Germany’s Climate Policy. The Conflict of Environmentalism and Economic Growth

Table of Contents

1. Introduction

2. Description of Germany’s climate policy
2.1 Overview
2.2 Current policies
2.3 Geopolitical factors
2.4 Political factors
2.5 Economic factors
2.6 Cultural factors

3. Analysis and evaluation of Germany’s climate policy

4. Conclusion

1. Introduction

This essay seeks to describe, analyze and evaluate Germany’s climate policy in order to argue that it is effective and progressive on a global scale, but also subject to trade-offs as Germany is a highly industrialized economy. Germany is chosen as it is an especially interesting case in the apparent conflict of environmentalism and economic growth.

The essay firstly outlines a literature review. An overview of the state of climate policy in Germany is given, major current policies are explained, and (geo)political, economic and cultural factors that influence climate policy are described. Within the literature review, the researcher decides to focus on policies related to renewable energies, energy efficiency, information campaigns and innovation. Germany’s membership in the European Union (EU) was identified as major geopolitical influence, local governance structures and the German green party as influencing political factors, and the fossil fuels, automotive, machinery and equipment as well as the cattle farming industries as influencing economic factors. In the absence of a proper research body on the relationship of German culture and its climate policy, cultural factors were deducted from the aforementioned sub-sections. Subsequently, the essay attempts to answer the question why Germany’s climate policy is designed the way it is and evaluates its performance. Finally, a conclusion is drawn.

The researcher finds that Germany’s climate policy is indeed successful, however especially the fossil fuel, automotive and cattle farming industries have substantial influence. These sectors are still subsidized and not directly tackled in the interest of climate policy, even though their contributions to greenhouse gas emission are substantial.

2. Description of Germany’s climate policy

In this section the state of Germany’s climate policy is described and current measures are briefly explained. Moreover, major contributing factors will be outlined.

2.1 Overview

Germany is one of the main originators of climate change – since the Industrialization, it has contributed roughly 5% to global warming, even though its population only makes up around 1% of the world population. Looking at consumption-based emissions, Germans emitted 2.2 times more CO2 per capita than the international average in 2015 (BMU, 2017, pp. 10–12).

Its climate policy, especially its support scheme for renewable energy sources (RES), is regularly described as highly ambitious in the light of its industrialized economy and the country is thus oftentimes seen as global forerunner (e.g. Blue, 2008; Strunz, Gawel, & Lehmann, 2016, p. 34). It has a strong institutional capacity for climate policy, as for example climate change mitigation is a part of the Federal Ministry of the Environment, Nature Conservation and Nuclear Safety’s (Bundesministerium für Umwelt, Naturschutz, Bau und Reaktorsicherheit, BMU) organizational mission (Hughes & Urpelainen, 2015, p. 58). The ministry states that Germany has been committed to this goal since more than 25 years and has already seen considerable improvements, as for example greenhouse gas emissions dropped by roughly 28% compared to 1990. Moreover, national targets are set above the EU average – by 2050, greenhouse gas emissions should be reduced by 80-95% compared to 1990 (BMU, 2017, pp. 12, 19).

2.2 Current policies

Germany’s climate policy mostly focuses on RES and energy efficiency. However, it also relies on information campaigns, and innovation policy.

RES

The Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) is the cornerstone of Germany’s climate policy. Its goal is to increase the competitiveness of RES with “financial, market-based and fiscal incentives” (BMU, 2017, p. 19) . It is a feed-in law that subsidizes renewable energy producers and guarantees market premiums (Hughes & Urpelainen, 2015, p. 59) . Since 2016, the EEG makes direct marketing for new installed renewable energy facilities mandatory. The market premium is determined via auctions (Tews, 2015, p. 281) . The act exempts heavy electricity users from the costs and puts them on individual consumers and is regarded as highly complex (Strunz et al., 2016, p. 39) .

As Germany is phasing out nuclear energy by 2022, it aims to achieve its transition to low-carbon technologies without nuclear power (Strunz et al., 2016, p. 36; Tews, 2015, pp. 278–279).

Energy efficiency

Germany has a National Action Plan for Energy Efficiency with reduction in energy consumption and increases in energy efficiency targets. Measures include standards and support programs for energy-efficient construction and refurbishment of buildings, subsidies for electric vehicles and investments in local public transportation, using waste heat potential in manufacturing industries, and reducing excess fertilization in agriculture (BMU, 2017, pp. 19–22).

Information

The German government aims to influence behavior via information campaigns and mandatory labels for climate-friendly products (BMU, 2017, p. 20). These labels for example include energy labels for cars, which have resulted in increases in car registrations of the most energy-efficient class. Efficiency is measured within car-segments and not over the whole range of models (Gössling & Metzler, 2017, pp. 425–426).

Innovation

Germany is investing heavily in innovation policy. It for example promotes research and development (R&D) in innovative technologies for energy efficiency, renewable energy sources and reducing industrial process emissions (BMU, 2017, pp. 20–21).

2.3 Geopolitical factors

Geopolitically, Germany’s climate policy is mainly influenced by its membership in the EU, which is why this sub-section will focus on this relationship.

Energy issues lie at the core of the EU and European integration. In the 1950s the European Coal and Steel Community (ECSC) was established, which set up a customs union for these commodities. Subsequently, its member states set up the European Atomic Energy Community, which widened the ECSC’s power to nuclear and other sources of energy (Benjamin, Cadoret, & Hubert, 2015, p. 735). Since the Lisbon treaty came into force in 2009, the EU has explicit competencies in energy policy (Strunz et al., 2016, p. 37).

The EU has a number of binding climate objectives, manages an emissions cap-and-trade system (ETS) and promotes RES. Research has shown that these overlapping regulations incur excess cost (Böhringer, Keller, Bortolamedi, & Rahmeier Seyffarth, 2016). RES policies across the EU are also highly fragmented and thus less effective than they could be, even though they are generally described as successful (Strunz et al., 2016, pp. 33–34).

Germany is the most important force in EU energy and climate policy (Szulecki, Fischer, Gullberg, & Sartor, 2016, p. 554). Their interests are however not always aligned. In the process of regulatory harmonization and protecting its single market, the EU opened an infringement procedure against the EEG in 2013. Initiating an infringement procedure results in a “standstill requirement” and thus to the immediate suspension of controversial provisions. Hence, Germany for example had to stop exemptions to energy-intensive companies until the matter was finally clarified and approved (Tews, 2015, pp. 274–275). The European Commission (EC) approved the law after several amendments in 2018 (EC, 2018).

2.4 Political factors

Political factors that influence climate policy in Germany are mainly local governance structures and the German green party.

Local governance structures

Germany is a federal republic, in which the 16 states (Bundesländer) traditionally have important legislative competences, administrative and budgetary powers. This shapes climate policy considerably, as the states make up the second legislator chamber and their planning laws for example affect the allocation of new power plants. For example, reforming the EEG was delayed by the states and wind power expansion is being slowed down by local interests (Strunz et al., 2016, pp. 37–38). They also contribute to climate policy in making local passenger transport more sustainable (Gössling & Metzler, 2017, p. 426).

Furthermore, Germany has a historical guarantee of local self-administration, which gives municipalities substantial control over revenue streams and thus influences climate policy (Eckersley, 2018, pp. 145–146). Today, larger German cities have implemented climate protection and climate change adaptation measures (Zimmermann, Boghrat, & Weber, 2015). Municipalities have strongly advocated expanding RES (one third of RES capacity has been set up by local initiatives until 2013) and have been effective in restricting car use (Gössling & Metzler, 2017, p. 426; Tews, 2015, p. 278).

The German government initiated a dialogue process with the states and municipalities in order to develop strategic climate measures and consolidate conflict as soon as possible (BMU, 2017, pp. 22–23). Regarding the importance of these structures this step seems very sensible.

Alliance 90/The Greens

The German green party (Alliance 90/The Greens) was founded by environmental activists in 1980 and is represented in the national parliament since 1983. From 1998 to 2005 they were part of the government coalition, and have managed to deeply embed environmentalism in German politics (Blue, 2008). Alliance 90/The Greens are thus more successful than most green parties (Hughes & Urpelainen, 2015, p. 58). This influence is for example apparent in the Energiewende (energy transition) narrative that has become part of mainstream politics – public debate focuses on how to achieve it, not whether it is possible or desirable (Strunz et al., 2016, p. 36). This clearly differentiates Germany from for example the USA or Australia.

Nevertheless, not all of their advances are successful. A proposal to oblige canteens to offer only vegetarian meals once a week was followed by accusations of pushing for an “ecological dictatorship” and a sharp drop in votes (Connolly, 2013).

2.5 Economic factors

Germany is a highly industrialized economy. The sectors that contribute to its greenhouse gas emissions most strongly are energy (38% in 2016), industry (21%), transport (18%) and agriculture (8%, without land use) (BMU, 2017, p. 26). In line with current policy measures and the literature, the researcher identified four specific industries that mainly influence climate policy: Fossil fuels, automotive, machinery and equipment (M&E) and cattle farming.

Fossil fuels

The German energy sector is dominated by conventional utilities and fossil fuels (mainly coal), whose close ties to decision makers are generally acknowledged (Strunz et al., 2016, p. 35). Today, subsidies for these industries and for example tax benefits for industrial and agricultural fossil fuel users remain in place on the grounds of competitiveness concerns (G20 Peer Review Team, 2017, p. 3). Nevertheless, RES are transforming the energy sector and reduce the oligopoly of fossil fuel and nuclear power companies (Strunz et al., 2016, p. 36).

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