Grid Agency (BNA)Grids

85 bn € by 2030HWWIAdditional Investments (Facilities, Cables, Storage, Power Plants)

250 bn € by 2030HWWIRenewable Energies

Period and Amount of Investments

Calculation byArea of Investment


Investments in Renewable Energies in 2012

Source: BMU (2013)

Most investments in 2012 went into thephotovoltaics sector


Investments in RES decreased since 2011

Source: BMU (2013)

Reasons:

� Lower costs forinstallations

� Investors arereluctant

� Unclear frameworkconditions(discussion of reformor abolition of EEG)

� Shortcomings in financing


Bottleneck 1: Expansion of Grids Too Slow

� Study of the National Energy Agency (DENA): 3800 km of new gridsnecessary to transport the electricity from north to south, � Only 268 km constructed so far

� „Plan of demand“ from 2009: 24 grid expansion projects were classified as most important - 2 finished and 15 delayed

� Investors reluctant (no double digit returns), network operators financially overwhelmed, resistance of citizens

Energy system of the past Energy system of the future Transmission needs in GW by 2020


Bottleneck 2: Lack of Powerful Energy StorageTechnologies

� Wind and solar energies arevolatile energies

� Bridge peak load and store overproduced energy (balance of demand and supply)

� But: Powerful energystorage systems notavailable

� Pump storage plants: most important, but strongly interfering in the environment (protests of citizens)

� Alternatives like “gas to power”: not explored and too expensive

� Development of lithium batteries: Germany is lagging behind

� Public financial support of R&D plays a crucial role in the transition to a low carbon society



2. Just Electricity Prices


Just Prices for the Industry

� Energy is an important production factor for the German and European Industry

� Several industrial sectors (steel, alluminium, paper etc.) located outside of Germany or Europe benefit from lower energy prices

� Challenge of the low carbon transition: reduction of short-term loss of competitiveness due to higher energy prices

� But:

- Germany is among the EU countries with the highest electricity prices for industry

- The liberalisation process has not lead to lower electricity prices

- The EEG-Apportionment is a significant driver of electricity prices


Development of German Electricity Prices - Industry

Offshore liability apportionment

Generation, Transport,Sales

Concession fee

EEG apportionment(increased in 2012)

KWK surcharge

Electricity taxElectricity prices for industry in ct/kWh (average), incl. electricity taxAnnual consumption of 160 to 20.000 MWh

Source: BDEW

Policy and measures

� Regulation to control electricity prices

� Industry policy ensuring that the necessary investments in energy efficiency take place

� Policy helping industry develop combined heat and power utilities, access to decentralised electricity production units


Regulation to Control Prices: Exceptions forEnergy Intensive Companies

� Energy-intensive companies (electricity consumption of more than 10 GWh per year) have to pay a reduced EEG apportionment of 0.05 ct/kWh (instead of 5.27 ct/kWh).

� 979 companies have taken advantage of the reduced EEG apportionment in 2012 (financial relief of 2 bn € per annum).

� Reform of EEG in 2012: Threshold of energy consumption was lowered to 1 GW per annum: circle of favoured companies expanded to about 2245 (financial relief of 4 bn €).

Companies with reduced EEG apportionment

Companies paying the full EEG apportionment

2012


Current Debate on Allocation of Costs

Industry: 6,1 bn €

Commerce, Trade,Services: 4,0 bn €

Private households: 7,2 bn €

Transport: 0,2 bn €

Agriculture: 0,5 bn €

Public Institutions: 2,4 bn €

20,4 bn € Industry, GHD, Transport, Agriculture:10,8 bn €

� Feeling of unfair allocation of costs

� Private consumers have to bear the lions share of the costs

� Private consumers and industry are put in opposition to each other

2013


Just Prices for Private Consumers

� Electricity is a basic need of human beings and part of general interest� Energy affordability is a basic prerequisite for economic development as well as socialinclusion

� Electricity prices for private consumers have doubled within the last 10 years

� Heavy burden for private households, danger of „energy poverty“

� Measures to prevent negative social impacts and to protect vulnerable energyconsumers


Development of German Electricity Prices -Households

Offshore liability apportionment

Generation, Transport,Sales

VAT

Concession fee

EEG apportionment

KWK surcharge

VAT EEG apportionment

Electricity taxElectricity prices of a 3-person-household in ct/kWh (average)Annual consumption

Source: BDEW

Policy and measures� Priority: Reduce energy needs by investing in energy efficient buildings (CO2 Building Modernisation Programme in

Germany)� Additional Means: Adapt standard payment of welfare system (Hartz IV) to rising energy prices, support vulnerable

consumers in purchasing energy efficient household appliances, free energy consultation)



3. New and High Quality Jobs


Energiewende as Engine for New Jobs?

Source: BMU (2013)

� Decreasing of employmentsince 2011

� Crisis in the solar industry(insolvencies, closures of companies)

� Lack of reliablefundingincentives

� Lack of industrypolicy


Decline of Job Creation in 2012

Source: BMU (2013)

Employmentby investments(incl. Export)

Employmentby Maintenanceand Operation

Employmentby Fuel Supply

Employ-ment 2012

Employ-ment 2011

Wind onshore

Wind offshore

Photovoltaics

Solar thermal

Solar ther. power plants

Water power

Deep geothermics

Biogas

Surface geothermics

Liquid biogas stationary

Small scale biomass plants

Biomass heat&power

Biofuels

Sum

Research & public admin.

Sum

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��


Quality of Work

� The quantity and quality of jobs is important

� Green jobs are not necessarily good jobs

- Tariff commitments as well as pay, social and working standards need to beimproved in some sectors of renewable energies (e.g. solar industry)

� Unions policy to improve working conditions

- Increase the union organisation degree in the green sectors

- Implement co-determination structures and work councils

- Subsidies to promote the green economy should be connected to national laws and standards of the International Labour Organisation (ILO)


Towards a Social Energy Transition - Conclusions fora Sustainable Industrial Policy


Hexagon of the Social Energy Transition

Social Energy Transition

Creation of„Good Work“

Safeguarding andExpansion of Jobs

Strengthening ofParticipation

Fair Allocationof Costs

Affordable Energyfor Everyone

Active Shaping of Structural Change


Elements of a Social Energy Transition (I)

1. Safeguarding and expansion of jobs in a low carbon economy- No separation into „green“ and „traditional“ industries

- Investment and innovation approach to the entire process chain

2. Creation of „Good Work“- „Green jobs“ are not automatically „good jobs“

- Wherever new jobs are created, the criteria of "good work" must be taken into account

- Companies, which receive public funding (structural funds etc.) must be obliged to establishstandards of good work

3. Affordable energy supply (households, SMEs, industry) must be ensured- Improvement of energy efficiency as highest priority (increase budget of the German CO2

Building Modernisation Programme to 5 bn € per annum)

- Additional policies and measures to protect industry and consumers against rising electricityprices


Elements of a Social Energy Transition (II)

4. The upcoming structural change must be accompanied by an active industrypolicy- Future Transformation and investment programme to promote new industries and sectors (greening) - Policies and measures for a just transition (regional structural concepts for further development of affected

sites, retraining and job programmes for affected employees)

5. The allocation of costs should be paid attention- The costs must be distributed fairly- Exceptions for energy-intensive industries must be retained� maintain important industries that also

produce essential precursors for the energy transition- But: overloads of individual consumer groups must be avoided

6. To make the energy transition a „collective work“ participation needs to beexpanded- Participation of trade unions (consultation of social partners) and works councils (company level)- Participation of citizens in early decision processes (also financial participation, for example by energy

cooperatives)


Thank you for your attention!

inge lippert: energiewende, employment and industrial policy

Documents

department industry

services structural

inge lippert

coherent energy

energy efficiency

energy infrastructure

energy revolutions

sustainable energy supply