28. January 2022 By Georg Benhöfer, Lars Zimmermann and Stephen Lorenzen
Habeck pushing up the gears – how the Federal Ministry for Economic Affairs and Climate Action wants to work even faster to achieve Germany’s climate targets
The energy industry is a constant presence in today’s media – which was rarely the case in the past. It’s not just in the specialist press either. It has been regularly featured on the front pages of various daily newspapers for a variety of reasons for weeks. Following on from issues such as the controversial NordStream2 gas pipeline, the ‘traffic light’ coalition’s new agreement and rising energy prices, there is now also the ‘opening balance sheet on climate protection’, which the German Federal Ministry for Economic Affairs and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz, BMWi) presented a few days ago.
We have taken a look at the paper presented by the Federal Minister for Economic Affairs and Climate Protection Habeck and summarised the most important points:
State the obvious
The BMWi starts by taking stock and looking at the positive side. The relatively sobering results in terms of measures to achieve its climate targets should come as little surprise to attentive observers as it does to the Climate Minister himself.
To be more specific, the BMWi has already announced that Germany will fail to meet its climate targets for 2022 and 2023. The climate protection measures taken so far are so inadequate across every sector that every climate target for 2030 will be missed. That is, unless decisive improvements are made.
While emissions have fallen by an average of 15 million tonnes per year in recent years, they need to fall at a rate of 36 to 41 million tonnes annually from now on. These figures are why Habeck is now talking about needing to speed up by a factor of three.
The opening balance sheet put particular emphasis on the energy sector, where CO2 emissions continued to rise in 2021 In order to reverse the trend, the expansion of renewable energies must be drastically accelerated and obstacles, such as long approval procedures, must be removed.
The overarching target is to achieve climate neutrality by 2045. In addition, the share of renewable energies in gross electricity consumption is to be increased from around 42 per cent today to 80 per cent by 2030.
To make this possible, the regulatory framework in particular must be adapted to remove existing hurdles and create the right incentives. The BMWi has announced that it will have advanced all the laws, ordinances and measures necessary to achieve the targets to such an extent by the end of 2022 that the corresponding procedures will be completed this year. This ambitious project goes by the name of the ‘Emergency Climate Protection Programme’ (Klimaschutz-Sofortprogramm). The first part of this programme is expected to be published by the end of April 2022.
Emergency Climate Protection Programme
An amendment to the German Renewable Energy Sources Act in particular will set the course for the target of 80 per cent of renewable energies in gross electricity consumption by 2030. In concrete terms, the BMWi has so far mentioned an increase in tender volumes. In addition, the principle that expanding renewable energies is in the ‘overriding interest of the public [and] public safety’ will also be enshrined in the amendment. The latter in particular may sound like a small detail and mere wish. However, in the political world, the discussion surrounding this is likely to be a heated one. Let’s take regulations on the minimum distance between wind turbines, for example, which represent a hurdle for their expansion. These and other similar regulations are currently a matter for the individual states, meaning the federal government has little influence on removing them. However, if, in the future, the expansion of renewable energies is directly linked to the preservation of public safety in a federal law – such as the German Renewable Energy Sources Act – the decision-making power of the individual states would be called into question in these matters.
The name of the solar acceleration package (Solarbeschleunigungspaket) explains exactly what the programme is about. In particular, an improvement in electricity prices for tenants and an increase in the tendering thresholds have been announced. The BMWi paper directly addresses the conflict over suitable locations for standalone systems with nature conservation and emphasises that it wants to comply with nature conservation criteria. In addition, it will also be stipulated by law that all suitable roof surfaces must be used for solar energy purposes. This will become mandatory for new commercial buildings.
The Wind-on-Land Act (Wind-an-Land-Gesetz) is intended to accelerate the expansion of wind turbines. To this end, two per cent of the state’s land area will be reserved by law for wind energy purposes. In addition, the law is designed to create conditions to speed up planning and approval procedures.
Up to 50 per cent of heating energy should be generated using climate-neutral methods by 2030. A new ‘Climate-neutral Building Strategy’ (Gebäudestrategie Klimaneutralität) will be developed to achieve this target. The paper specifically mentions increasing energy efficiency and expanding heating grids in relation to this. The Federal Funding for Efficient Heating Grids (Bundesförderung effiziente Wärmenetze, BEW) will be increased for this purpose.
The German Building Energy Act (Gebäudeenergiegesetz) will be amended to increase building standards. From 2025 onwards, every newly built heating system will be operated on the basis of at least 65 per cent renewable energies. In addition, the funding pools in this area will also be adjusted to create incentives for investments that are in line with the climate targets.
In order to support the transformation of industry, legal foundations to introduce carbon contracts for difference will be created. To put it very simply, companies can conclude these contracts with the state to compensate for the difference between the cost of avoiding CO2 and the profits gained in doing so. If the cost of avoiding CO2 (by investing in energy efficiency, for instance) is higher than the profit gained in doing so (avoided expenditure on CO2 certificates), the state will assume the difference. In the opposite case, the company must pay the difference.
Hydrogen is the current talk of the town. The BMWi is also backing hydrogen technology and wants to double the production capacities that are planned at the moment. To this end, the National Hydrogen Strategy is to be revised and corresponding funding programmes launched.
Fasten your seatbelts
By creating the opening balance sheet on climate protection, Habeck has made it clear that there is still a lot to be done to achieve Germany’s climate targets. The targets and measures that have been announced are ambitious. In particular, the announcement that all of the necessary legislative projects will be completed this year is nothing short of incredible.
For the energy industry, the transformation of the energy system will pose a number of major challenges – but this isn’t news. However, we could be in for a bumpy ride if the targets that have been outlined are actually going to be met using the measures that have been announced. We’re about to put our foot down, so fasten your seatbelts.
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