Parliamentary Evening of Rhine-Neckar Metropolitan Region and ZEW: How to Sustainably Succeed with Energy and Climate Policy

Have Germany's ambitious energy and climate goals started to clog the economy? The Rhine-Neckar Metropolitan Region and the Centre for European Economic Research (ZEW) cooperatively hosted the fourth parliamentary evening in Mannheim at the end of February 2016. The event's main topic was how to balance international competitiveness and environmental protection.

A sustainable energy and climate strategy is consistently demanded from science, economy and politics. Long-term plans are affected by measures such as the German nuclear phase-out as a consequence of the Fukushima Daiichi nuclear disaster in 2001 or by results of international conferences like the latest UN Climate Change Conference in Paris at the end of 2015 (COP21).

In his welcome address for the fourth parliamentary evening on the subject "Energy and Climate Politics – Their Effects on Germany's Competitiveness", Thomas Kohl, Executive Director of ZEW, made clear that those adjustments will have consequences for companies, politics and the citizens – as tax payers as well as consumers.

Bernd Kappenstein, head of the Rhine-Neckar Metropolitan Region’s Energy & Environment Department, was positively surprised about COP21 resulting in tangible outcome. However, Kappenstein's opening statement did not include any specific evaluation of the conference: "After Paris, fast expansion of renewable energy and swiftly phasing out of coal-based power generation are still high on Germany's agenda."

New dynamics in the global climate policy

Dr Oliver Schenker, acting head of the Research Department "Environmental and Resource Economics, Environmental Management" at ZEW, called the agreement a milestone – despite its shortcomings. "For the first time, a climate agreement was passed that takes almost all states up on their promise to limit their carbon emission," said Schenker. The decision of Paris would bring new dynamics into global climate policy and is a solid foundation for further action. But it will only become apparent over the medium and long term if countries actually comply with their commitment to reduce carbon emissions. For Germany, Schenker rated the agreement as "basically positive". New growth impulses for investment in the high-tech industry could emerge.

Following Schenker's scientific introduction, a discussion took place between MP Gabriele Katzmarek (SPD, Social Democratic Party of Germany), MP Dr Thomas Gebhart (CDU, Christian Democratic Union), Joachim Goldbeck, Executive Director of Goldbeck Solar GmbH, Dr Wolfgang Niopek, deputy chief manager of the Chamber of Industry and Commerce (IHK) Rhine-Neckar, and Adolf Roesch, Managing Director of the Sub-Region Central Europe from General Electric's (GE) Power Services department. The panel discussion was chaired by SWR ("Southwest Broadcasting") editor Gerhard Augstein.

Augstein opened the discussion with the request to evaluate the results of the climate conference in Paris. Gebhart, who personally participated in the conference, was satisfied: "The agreement of Paris was a historic event since a world-wide climate agreement was passed after more than 20 years of negotiation." It must be kept in mind that 195 states and organisations with different interests participate regularly in the negotiations and that the principle of unanimity is applied. However, the CDU politician remarked that the contract alone will not solve the problems. Katzmarek also welcomed the fruitful negotiation, but added: "Germany can not save the climate all by itself. Some other countries have to make far greater contributions."

All the costs and fees of these measures set certain signals for the market

Wolfgang Niopek put a stronger focus on Germany: "We have a discussion on global climate goals, but also on very ambitious domestic goals, such as the exit from nuclear energy, the increase of energy efficiency and the expansion of renewable energy." All the costs and fees of these measures set certain signals for the market that must be taken into account.

Entrepreneur Joachim Goldbeck brought in the EEG reallocation charge as a specific example in that context. This instrument would be still necessary to cheaply finance renewable energy projects. "Nevertheless, renewables cannot be financed infinitely," Gabriele Katzmarek remarked. On the whole, subsidisation is still very important. This way, it was possible to raise the share of renewable energy from ten to about 30 per cent within five years.

Conventional power plant technology has been suffering for years

Adolf Roesch has to deal with the consequences of this development. "Conventional power plant technology has been suffering for years," the GE manager pointed out. This also affects Mannheim, being a centre for turbine engineering. According to Roesch, the government should lessen its power market interference. Solar entrepreneur Goldbeck agreed on this subject, but added: "As long as conventional power plants can use the atmosphere as a free dump, there will be market distortions."

In the view of Wolfgang Niopek, before anything else, renewable and conventional energy sources have to be brought into one market. Only this way the energy transition could succeed sustainably. Roesch agreed with him: "Until now, energy policy has always been set out for the long term. This balance is currently lacking. We allow ourselves two parallel energy systems." According to Gabriele Katzmarek, the grid expansion is the key project for this market integration to succeed. For CDU member Gebhart, moving towards more market oriented policy models is a suitable measure to achieve a balance between climate protection and international competitiveness of the German economy. On the whole, all debaters agreed on the energy and climate policy having to adopt more long-term thinking and acting again.