Germany’s decison to ditch nuclear power could lead to power cuts, higher bills and missed carbon targets. But it could also make the nation the renewables capital of the world.
It was a move lauded by the political left and supporters of renewable energy, and derided by nuclear advocates. When German chancellor Angela Merkel, in a bout of political pragmatism, announced that all nuclear power plants in Germany would be turned off by 2022 it launchd the world’s fourth-largest economy towards an uncertain energy future.When Merkel, fresh from her election success in 2005, reversed the previous government’s decision and extended the life of Germany’s ageing nuclear plants it was a decision based on sound technical, economic and environmental advice. The long-term plan has always been for Germany to become nuclear free, but in a controlled manner.
But now, because of political expediency – Merkel needs the support of the Green party to prop up her ailing coalition – that sensible timetable is in tatters.
The move certainly has no financial foundations. Nuclear power stations currently generate almost a quarter of Germany’s electricity, and a move away from these is expected to increase electric bills by around 30 per cent and put a dent in the country’s global warming targets, with carbon emissions expected to rise by 10 per cent.
It will also harm the country’s manufacturing heartland and could push energy-intensive companies, such as those in the chemical and automotive sectors, to seek cheaper locations in either Poland or eastern Europe.
While nuclear energy has its safety problems – starkly illustrated by the nuclear accident in Japan – and a worrying lack of clarity when it comes to dealing with its waste, it remains the only carbon-free generation for baseload electricity. Not only this, but the German nuclear industry is probably the safest in the world.
Even if the decision could be defended on safety grounds, nuclear pollution is no respector of national boundaries, and with Germany’s neighbours such as France, Poland and Czech Republic committed to a nuclear future there is no shelter in unilateral decisions.
However flimsy the reasoning behind the nation’s actions, it has raised the stakes dramatically for the German renewables sector and given it an opportunity to lead the world. In order to fill the gap left by nuclear energy, Germany is planning to generate 35 per cent of its electricity from renewable sources by 2020. Hand in hand with its withdrawal from the nuclear industry comes a huge raft of investments into renewable technology that will almost certainly propel the country to the head of the renewable technology tree. The type of investment that the US and UK have shied away from on the grounds of economic sense will now happen because of political expediency – and if Germany can steer its way through the next ten years economically and environmentally unscathed then its future will be bright, and green.
But that short-term environmental damage could be telling. The backdrop to the German nuclear u-turn comes from a report released at the end of May by the influential International Energy Agency (IEA) that proclaimed that energy-related CO2 emissions were the highest in history last year.
After a dip in 2009 caused by the global financial crisis, emissions are estimated to have climbed to a record 30.6Gt (Gigatonnes), a 5 per cent jump from the previous record year in 2008, when levels reached 29.3Gt. The organisation has also estimated that 80 per cent of projected emissions from the power sector in 2020 are already locked in, as they will come from plants that are currently in place or under construction today.
“This significant increase in CO2 emissions and the locking in of future emissions due to infrastructure investments represent a serious setback to our hopes of limiting the global rise in temperature to no more than 2°C,” Fatih Birol, chief economist at the IEA, says.
Global leaders agreed a target of limiting temperature increase to 2°C at the UN climate change talks in Cancun in 2010. For this to be achieved, the long-term concentration of greenhouse gases in the atmosphere must be limited to around 450 parts per million of CO2-equivalent, only a 5 per cent increase compared to an estimated 430 parts per million in 2000.
“Our latest estimates are another wake-up call,” Birol adds. “The world has edged incredibly close to the level of emissions that should not be reached until 2020 if the 2°C target is to be attained. Given the shrinking room for manoeuvre in 2020, unless bold and decisive decisions are made very soon, it will be extremely challenging to succeed in achieving this global goal agreed in Cancun.”
These figures throw an altogether more alarming note to the German decision as although they have increased their long-term commitment to renewable energy this will have very little bearing on the 2020 figures. The short-term energy shortfall will fall onto the shoulders of existing fossil-fuel generation.
“I think the real concern is that last year we had more CO2 emissions than ever before,” says Malcolm Grimston, Chatham House research fellow in nuclear issues, and adviser to the UK government on nuclear policy. “To have a major European economy inevitably saddling itself with more greenhouse gas emissions – the German Greens are openly talking about building more gas-powered plants and supporting the new coal-fired plants that are being brought online – is, I think, going to be a tragedy for the environment, and I don’t think it’s going to be good for the German economy.”
In an interview with the Times, former UK government chief scientist Sir David King cautioned that global climate change would be difficult to reverse if more countries followed Germany in rejecting nuclear power as a low-carbon source of energy. “The British government’s decision is based on a technical analysis of risk and a thorough examination of the lessons learnt from Fukushima, which has rightly not deflected it from its plans,” King said. “If other countries wish to follow an example, they should look at Britain’s response.”
Boost for renewables
Whatever the short-term harm to Germany’s carbon emission strategy there can be little doubt that in the long term it will provide a huge boost to the German renewable industry. If its nuclear policy is now in tatters the same cannot be said for its renewable plans. It has steadfastly backed solar power with some of Europe’s most generous feed-in tariffs and, in new plans announced alongside the nuclear closures, it has given other renewable technologies a huge boost.
In the wake of the nuclear decision Merkel and her government have been scrambling around to bolster the incentives offered to renewable technologies in an effort to increase their take up. The initial energy legislation would appear to benefit offshore wind farms in favour of their land-based brethren.
Offshore wind park owners will see their guaranteed above-market rates decrease starting in 2018, three years later than the government had planned, while onshore turbine operators will see the aid they receive slide by an additional 1.5 per cent in 2012. If the German timetable is adhered to 20.7GW of electricity produced by the 17 condemned nuclear power stations would be replaced by offshore wind by 2030.
However, despite the increased incentives the government’s plans have not been met with universal approval by the German wind industry. The main complaint being voiced is the perceived bias towards an immature and largely untested offshore wind segment to the detriment of the well-established on-shore market.
“The changes in the digression are nothing but window-dressing to pacify the opposition and state governments,” a spokesperson for the German Wind Energy Association explains. “If the law goes through the upper and lower houses of parliament in this form, it will slow onshore wind energy development.”
Germany has 27.2GW of onshore turbines, while the first commercial offshore wind farm – the 48.3MW Baltic 1, began supply power to the grid in May of this year.
The renewable energy bill also increases support for energy efficiency, electric vehicles and power storage technologies as the country seeks to halve its primary energy use by 2050. The government aims to double funding for research and development into electric vehicles to £1.8bn until 2014, increase support for energy efficiency in buildings by a third to £1.3bn by 2013 and spend £180m in energy storage projects.
Future of nuclear
Outside of Germany the nuclear renaissance will continue with France, China, UK, South Korea and Russia all likely to continue with their new build plans. Who knows; if the political landscape in Germany changes, then economic practicalities may cause another about-turn.
Although portrayed as the death knell for the nuclear new-build sector the German decision is unlikely to have a major effect on other nation’s nuclear plans. The Fukishima accident has already caused delays with the US and UK among many countries carrying out due diligence with regards to safety, but after a brief hiatus the programmes will begin rolling forwards, with only relatively minor delays.
“This is not necessarily damaging for the nuclear industry,” adds Chatham House’s Grimston. “I think this will create new export opportunities for the French nuclear industry in Germany. The Czech Republic will be another source of the replacement imports. Most of that will be as a result of coal, but the Czech Republic itself has a vigorous new nuclear programme. So this does create a new market for nuclear electricity and, as long as that is what has happened, then the environment will not be damaged.”
“Of course we agree that we should conserve energy wherever we can – this idea appears to be part of the German plan going forward,” Keith Parker, chief executive of the Nuclear Industries Association (NIA) says. “We also support a major increase in renewables as the Germans do. However, nuclear supplies the essential base-load electricity needed to power an advanced industrial economy and is key in protecting the UK from becoming too reliant on imported energy.
“Nuclear is the only low-carbon base-load source we have. It currently gives us 80 per cent of all our low-carbon electricity in the UK. It offers security of supply which puts Britain in a good position and it helps us lead the way in delivering a low-carbon economy.
“Our nearest neighbours in France rely on 80 per cent nuclear power. In the UK we are only 20 per cent – but that 20 per cent is crucial in ensuring the UK is not exposed to a loss of supply. A balanced mix involving nuclear, renewables and fossil fuels is a sensible approach for the UK.”
One of Germany’s neighbours, the Czech Republic, was quick to heap scorn on the German decision. President Vaclav Klaus, in a speech to industrialists at Hamburg called into question the motives behind the decision as well as announcing plans to enlarge one of its nuclear plants sited close to the German border.
“There are surely many other themes which could be discussed here tonight, for example the current, entirely absurd proposals for an exit from nuclear power in your country,” he told the invited audience. “Here I would like to mention the following. The Czech Republic will not give up nuclear energy. To the contrary, in southern Bohemia we plan to build further blocks at the Temelin nuclear power station.
In his speech, Klaus took aim at Germany’s popular anti-nuclear movement, questioning the sincerity of its activists and accusing them of collusion with Germany’s renewable-energy industry. “I do not believe the apostates who fight against nuclear energy today,” he told the audience. “I do not believe they are sincere. They are also not entirely innocent. The lobbying of manufacturers of alternative energy sources often lies hidden behind their supposed good intentions.”
Counting the cost
Aside from the increased energy bills for consumers and businesses alike Germany may face some rather larger pay outs. Four companies have been hit by the dramatic German u-turn – E.ON, EnBW, RWE and Vattenfall, although to date only E.ON and Vatenfall have made their displeasure known. Both are talking about demanding huge financial damages from the German government.
“Decisions concerning the country’s energy policy framework are always taken by parliament and the government,” a company spokesperson said. “Despite the high safety standards at the nuclear power stations across Germany, confirmed recently by the reactor safety commission, E.ON accepts the will of the political majority to secure an early phase-out of nuclear energy.
“At the same time the company expects to receive due compensation for the financial damages associated with these decisions, which is expected to amount to billions of Euros. E.ON has already made substantial investment decisions trusting in the earlier announcement of the government to extend the operating lives of nuclear power stations.
Vattenfall, which has stakes in three German nuclear plants, said it expected “fair compensation” for financial losses resulting from the decision. It said it trusted the German political system would “take full responsibility for its decisions”, and that it will “keep future options open”.
Even now, only weeks into the legislation calling a halt to nuclear, there are rumblings about whether the strategy will last the course. Chancellor Merkel herself tried to get parliament to allow several nuclear plants to be left on standby, and although that plan fell by the wayside there is still time for another about-turn. When the financial burden bites deep and power security is under threat many analysts believe nuclear power will be back on the table.
“There is plenty of time for the Germans to reverse their decision,” Grimston says. “We have seen many flip-flops in German opinion already. The economy there is already very severely crippled by its enormous renewable subsidies and, of course, in hot weather the wind farms tend not to work at all. In Germany they had about 1.5 per cent output for three weeks in 2003 because of the heat.
Having said that, I hope we can get further with renewables and with energy efficiency. Energy efficiency tends not to cut energy use, it boosts economic output. These are all things we have to approach but to be closing down nuclear plants rather than coal plants is, I think, just environmental vandalism.” *