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1
Solar Energy
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The Case of Germany
Final Thesis
International School For Humanities and Social Sciences
MA International Relations
The Political Economy of Energy
July 12th 2009
University of Amsterdam
Author Gerrit Jan van den Dungen
Supervisor Dr. Mehdi P. Amineh
Second Reader Drs. Daniel Scholten
Word Count 21.215
Cover Design Google Earth
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ABSTRACT | SOLAR ENERGY: THE CASE OF GERMANY
Deze scriptie behandelt de ambitieuze zonne-energie politiek van Duitsland. Het doel
van de scriptie is om te analyseren of het Duitse zonne-energie beleid een voorbeeld kan
zijn voor andere landen. De onderzoeksvraag luidt: Kan het Duitse zonne-energie beleid
daadwerkelijk een bijdrage leveren aan energieveiligheid en belasting van het milieu
voorkomen tegen een realistische kostprijs?
Het onderzoek bestaat uit drie delen. Het eerste deel zal bespreken wat
veiligheid op het gebied van energie betekent voor Duitsland. In deze analyse zal
gebruik worden gemaakt van het Resource Scarcity Model. Ook zal in het eerste deel
gekeken worden naar de politieke ontwikkelingen op het gebied van duurzame energie
in Duitsland. Samen geven deze twee delen een antwoord op de vraag, hoe Duitsland
tracht in de toekomst in haar energie behoefte te voorzien.
Het tweede deel van het onderzoek richt zich op het ontstaan van het Duitse
zonne-energie beleid. De verschillende actoren, netwerken en instituties worden
besproken aan de hand van de Technological Innovation System Theory. In hoeverre
begrippen als energieveiligheid en milieu problematiek voor deze elementen een rol
spelen wordt besproken in dit deel.
In het derde deel van het onderzoek wordt de Duitse zonne-energie politiek
geanalyseerd. In dit deel wordt gekeken naar de resultaten en voorspellingen, de
opbrengsten voor energie veiligheid en milieu problematiek en de economische
gevolgen van de politiek.
De uitkomst van het onderzoek toont zich negatief over het Duitse zonne-energie
beleid. De huidige Duitse politiek lijkt er niet in geslaagd om met zonne-energie een
behoorlijke bijdrage te leveren aan energieveiligheid en het voorkomen van
milieuproblematiek. Het grootste probleem op het moment zijn de hoge kosten, die
verbonden zijn aan het zonne-energie beleid. Deze hoge investering lijkt zich niet terug
gaan betalen. Een dure investering, die gezien de huidige problematiek gerelateerd aan
energieveiligheid en milieuproblematiek, maar ook de economische crisis, beter anders
besteed had kunnen worden.
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ACKNOWLEDGEMENTS |
This thesis marks the end of an episode of my life: my student years. The seven years
that have passed ever since I left high school shaped me for life, and hopefully made me
a wiser man. I visited four universities, both at home and abroad, where I practiced four
studies, with different results. I travelled to many special places on this globe often
study related. Of the voyages the study trip to Ukraine and the voluntary work in
Senegal touched me most. However, field research in Rome was not a bad thing either...
For all these opportunities and experiences I would like to thank my parents. I dedicate
this thesis to them for their unconditional support and belief, even at times when my
future looked less bright than it does today. I will start the next episode of my life at a
place I have dreamed of since I was little boy. Without their help things could have
ended up very different...
Special thanks are for my supervisor Mehdi Amineh. I wasn’t always an ideal student,
but he managed to let me finish something that at least looks like a thesis. Last but not
least I would like to thank my little brother Maarten for his mathematical and technical
support.
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CONTENTS |
ABSTRACT 2
ACKNOWLEDGEMENTS 3
LIST OF MAPS 7
LIST OF TABLES 7
LIST OF FIGURES 7
LIST OF ABBREVIATIONS 9
CHAPTER 1 | 13
1.1 Introduction 13
1.2 Problem Formulation 13
1.3 Methodology 14
1.4 Theoretical Framework 15
1.4.1 Resource Scarcity Model 15
1.4.2 Technological Innovation System Approach 16
1.5 Structure of the Work 20
CHAPTER 2 |GERMANY’S ENERGY SITUATION 22
2.1 Germany’s Resource Status 22
2.1.1 Demand-induced Scarcity 24
2.1.2 Supply-induced Scarcity 25
2.1.3 Structural Scarcity 27
2.1.4 Conclusion on Germany’s energy situation 28
2.2 The long road to the Electricity Feed-in Law (1974-1991) 29
2.2.1 Taking the Lead (1991-2000) 31
2.2.2 Consolidating the pioneer role (2000-2004) 34
2.3 Conclusion 38
CHAPTER 3 | CONSTRUCTING A FAVORABLE CLIMATE FOR SO LAR
ENERGY IN GERMANY 39
3.1 Initial stage: the birth of actors 39
3.1.1 Germany ’s governmental structure 39
3.1.2 Development of interest groups 40
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3.1.3 First step in the renewable direction:
the Electricity Feed-in Law 42
3.2 Middle stage: securing development 44
3.2.1 Initiating solar energy on a local level: the Aachen Model 44
3.2.2 Reunification: new opportunities in the East 45
3.3 Final Stage: market formation and public acceptance 47
3.3.1 Inactivating opposition 47
3.3.2 Public Acceptance 50
3.4 Conclusion 51
CHAPTER 4 | THE GERMAN SOLAR ENERGY POLICY REVIEWED 53
4.1 Energy Security 53
4.2 Environmental Concern 55
4.3 Economic effects of PV 57
4.3.1 Feed-in Tariff and its costs 58
4.3.2 Economic effects 62
4.4 Conclusion 65
CHAPTER 5 | CONCLUSIONS 66
BIBLIOGRAPHY | 70
APPENDIX 1 | 1
APPENDIX 2 | 2
APPENDIX 3 | 3
APPENDIX 4 | 5
APPENDIX 5 | 11
APPENDIX 6 | 12
APPENDIX 7 | 14
APPENDIX 8 | 15
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LIST OF MAPS |
Map 1 Germany 10
LIST OF TABLES | Appendix
Table A Energy Consumption and Production in Germany 1991-2006
Table B Supply-Demand Balance Germany in 2005
Table C World Population by Region, Reference Case, 1990-2030
Table D World Gross Domestic product (GDP) by region expressed in
Purchasing Power Parity, Reference Case 1990-2030
Table E World Proven Oil Reserves 2009
Table F World Oil Production 1998-2008
Table G World Liquid Production, Reference Case 2006-2030
Table H Proven Natural Gas Reserves 2009
Table I World Gas Production 1998-2008
Table J World Natural Gas Production by Region and Country 2006-2030
Table K Federal Government Spending in Research and Development of
Solar Energy in relation with relevant events 1974-1991
Table L Federal Government Spending in Research and Development of
Solar Energy 1991-1999
Table M Government Spending in Research and Development in Germany
and Japan 1974-2005
Table N Key Data of the Lead Scenario 2008, Highlightening the Contribution
of Renewables
Table O Development of Energy Supply from Renewable Energy in Germany
Table P Total CO2 avoidance via the Use of Renewable Energy Sources in
Germany
Table Q Annual PV Production by Country, 1995-2006
Table R Annual PV installations, select Countries and Regions 2000-2007
Table S PV Production by Top Ten Producing Companies 2006 and first half
2007
LIST OF FIGURES |
Figure A Technological Innovation System: Scheme of Analysis
Figure B Contribution of renewables to final energy by type of source 1975-2007
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Figure C Structure of final energy supply from renewable energy in Germany,
2007
Figure D Jobs in the renewable energy sector in Germany
Figure E Total additional costs of renewable electricity supply
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LIST OF ABBREVIATIONS |
CH4 Methane
CO2 Carbon dioxide
DG Directorate General
EEG Erneuerbare Energie Gesetz
EFL Electricity Feed-in Law
EnBW Energie Baden-Württemberg
EIA Energy Industry Act
EUAs European Union Allowances
GDP Gross Domestic Product
GWh Gigawatt hour
HDTP 100.000 Roofs Program
IEA International Energy Agency
kWh Kilowatt Hour
kWp Kilowatt-peak
MAP Market incentive program
Mtoe One million tonne of oil equivalent
OECD Organization for Economic Cooperation and Development
OPEC Organization of Petroleum Exporting Countries
PJ Petajoule
PV Photovoltaïcs
RES Renewable Energy Sources
RPS Renewable Portfolio Standard
RWE Rheinisch-Westfälisches Elektrizitätswerk
TIS Technological Innovation System
TWh Terawatt Hour
VDEW Vereinigung Deutscher Elektrizitätswerke
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Map 1 | Germany
Source | University of Texas at Austin Library – July 11th 2009
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‘When the wind changes direction, there are those who build walls and those who build
windmills.’
Chinese proverb; used by Thomas L. Friedman in
Hot, Flat, and Crowded: Why We Need a Green Revolution - And
How It Can Renew America
‘I think we might be going a bridge too far.’
Lieutenant-General Sir Frederick Browing, Allied commander
during operation ‘Market Garden’ in World War II
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CHAPTER 1 |
1.1 | Introduction
This thesis concerns the solar energy policy of Germany. Since the 1970s the world of
energy has changed dramatically. The glorious German post-war welfare state was built
on cheap access to oil, but this altered during the seventies. Not only was the cheap
access denied after the first oil crisis of 1973, serious environmental damage due to the
use of fossil fuels was noted by the Club of Rome. Germany was one of the western
countries that had to face both challenges.
The country has been working on an advanced new energy policy ever since.
Germany claimed to have achieved major results, and seems to be a pioneer on the field
of renewable energy today. Since the oil-crisis of 1973 and the publication of the report
Limits to growth of the Club of Rome the energy threats have grown worse. The scarcity
of fossil fuel reserves becomes more significant every day, and climate change raises
serious questions concerning the use of fossil fuels.
The policy of Germany is particularly interesting. Germany faces both the
problems of energy security, and the problems of climate change. What makes the
country more noteworthy is that it has incorporated a major role for solar energy. Solar
energy is regarded by many leading experts as the energy resource for the future. Solar
energy should be the energy resource that can solve both the threats of energy security
and climate change.
1.2 | Problem Formulation
Germany is currently occupied with the challenge of creating energy security and
creating a sustainable manner of producing energy. As her energy policy is stated:
‘German energy policy aims to combine security of supply and affordable energy prices
with effective environment protection and climate change mitigation in an efficient
manner. A central principle is individual responsibility of market participants.
Investment decisions, for example lie solely in the hands of private energy suppliers.
Nevertheless, the government believes that it remains one of its responsibilities to create
conditions in which market forces can produce economically desirable outcomes.’1
1 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 27.
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This thesis will elaborate on this policy goal in relation with solar energy. The focus
will lie on the question in how far solar energy can make a contribution to these
challenges, at what cost, and with what type of regulations the German government tries
to achieve her energy goals. In order to investigate this, the thesis will be constructed
based on three different sub-questions.
The first sub-question concerns the problem of energy security. What is
Germany’s status concerning energy security? Which laws were implemented by the
German government to introduce renewable energy? Where these laws directly linked
with the concern of energy security?
The second sub-question focuses on the implementation of solar energy policy.
The playfield for creating solar energy policy will be explored. What type of motives
had the actors that were concerned with the implementation of solar energy in
Germany? Where they concerned with the threat of energy insecurity? Where they led
by ecological motives? Or where other concerns, like economic or political gain, the
push factor for the actors to promote the development of solar energy in Germany?
The third sub-question will judge the German policy regarding solar energy. At
what cost did Germany implement the solar energy policy, and was this investment
worth it?
Together these sub-questions will provide the answer to the main research
question.
Is the current solar energy policy of Germany able to make a serious
contribution to energy security and avoiding ecological threats in an economic
responsible manner?
1.3 | Methodology
The research that will be conducted in order to answer the main research question will
be based on a theoretical and empirical study. The theoretical part will consist of two
theories: The Resource Scarcity Model and the Technological Innovation System
Theory. The Resource Scarcity Model must help us understand the German concern of
Energy security. The Technological Innovation System Theory will provide the
framework, which will be used to determine the different actors and their role in the
implementation of the solar energy policy.
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The first sub-question concerning the energy security of Germany will be
answered by using the Energy Scarcity Model. The answer to this question will be
provided by using both qualitative and quantitative components. The problem of energy
scarcity for Germany will be analyzed by quantitative components, mainly data. The
laws that were formulated to implement renewable energy will be described by a
qualitative component, books and articles.
The second sub-question, which handles the construction of the solar energy
favoring policy of Germany, will be described by using the Technological Innovation
System Theory. This part will consist of mainly, quantitative components, both books
and articles. Some qualitative resources will be used to support the quantitative
components.
The third sub-question will be an evaluation of the achievements of the German
solar energy policy. The question will be answered by a mix of qualitative and
quantitative research methods. The answer will be based on data provided by the
German government and the International Energy Agency (IEA). For complementary
data other online resources will be used. The commentary on the German solar energy
policy will be taken from the content, in which they were expressed, both articles and
research reports.
1.4 | Theoretical Framework
Germany’s policy faces two immediate threats regarding to her energy policy: a
possible shortage of supply, and ecological threats. To analyse the first threat the
Resource Scarcity Model will be used. The Technological Innovation System Theory
will provide us with better insight in the development of solar energy in Germany. The
Technological Innovation System Theory will be used to determine the different actors,
networks and institutions that led to the implementation of solar energy policy in
Germany. When these structures are determined, we can use these facts to consider the
importance of ecological concern for the implementation of solar energy. Both the
Resource Scarcity Model and the Technological Innovation System Theory will be
elaborated below.
1.4.1 | The Resource Scarcity Model
The current trend of renewable energy has not come out of the blue. Energy security has
been priority for all governments ever since the Industrial Revolution. Countries face
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major problems related to energy security caused by three different causes, which are
intertwined. These problems are either caused by a factor of demand induced scarcity,
supply induced scarcity or structural scarcity.
Demand Induced Scarcity concerns a global rise in consumption of oil and gas,
while the per capita availability of both resources will after some point in time begin to
decrease. This effect is mainly caused by three factors: (i) population growth in energy
consuming countries, (ii) rising per capita income, and (iii) technological change.2
Supply-induced scarcity is caused by the dwindling of stock. In reality, demand-
and supply- induced scarcity interact. An increase in demand automatically causes shift
in relative share and creates a condition for competition. Supply demand scarcity will
grow in the future. Today’s scarcity is caused by predictions of a future shortage, and
shifts in regional reserves. Many experts agree on the fact that all major reserves have
been discovered, and supply induced scarcity is thus in the future even more likely to
grow.3
The oil crisis in 1973 caused by an Arabic boycott marked the vulnerability of
the western economies. Less oil became available and prices rose immediately,
stimulating an economic crisis, which had already begun. Whereas cheap oil had been
accessible during the golden years after World War II, suddenly the fundament of
western prosperity collapsed.
The event of 1973 is an example of structural scarcity. Structural scarcity is
supply-induced scarcity induced by the deliberate action of a major power, by non-state
actors such as major oil companies, or by producer cartels such as the Organisation of
Petroleum Exporting Countries.4
1.4.2 | Technological Innovation System Theory
The Technological Innovation Systems Theory focuses on the development, diffusion
and use of a particular technology (in terms of knowledge, product or both). TIS not
only contains components exclusively dedicated to the technology in focus, but all
components that influence the innovation process for that technology, and this makes
the theory extremely useful for this research on the implementation of solar energy.
2 Amineh, M and H. Houwelink, Global Energy Security and Its Geopolitical Impediments: The Case of the Caspian, in The Greater Middle East in Global Politics: Social Science Perspectives on the Changing Geopgraphy of the World Politics, Amineh (ed.), Koninklijke Brill NV, Leiden, 374-375. 3 Ibidem, 375. 4 Ibidem, 375.
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A technological innovation system (TIS) is made up of three structural
components. The actors and their competence form the first group. Actors can for
instance be large companies. Particularly important are the so-called ‘prime movers’.
These are actors who are technically so powerful that they initiate or strongly contribute
to the development and diffusion of new technology. Prime movers perform four
important tasks to promote the new technology: they raise awareness, undertake
investments, provide legitimacy and diffuse the new technology. Policy agents need to
be concerned with prime movers and estimate which role they can play in the possible
diffusion process.5
Prime movers can also be formed by different groups of actors. The constellation
of actors is a possibility if a number of actors share an interest in the promotion of a new
technology. For example: when nuclear power was developed in Sweden, there was a
shared interest by many actors: the state, the electricity intensive industry, the suppliers
of electricity and the environmental movement. They moved together to introduce this
new technological system. The main role of the policy maker must be to indicate
different actors and help them find each other, in order to cooperate.6
The second element of a technological system is a network. A network
constitutes important modes for the transfer of tacit and explicit knowledge. Integration
into a network increases the resource base of the individual firm, in terms of
information and knowledge, and therefore its degrees of freedom. A network influences
the perception of what is possible and desirable, but can at the same time constrain the
individual actor in making certain technological choices. Connectivity is important in
network. High connectivity can be created by market forces. However, the highest
connectivity is based on the development of trust and a collective identity. Examples of
different networks are public-private partnerships, technology platform consortia and
industry-university links.7
Institutions are the third element of the technological system. Institutions can be
hard ones, such as legislation, the capital market or the educational system, but soft ones
as well such as culture. Institutions greatly affect the specific path that a technology
takes.8
5 Jacobsson, and Johnson, Staffan and Anna, ‘The diffusion of renewable energy technology: an analytical framework and key issues for research’ in Energy Policy 28 (2000), 625-640, 629-630. 6 Ibidem, 637. 7 Ibidem, 630. 8 Jacobsson, and Johnson, Staffan and Anna, ‘The diffusion of renewable energy technology: an analytical framework and key issues for research’ in Energy Policy 28 (2000), 625-640, 630.
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The first step of a TIS analysis in functional terms is to describe the functional pattern
of the TIS in order to analyze how the TIS is behaving in terms of a set of key
processes. The key processes will be described in the following part. However, the
pattern for each TIS is different. The steps described below are neither a chronological,
nor an optimal framework.9
Knowledge development and diffusion (I) is normally the starting point of a TIS.
This function captures the process of how the current knowledge base performs, and
how it changes over time. Knowledge can be explained in different terms. We
distinguish different types of knowledge, for instance scientific, technological,
production, market and design knowledge, and sources of knowledge development such
as learning from new applications, production and imitation.10
A TIS needs to develop a large group of firms and organizations who choose to
be part of the new system. This group can be formed either by incentives, or by
pressures. The second function of the TIS analyses how this process evolves and how it
affects different actors. This process is a combination of different factors influencing
each other. The direction of the search (II) the TIS is determined by:
- visions, expectations, beliefs of growth potential
- actors perception of the relevance of different types and sources of knowledge
- actors assessments of the present and future technological opportunities and
conditions
- regulation and policy
- articulation of demand from leading customers
- technical bottlenecks
- crisis in current business.11
A technological innovation system evolves under considerable uncertainty in terms of
technologies, applications and markets. This function of uncertainty (III) is a
fundamental feature of technological and industrial development and is not limited to
early phases in the development of a TIS, but is a characteristic of later phases as well.
A successful TIS needs entrepreneurship during this process. Entrepreneurship, and its
9 Bergek et al, ‘Analyzing the functional dynamics of technological innovation systems: A Scheme of Analysis’ in Research Policy 37 (2008), 407-429, 414. 10 Ibidem, 414. 11Ibidem, 415.
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inherent capability of experimentation can help the TIS to develop further, instead of
stagnating.12
For an emerging TIS, or one in a period of transformation, markets may not
exist, or be greatly underdeveloped. Institutional change is often a prerequisite for
markets to evolve (IV). In the very early phase, ‘nursing markets’need to evolve, so that
a learning space is opened up in which the TIS can find a place to form. In a successful
TIS mass markets may evolve, often several decades after the formation of the initial
market.13 Legitimacy (V) is an important asset for the TIS. Mapping the functional
dynamics of legitimation for all relevant actors and stakeholder is an essential part of
the TIS. It is necessary to understand:
- the strength of the legitimacy of the TIS, in particular whether there is alignment
between the TIS and current legislation and the value base in industry and
society
- how legitimacy influences demand, legislation and firm behaviour
- what influences legitimacy and how.14
The TIS can not be created without a variation of resources (VI). We distinguish
different types of resources that are necessary to understand to which extent a TIS is
able to develop:
- competence or human capital
- financial capital
- complementary assets such as complementary products, services, network
infrastructure.15
The development of positive externalities (VII) is of major importance in the
formation and growth of the TIS. New firms entering a TIS is a positive externality,
which does not only bring new technology and labour into the TIS, but strengthens the
legitimacy of the TIS as well. The more firms that will enter the TIS, the more likely
will be that new combinations (between firms) will arise, which will help the TIS to
develop further in terms of market formation.16
12 Bergek et al, ‘Analyzing the functional dynamics of technological innovation systems: A Scheme of Analysis’ in Research Policy 37 (2008), 407-429, 415-416. 13 Ibidem, 416. 14 Ibidem, 416-417. 15 Ibidem, 417-418. 16 Ibidem, 418-419
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Having identified these seven key processes of a TIS, one can structure the
evolution of a TIS. It will be possible to stipulate the strengths and weaknesses of a TIS.
However, having identified the seven key processes do not tell us, whether a TIS is
functioning well or not.
In order to determine the direction of a TIS, the inducement and blocking
mechanisms need to be identified. Inducement mechanisms are for instance: the belief
in growth potential. Blocking mechanisms are for instance: lack of ability of the
proponents of a new technology to organise properly and thus to influence
legitimation.17
The inducement and blocking mechanisms together with the seven key processes
give an overview of how a TIS functions. If this has been identified for a particular
technology the analyst can determine, whether a TIS is likely to succeed or not, and if
policy implications will be able to help the TIS to develop in the good direction. Please
refer for a schematic overview of a TIS to Appendix 1, Figure A.
1.5 | Structure of the work
Chapter two will expand on Germany’s status, mainly focusing on oil and gas. The
Resource Scarcity Model will be applied in this chapter. In the second part of the
chapter the implementation of the laws concerning renewable energy will be discussed.
The chapter must provide the reader of a deeper insight of the energy situation in
Germany.
Chapter three will analyze the implementation of solar energy policy in
Germany. This implementation will be judged by the above mentioned three elements:
actors, networks and institutions and their seven key processes of the Technological
Innovation System Theory. The reader will get a better understanding of why and how
solar energy policy was introduced in Germany.
Chapter four will evaluate, supported by the facts gathered in the previous two
chapters, the German solar energy policy. It will take in consideration the demands that
were mentioned in the problem formulation of energy security and ecological threats in
an economic responsible manner.
In chapter five we will look back on the complete story of solar energy policy,
and answer the main research question.
17 Bergek et al, ‘Analyzing the functional dynamics of technological innovation systems: A Scheme of Analysis’ in Research Policy 37 (2008), 407-429: 420.
21
The terms Photovoltaïcs (PV) and solar energy will be used disorderly. PV is the
technology that is used to generate solar energy in Germany. There are different
methods to generate solar energy, however, these are neither exploited on a large scale
in Germany, nor part of the solar energy policy conducted by the German government.
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CHAPTER 2 | GERMANY’S ENERGY SITUATION
This chapter concerns the German problem of energy security, and how to battle it. The
German government formulated the problem herself as security of supply, it explained
as follows:
‘Security of supply means that, at any given time, there are sufficient sources of energy
to meet demand. As a country poor in natural resources, Germany is particularly
dependent on energy imports. Thus in order for Germany to maximize its energy
security, it needs to ensure a diverse mix of energy sources and energy suppliers from
around the world. This is particularly true in light of the Government's decision to
phase out nuclear power. It is also crucial to increase energy savings and energy
efficiency, because reducing energy demand through the more rational use of energy
also makes a significant contribution to security of supply.’18
This policy summons two different questions. The first question is what problems will
Germany face concerning energy security. For this part we will use the Resource
Scarcity Model as a theoretical tool. The second question that is introduced by this
statement is, by using which type of laws the German government tries to guarantee a
diverse mix of energy sources? And where these laws the result of the search for energy
security, or motivated by ecological or other arguments?
2.1| Germany’s Resource Status
Germany has Europe’s largest economy. The country ranks fifth on the list of the
world’s largest economies. The German economy is highly dependent on imports for
her security of energy supply. In 1985 the indigenous production of Germany peaked,
when it produced almost 58% of her total energy consumption.19 The production has
declined ever since. Today, the indigenous production covers approximately 40 % of the
supply. For absolute data, please refer to Appendix 2, Table A.
For oil supply Germany depends almost entirely on foreign imports. In 2005 the
country produced only 3.7% of the total oil requirements herself. In that year Germany
18 Federal Ministry of Economics and Technology, (2009) Report by the German Government on the Oil and Gas Market Strategy. 19 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 26.
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imported 151 Mtoe of oil, including both crude and petroleum products. The former
Soviet Union was the main source for oil supply, covering 33% of the total supply. The
Netherlands came second with 14%. The list of main sources for oil was completed by
Norway (12%), the UK (11%) and Libya (9%). The OPEC countries were responsible
for 14% of the total supply, OECD countries for 45%.20
Germany is a substantial gas producer, providing approximately 18% of its
supply from domestic resources.21 The country imported the other four-fifth of the gas
supply. The main supplier was Russia, that accounted for roughly 35% of the total
supply, and 42% of the imported gas. Norway was responsible for 24% of the total
German gas supply, and 29% of the imports. The Netherlands completed the top three
with 20% of the total supply of gas, and 24% of the imports.22
The only natural resource that Germany is capable of producing herself is coal.
In 2005 Germany had a total demand of 81.7 Mtoe, of which it imported 25,7 Mtoe.
Please refer to Appendix 2, Table B for the numbers. Germany’s hard coal reserves
totalled 152 million tonnes (Mt) in 2005. The less energy contenting substantial lignite
resources were indicated at 76 billion tonnes (Bt).23
In 2005 17 nuclear plants in Germany contributed to 26.6% of the German
electricity generation. They had a combined availability factor of 88%. Overall they
produced almost half the country’s baseload power generation.24 Nuclear energy was in
2005 responsible for 12% of the total supply of energy, see Appendix 2, Table B
The German economy is highly dependent on oil and gas. Oil accounted in 2005
for 123.4 Mtoe of the total demand of 344.7. Gas was responsible for 80.8 Mtoe of the
total demand of 344.7. Since the overwhelming part of oil and gas supply needs to be
imported from foreign countries, future German energy security is premature. Please
refer to Appendix 2, Table B for the numbers concerning Germany’s energy demand.
We will apply the Energy Scarcity Model to analyse the eventual threats for Germany
concerning scarcity of resources.
20 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 85. 21 Ibidem, 95. 22 Ibidem, 96. 23 Ibidem, 79. 24 Ibidem, 149.
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2.1.1 | Demand-induced Scarcity
Demand-induced scarcity concerns a global rise in consumption of oil and gas, while
the per capita availability of both resources will, after some point in time, begin to
decrease. This effect is mainly caused by three factors: (i) population growth in energy
consuming countries, (ii) rising per capita income, and (iii) technological change.
Demand-induced Scarcity enters the lives of high-income societies last, and is said to
have global implications.25
Reflecting on the first factor, the world population is forecasted to rise from
6.903 million people in 2010 to nearly 8.327 million people in 2030. However, Europe,
in which Germany plays an important role, will only slightly contribute to the rise in
world population. Europe’s population will only grow with an annual average of 0.2% a
year. The rise in world population will mainly be driven by other countries. The
countries that do not participate in the Organisation for Economic Cooperation and
Development (OECD) in Asia (India), the Middle East, Africa and Central and South
America will make the most important contribution to the growth of the world
population. Of the OECD Countries, the North American states will encourage the
population growth. For the absolute data, please refer to Appendix 3, Table C.
Considering the second factor, the rise per capita income is considered to grow
dramatically as well. The world Gross Domestic Product (GDP) is expected to rise with
an annual average of 3.5 %. Asian non-OECD countries will make the largest
contribution to the global growth in GDP. China will have an annual growth in GDP of
6.4%, with India at 5.6%. The GDP of Europe, of which Germany has the largest
economy, will increase with an annual average of 2.0. For all the regional data of
development of GDP, please refer to Appendix 3, Table D.
The third factor, technological change is likely to play a different role for OECD
countries, than for non-OECD countries. Technological change in countries such as
India and China, where a major part of the population will buy the first car during the
next twenty years, is said to have another effect on the increase of Demand-induced
scarcity, than technological change in Germany. In Germany the majority of the
population does already possess a car and the German consumer will probably buy a
more efficient one. However, the rise in GDP in Non-OECD countries, where a larger
25 Amineh, M and H. Houwelink, Global Energy Security and Its Geopolitical Impediments: The Case of the Caspian, in The Greater Middle East in Global Politics: Social Science Perspectives on the Changing Geopgraphy of the World Politics, Amineh (ed.), Koninklijke Brill NV, Leiden, 374-375.
25
group of people will get access to consumer goods, will encourage technological change
in these countries. Technological change, which is inevitably intertwined with demand
for fossil fuels, will increase Demand-induced scarcity.
The overall conclusion is that global demand in energy will continue to grow,
while the per capita availability of fossil fuels will diminish. Germany who depend
heavily on the import of oil and gas, as is stipulated in Appendix 2, Table B, will in the
future face demand-induced scarcity. A higher demand for energy due to population
growth, rise in GDP and technological change in other parts of the world will increase
the price of fossil fuels. This will heavily affect the German economy, if no measures
will be taken considering renewable sources of energy. On the demand side however,
there are dark clouds on the horizon.
2.1.2 | Supply-induced Scarcity
Supply-induced scarcity is caused by the dwindling of stock. In reality, demand- and
supply-induced scarcity interact. Where the extraction costs, refining and retail plus
profit mark-ups determine offer price, the intersection of demand and supply determine
the consumer price. Supply-induced scarcity or the anticipation may be expected to
provoke a process of international power struggle as the remaining reserves will
encourage the interest of dependent countries, as the stock depletes.26 In relation to
German dependency on foreign imports of oil and gas, this does concern the German
energy security as well.
Oil is Germany’s most important energy source, accounting for 36% of the total
German demand, see Appendix 2 Table B. Germany possesses virtually no oil reserves
herself, and is thus largely dependent on oil imports. Please refer to Appendix 4, Table
E for the world proven oil reserves. It was mentioned before that Germany imports most
of its oil from the former Soviet Union, about 33%.27 These countries to which belong,
Azerbaijan, Kazakhstan, the Russian Federation, Turkmenistan and Uzbekistan hold
together about 10.2 % of the world proven oil reserves. For the numbers per country
please refer to Appendix 3, Table E. In 2008 the former Soviet Union produced 16% of
the total world production of oil, a large share related to the proven reserves. For the
26 Amineh, M and H. Houwelink, Global Energy Security and Its Geopolitical Impediments: The Case of the Caspian, in The Greater Middle East in Global Politics: Social Science Perspectives on the Changing Geopgraphy of the World Politics, Amineh (ed.), Koninklijke Brill NV, Leiden, 375. 27 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 85.
26
numbers of oil producing countries, please refer to Appendix 4, Table F. The only other
country from which Germany produces a major percentage of her oil resources, that has
relatively large proven reserves is Libya. Libya sits on 3.5% of the world proven oil
reserves, see Appendix 4, Table E.
The Organisation of Petroleum Exporting Countries (OPEC) possesses the
majority of world’s proven oil reserves. It sits on 76% of the world proven oil reserves.
However, it produced only 44.9% of the total world oil production in 2008. Please refer
to Appendix 4, Tables E and F for the exact numbers.
We proved that demand-induced scarcity will be a major concern for Germany,
as follows supply-induced scarcity is also likely to arise, since the two are intertwined.
Supply induced scarcity will cause eventual problems for Germany as well. The data
showed that Germany depends highly on foreign imports for oil. The global future
demand for oil will grow enormously, while German demand will remain nearly the
same, as was shown in the previous paragraph. However, the supply-side will stabilize
on the same level of production, since the production only growing with an annual
average of 1%. Please refer to Appendix 4, Table G for the regional numbers. With in
addition the limited oil reserves, competition for oil seems inevitable.
Gas is the other natural resource on which the German economy heavily
depends. Gas accounts for 23% of Germany’s total fuel needs, see Appendix 2, Table B.
Contrary to oil; Germany produces a substantial amount of gas herself, about 18%.28
While Germany sits on 0.1% of the world gas reserves, see Appendix 4, Table H, the
remaining 82% needs to be imported from other countries. Russia is responsible for the
largest share of imported gas in Germany, accounting for 42%.29 Russia’s reserves are
the largest that a single country possesses, about 23.4%. Russia produced 19.6% of the
world’s total natural gas, which makes Russia the world leading producer. For the
Russian gas data compared to other nations, please refer to Appendix 4, Table H and I.
The other two nations that export a large share of their gas to Germany, Norway (29%
of the total imported gas) and The Netherlands (24% of the total imported gas) hold
only small reserves of gas.30 Norway sits on 0.9% of the world proven gas reserves, The
Netherlands on 1.6%, see Appendix 4, Table H.
28 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 95. 29 Ibidem, 96. 30 Ibidem, 96.
27
The story that was told for oil goes for gas. Although gas production will
increase with a higher annual rate, 1.6%, see Appendix 4 Table J. Scarcity is likely to
increase due to a higher demand, while the supply will not be substantially augmented.
Germany depends on the import of gas, meanwhile two of the most important exporting
countries for Germany, Norway and the Netherlands, are not likely to export more gas,
since they hold only limited resources themselves. The Netherlands will phase out the
export of gas between 2015 and 2020, and after that period Germany will become even
more dependent on Russian gas. Gazprom, the company that accounts for the Russian
part of the gas imports, has extended its export contracts to last until 2035.31
Germany will face inevitable difficulties securing the supply of oil and gas. The
only alternative that leaves Germany is renewable sources of energy, since it lacks fossil
resources.
2.1.3 | Structural Scarcity
Structural scarcity is supply-induced scarcity induced by the deliberate action of a major
power, by non-state actors such as major oil companies, or by producer cartels such as
the OPEC.32 Germany is vulnerable to this type of scarcity, since it imports most of its
oil and gas from one country, Russia, as was shown in the previous paragraphs. The
German government underlines the importance of the relation with Russia in her energy
policy:
‘Russia is Germany’s largest energy supplier, and Germany is Russia’s largest energy
market. The high proportion of German imports from Russia has a history going back
many decades. With gas delivery contracts lasting up to 2030 and beyond, German
firms have a secure foundation for deliveries in this field. In previous years, Russia has
always proved to be a reliable supplier. This partnership must be expanded further.’33
However, in times of conflict, such as in the past year, between Russia and the EU, this
dependency on a single country can leave Germany in a difficult position. Another path
31 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review 32 Amineh, M and H. Houwelink, Global Energy Security and Its Geopolitical Impediments: The Case of the Caspian, in The Greater Middle East in Global Politics: Social Science Perspectives on the Changing Geopgraphy of the World Politics, Amineh (ed.), Koninklijke Brill NV, Leiden, 375. 33 Federal Ministry of Economics and Technology - (2009) Report by the German Government on the Oil and Gas Market Strategy.
28
that Germany tries to take is to diversify its routes of supply, to secure the import of oil
and gas. This path is also described in the German energy policy:
‘The continuing diversification of sources of supply and transit routes remains a
central task. In the case of gas, the Nordstream pipeline through the Baltic is a major
contribution towards this; it forms part of the efforts to expand the Trans-European
Networks. And the NABUCCO pipeline project should also be welcomed in this
respect.’34
Another important asset in the German security of supply of gas is the Nord Stream gas
pipeline that secures the direct connection between Russia and Germany. The German
gas supply can not be blocked by a conflict between Russia and for instance Ukraine by
the construction of this pipeline. However, the threat of structural scarcity for Germany
should not be underestimated. The prospects for the future, concerning not only
competition for oil and gas, but other eventual conflicts as well, can alter the political
landscape. Diplomacy can fail. The most efficient manner to avoid structural scarcity is
to diversify the structure of consumption. Once more renewable energy seems the most
realistic alternative.
2.1.4 | Conclusion on Germany’s energy situation
The energy security of Germany will in the future face three types of scarcity. Demand-
induced scarcity will appear, due to population growth, rising per capita income, and
technological change mainly in other countries. Supply-induced scarcity will arise, since
the production of oil and gas will not increase proportionally with the increase in
demand. Good relationship ties with Russia and diversifying the structure of energy
imports and consumption can avoid structural scarcity, although this type of scarcity
remains difficult to predict. To guarantee energy security in the future, Germany needs
to transform to an economy in which renewable energy plays an important role. Coal
and nuclear energy were not perceived in Germany’s scarcity model. The following
paragraphs will clarify this decision.
34 Federal Ministry of Economics and Technology - (2009) Report by the German Government on the Oil and Gas Market Strategy.
29
2.2 | The long road to the Energy Feed-in-Law (1974-1991)
Germany started the renewable energy policy in 1974. The shift in policy was caused by
the oil crisis in 1973, which affected Germany as a resources dependent country even
more than other countries.35 In 1972 the Club of Rome published a report called Limits
to Growth. In the report environmental damage was denounced for the first time. As
was stated in Limits to Growth: ‘In searching for a new enemy to unite us we came up
with the idea that pollution, the threat of global warming, water shortages, famine and
the like, would fit the bill.’36 In Germany this led to a modest spending on the
development of renewable energy resources. The main response of the German
government consisted of promoting the use of nuclear and coal energy. The renewable
energy policy was chiefly a political tool to silence dissenters.37
In 1985 Hesse was the first German state to elect a Red-Green government. The
Green Party was evolved out of environmentalists and peace activists during the
seventies. Besides their fierce opposition to nuclear energy, the party core business was
the environment. The coalition with the socialist SPD meant that Hesse was the first
German state to introduce a ‘green’ policy. This development made the SPD take a
more progressive position on issues such as the environment and nuclear energy. In
1986 the SPD published a new party program, in which it stated the ambition to phase
out nuclear energy within ten years.38
The change of policy of the SPD was mainly influenced by one of the most
terrible disasters of the twentieth century. In April 1986 an accident took place in a
nuclear power plant in Chernobyl in the former Soviet Union. The catastrophe raised
questions about the safety of nuclear energy and created a negative public attitude
towards nuclear energy in Germany. The most important result of the Chernobyl
catastrophe in Germany was the establishment of a federal ministry for the environment.
This was the first step in the institutionalization of environmental policy in Germany,
which would play an important role in the new renewable energy policy.39
Another development in 1986 was the publication of a report that warned of an
impending climate catastrophe. Helmut Kohl, by then the chancellor of West-Germany,
35Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 599. 36 Club of Rome - (1972) Short Version of Limits to Growth 37 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 599. 38 Rüdig, Wolfgang, ‘Phasing Out Nuclear Energy in Germany’ in German Politics 9 (2000), 43-80: 48. 39 Lenschow, Andrea, Environmental Policy Integration: Greening Sectoral Policies In Europe (London: Earthscan 2002), 68.
30
declared in March 1987 that the climate issue was the most important problem for the
future.40 He installed an inquiry commission to investigate on preventive measures to
protect the earth’s atmosphere. This commission recommended a 30 percent reduction
of carbon dioxide (CO2) and methane (CH4) by 2005 compared to 1987 and an 80
percent reduction by 2050 for both gasses. They came up with three possible scenarios
to achieve this target:
1) Removing obstacles in energy policy: energy policy removes all major obstacles
preventing efficient energy use and the growth of renewable energies, fuel prices
approximately double in real terms by 2005, existing nuclear plants continue.
2) Abandonment of nuclear energy; intensified efforts in energy efficiency,
increase of renewable energy, greater increase in use of natural gas.
3) Expansion of nuclear energy.
The Chernobyl catastrophe made expansion of nuclear energy nearly political suicide.
This shaped a growing consensus to create a market for renewable energy.41
Finally, in January 1991 Germany became the first country to pass a law that
stimulates the growth of renewable energy. The law was supported by a broad coalition
that included the conservative members of parliament. The only members that voted
against the Electricity Feed in Law were the liberal members. The opposition came
predominantly from the electric utility industry. These large utilities which were very
influential in the German corporate state system were not able to mobilize on a large
scale. It is often stated that they underestimated the importance of the law. However the
major reason seems that the taking over of the East German electricity sector absorbed
their attention.42 The reunification of East- and West-Germany was achieved shortly
before the final passing of the law in the German parliament.
The Electricity Feed-in-Law of 1991 simply implied two points:
1. It obliges the network operator to purchase power from renewable sources where
it does not originate from a public sector power provider
2. It stipulates the minimum prices to be paid for this electricity43
40 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 600. 41 Ibidem, 602. 42 Ibidem, 602. 43 Gutermuth, Paul, ‘Regulatory and Institutional Measures by the State to enhance the Deployment of Renewable Energies: German Experiences’ in Solar Energy 69 (2000), 205-213: 207.
31
The prices were determined at such a rate that it became lucrative to invest in wind
energy. The prices that were paid for PV and biomass remained too low to serve as an
incentive to install the necessary facilities. A major problem was that the production of
regenerative electricity varied widely from region to region. This meant that the
financial burden was also unbalanced both locally and regionally. Other weaknesses of
the law were the approaching liberalization of the EU electricity market, which could
have disadvantaged the German network operators in the future. The lack of price
dynamism for the different renewable sources stipulated in the law was another
shortcoming. The electricity utilities did not gain any incentive by the law; this meant
that a powerful group of investors was neglected.44 The utilities were by this time
marked by the experiences of subsidies for hard coal used in electricity generation
which had grown to more than 4 billion annually in early 1990s.45 The future adoption
of renewable energies would thus demand a major transformation of the electric
utilities.
A definitive shift to a renewable energy based economy was not accomplished.
Nevertheless, an important first step was taken.
2.2.1 | Taking the lead (1991-2000)
Germany was reunited in October 1990. The immediate result was that Germany had
become one of the largest energy markets in the world. This made the impact of the new
renewable energy policy even larger. The new federal republic started with the
implementation of the new electricity feed-in-law in 1991. However, this law was far
from perfect and amendments were almost inevitable in the future. The European Union
(EU) also made improvements on closer integration. The Treaty of Maastricht was
signed on 7 February 1992, which would directly affect the member states home
sovereignty. The treaty made EU legislation the highest judicial authority.
In the second half of the 1990s the drive towards liberalization and privatization
of the European electricity and gas sector gained momentum. The European energy
market was until that moment, dominated by state-owned companies, who received
direct and indirect subsidies on conventional forms of energy. In many member states it
44Gutermuth, Paul, ‘Regulatory and Institutional Measures by the State to enhance the Deployment of Renewable Energies: German Experiences’ in Solar Energy 69 (2000), 205-213: 208. 45 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 603.
32
was difficult and time-consuming for new operators of renewable energy to get entrance
to the market. The responsible European authorities wanted to create a fairer and more
sustainable energy domain within the European borders. Liberalization of the European
Energy Market would respond to this desire. The entrance for new renewable energy
orientated companies would be moderated. The second benefit was that the state
subsidies for conventional forms of energy would be abolished.46
The process finally resulted in the draft of the EU white paper for energy policy.
It stated that energy policy must form part of the general aim of the Union’s economic
policy based on market integration, deregulation, limiting public intervention to what is
strictly necessary in order to safeguard the public interest and welfare, sustainable
development, consumer protection and economic and social cohesion. The three main
objectives of the energy policy would be:
- improved competition ability of the EU economy
- security of the energy supply
- environmental protection.47
The White Paper resulted in the EU directive in 1996 that obliged their member states to
liberalize their electricity markets starting in February 1999.
Germany reacted with an amendment to the Energy Industry Act (EIA) and to
anti-trust legislation which came into force in April 1998. The reform did put all utilities
on an equal footing with companies in all other sectors of the economy. The objective
was more competition in the electricity markets. The direct implication of this act was:
1. Abolition of the statutory exemption for demarcation contracts between utilities
2. Abolition of the statutory for exclusive concession agreements between
municipalities and utilities
3. Establishment of a specific right to third party access.
Next to more competition, also included in the law was that the supply of electricity
needed to be as environmentally compatible as possible.48
The EIA meant an important step forward for the promotion of renewable
energy in Germany. This was fixed in a set of regulations. In the EIA the EFL was
explicitly referred to, which made it an integral part of the new framework. The law
46 Jansen, Jaap, ‘A fragmented market on the way to harmonisation? EU policy-making on renewable energy promotion’ in Energy for Sustainable Development VIII (2004) 1, 93-107: 94-96. 47 Ibidem, 94. 48 Gutermuth, Paul, ‘Regulatory and Institutional Measures by the State to enhance the Deployment of Renewable Energies: German Experiences’ in Solar Energy 69 (2000), 205-213: 209.
33
legitimated, due to environmental compatibility, price discrimination on environmental
grounds. The act meant that no license was required to feed electricity to the system.
This favoured the producers of renewable energy, who previously needed a special
license. Third party access that obstructed the power generation of renewable energy
could be denied by municipalities. The final implication was that tariff customers could
generate power from renewables for their own consumption without losing their
entitlement to connection and supply as tariff customers.49
In the autumn of 1998 the Germany electoral results brought a new historical
coalition. The socialist party, the SPD formed an alliance with the environmental party,
the Green Party. The coalition was named the Red-Green Coalition. The socialist
Gerhard Schroder became the new chancellor of Germany. The new coalition meant an
important shift in environmental policy. The aims of the new coalition were climate
change policy, the creation of more jobs and the socio-economic development.50
On the subject of energy, the coalition was ambitious. The new energy policy would
not be limited to continuation of the EFL. In the agreement was:
- Redesign of the energy law to create and secure fair market opportunities for
renewable energy sources (RES)
- Removal of obstacles, which hamper increased use of RES
- Increased support for the production and launch of primary materials for
renewables
- Realization of a 100,000 roofs program for PV systems
- Consensus with the energy industry concerning the phase out of nuclear
energy.51
The realization of the 100,000 roofs program for PV systems was even entitles as too
ambitious by Greenpeace.52 Nevertheless, mainly through efforts of the SPD politician
Hermann Scheer, the plan was ratified in January 1999. It meant a great leap forward
for the development of solar energy in Germany. Under the Electricity Feed-in-Law,
solar energy had not been economically beneficial.
49 Gutermuth, Paul, ‘Regulatory and Institutional Measures by the State to enhance the Deployment of Renewable Energies: German Experiences’ in Solar Energy 69 (2000), 205-213: 210. 50 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 607. 51 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 50. 52 Tegenlicht: Here comes the Sun
34
The 100,000 Roofs Program (HDTP) promoted the installation and the extension
of PV plants with a power output of more than 1 kilowatt-peak (kWp). The target of the
program became mainly private persons, associations, foundations, housing
associations, freelancers, and small and medium sized enterprises. The encouragement
that was granted were long-term soft loans to a maximum amount of 500,000 euros. The
interest rates were very low, at 1.91% a year effectively. 53
The 100,000 Roofs Program was aimed at the realization of PV installations.
The Market Incentive Program (MAP) was designed for other types of renewables,
however it was open for PV projects as well. Those entitled to apply for the MAP were
similar to those in the case of HTDP: private persons, associations, foundations, housing
associations, freelancers as well as farmers and foresters. Support was made available
through direct investment subsidies and soft loans. The loans could cover 100% of the
total investment up to an amount of 5 million Euros.54 The Market Incentive Program
started on 1 September 1999.
The Red-Green government took another controversial step in order to achieve a
more sustainable energy system. The coalition introduced the Ecological Tax Reform.
This meant a tax on the consumption of electricity. Coal and nuclear energy were,
however, not affected. The industry was taxed with different rates, in order not to harm
the competition position of German firms abroad. The law came into force on 1 April
1999.55
The new government recognized the need to improve the Electricity Feed-in-
Law. The local monopoly utilities that were subject to the purchase obligation under the
old structure had ceased to exist upon deregulation of the electricity market in April
1998.56 Other shortcomings made it clear that if the renewable energy policy was to be
continued, a new law was necessary.
The objectives for the new law were similar to that of the Electricity Feed-in-
Law. However, the past decade had made clear that they were more urgent. The climate
and environment needed protection and the new law had to make this possible. The
energy costs were a major burden on the German economy, since Germany lacked fossil
53 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 50. 54 Ibidem, 51. 55 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 608-609. 56 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1687.
35
reserves itself. The costs of the energy supply had to be reduced by internalizing the
external costs. The result of this step would automatically be that geopolitical conflicts
in the future could be avoided. The promotion of the development of renewable energy
technologies was another major objective. The ambitious targets were determined at an
increase of the share of renewable sources to at least 12.5% of electricity supply by
2010 and at least 20% by 2020.57
The final draft of the Renewable Energy Resources Act was ratified in the
German parliament on 29 March 2000, and came into force on 1 April 2000. The
Erneuerbare Energie Gesetz (EEG) consisted of the following points:
1. The remuneration system was uncoupled from the average utility revenue per
Kilowatt Hour (KwH) sold and replaced by fixed, regressive and temporarily
limited feed-in-tariffs for the whole amount of RES electricity generated.
2. A priority purchase obligation for RES power was introduced, to be met by the
nearest grid operator.
3. A Germany-wide equalization scheme was adopted for the costs that grid-
operators insure as a result of the different amounts of RES each region feeds
into the power grid, which leads to an even distribution of the RES power
amounts and extends remuneration to all energy supply companies and
ultimately to all end consumers.
4. EEG also contained for the first time provisions concerning the financing of grid
connection and grid extension.58
The new clauses mainly solved the problems of the Electricity Feed-in-Law. The
European legislation was very strict on state aid. In order to comply more closely with
European law, further provisions were set. Every two years after the entry into force of
the law, the progress of the law has to be reported in terms of market introduction and
the cost development of RES power generation installations. The remuneration for wind
power was based on the different circumstances of the separate locations. The more
inland situated wind parks thus gained a higher reward than the parks situated near the
sea. The guaranteed remuneration of PV systems was also limited. The law stated that
the fixed price would not be paid for PV systems commissioned after 31 December of
57 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1686. 58 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 52.
36
the year that the total PV capacity reached 350 MW.59 This clause was added to prohibit
unequal competition in relation with other renewables.
The improvements of renewable energy were numerous: The remuneration for
electricity from PV systems and biomass was increased. A declining scale remuneration
for PV, wind energy and biomass was introduced. The new remuneration plans all
called for fixed prices, which guaranteed investment security. The energy utilities, who
had no advantage from the Electricity Feed-in-Law, could benefit from the EEG as well.
The costs for linking to the grid were made clearer. The necessary expansion of the grid
rested on the shoulders of the network operators. However, they were offered the
possibility to pass them on. The most important improvement was that a nationwide
cost equalization arrangement was included in the EEG. The burden of the costs was
divided in a fair manner, and carried equally.60
The Electricity Feed-in-Law of 1991 had clear shortcomings. The EEG had
substantially improved the conditions for a successful implementation of renewable
energy in Germany. The 100,000 roofs program implemented in 1999 had already given
an opportunity for solar energy to gain a respectable market share. The EEG gave even
more options.
2.2.2 | Consolidating the pioneer role (2000-2004)
The EEG was a major success for the red-green coalition. The act had made Germany a
leading nation on the field of renewable energy. However, the Green Party had not yet
lived up to their election promise. In 1998, the Green party acquired its first opportunity
to influence environmental policy directly at the national level as part of the ruling
coalition. This changed their situation fundamentally because the phase-out of nuclear
energy fell under federal level.61 The greens had emerged out of the protest movement
against nuclear power, and the greens had to deliver something on nuclear power to
fulfil their destiny.62
In 1998, the year that the Red-Green coalition came into government, 19 nuclear
reactors produced 30 percent of Germany’s total electricity production. The nuclear
reactors were costly, since they had been built recently, and faced high start-up costs.
59 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 53. 60 Gutermuth, Paul, ‘Regulatory and Institutional Measures by the State to enhance the Deployment of Renewable Energies: German Experiences’ in Solar Energy 69 (2000), 205-213: 208. 61 Reuter, Werner, Germany on the Road to Normalcy (New York: Palgrave Mac Millan 2004), 83. 62 Rüdig, Wolfgang, ‘Phasing Out Nuclear Energy in Germany’ in German Politics 9 (2000), 43-80: 63.
37
An eventual ban on nuclear energy would thus create a huge demand for renewable
energy, but also cause major opposition from the nuclear oriented energy industry. The
Greens expressed nevertheless their commitment to an immediate exit from nuclear
energy and promised to use all available administrative, economic and legislative means
to implement such a policy.63
The Red-Green coalition was able to manage the nuclear phase-out due to a set
of compromises with potential opponents. The final ban on nuclear energy was
approved by the German cabinet in September 2001. The act on the structured Phase-
Out of the utilization of Nuclear Energy for the Commercial Generation of Electricity
focused on three points:
1) A ban on constructing new commercial nuclear power plants and the restriction
if the residual operating time of existing nuclear power plants to 32 years from
the time of the plant’s start up.
2) A maximum permitted residual electricity volume for each individual nuclear
power plant.
3) As of 1 July 2005, prohibition of the delivery of spent fuel elements for
reprocessing and restriction of nuclear waste disposal to final storage.64
The government did not limit their renewable energy policy within their borders. The
government created the German Energy Agency DENA, which was given the task of
promoting renewable energy world-wide. In the summer of 2002 the International Area
RES export initiative was founded. The objective was to develop a consistent strategy
for the international diffusion of German RES technology. A further initiative was the
500 million euro support for developing countries during the next five years to develop
RES. Another 500 million euro was provided to increase the energy efficiency in
developing countries.65
In 2002 the German voter granted the Red-Green coalition a second term. The
result of the election success of the coalition was that the responsibility for renewable
energy was transferred from the Ministry of Economics to the Ministry for the
Environment.66 The Ministry of Economics had been held by a social democrat, the
63 Rüdig, Wolfgang, ‘Phasing Out Nuclear Energy in Germany’ in German Politics 9 (2000), 43-80, 49. 64 Reuter, Werner, Germany on the Road to Normalcy (New York: 2004). 65 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 55. 66 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1688.
38
environmental ministry was about to be occupied by a green member, which would
imply a more favourable policy towards renewable energy.
It became clear during the second term that the EEG of 2000 would not be able
to guarantee the increase of energy derived from renewable energy to at least 12.5
percent by 2010, and at least 20 percent by 2020. The overall framework for feeding in,
transmitting and distributing electricity from renewable energy sources needed to be
considerably improved. A series of amendments were demanded to ameliorate the EEG
of 2000.
On 17 December 2003, following a proposal by environment minister Jürgen
Trittin, the cabinet presented a government draft for a comprehensive amendment to the
EEG. The new amendment came into force on the 1 August. The amendment meant the
approval of the success of the 100,000 Roofs Programme. The so-called ‘Photovoltaics
Amendment’ introduced improved terms from 1 January 2004 for the remuneration of
solar power in compensation for the successful conclusion in summer 2003 of a
nationwide programme to install solar power technology on 100,000 roofs.
The phasing-out of nuclear energy, and the amendments of the EEG meant the
definitive shift towards a renewable energy based economy for Germany. The success
of 100,000 Roofs Programme had guaranteed an important role for solar energy in this
process.
2.3 Conclusion
Energy security is a major threat for Germany that will increase in the coming years.
Germany possesses herself limited resources, while its economy depends highly on
imported oil and gas. These fossil fuels will become scarce during the following twenty
years, mainly caused by other countries. Growth of population, GDP and technological
change in other regions of the world, as well as dwindling resources, will harm
Germany, if it does not adapt to other sources of renewable energy. Coal and nuclear
energy are phased out as serious options in Germany by politicians, who created a
policy that favors the introduction of renewable energy. They were led by ecological
arguments rather than concern for energy security, as proven by the nuclear phase out.
The pursuit of energy security was, although, an important motivation for the creation
of renewable energy laws. Solar energy plays an important role in the renewable energy
policy of Germany. It will be considered in the next chapter why it plays such a role.
39
CHAPTER 3 | CONSTRUCTING A FAVOURABLE CLIMATE FOR S OLAR
ENERGY IN GERMANY
In this chapter the construction of the final solar energy favourable climate in Germany
will be outlined. Three phases will be distinguished. The initial stage describes the
starting point of the process. The main focus in this part is on the German governmental
structure and how this facilitated knowledge creation. The middle stage handles the
creation of political conditions that made large scale solar energy implementation
possible. The final stage will describe the market formation for solar energy companies.
The theoretical framework in this chapter will be provided by the Technological
Innovation System Theory. The Technological Innovation System will be used to
determine the different actors, networks and institutions that led to the implementation
of solar energy policy in Germany. In the conclusion of this chapter it will be identified
which key features of a technological innovation system mentioned in chapter 1 were
essential for the establishment of a market for solar energy in Germany. Another
important aspect that will be identified is the type of motives that the different actors
had in promoting the evolution of solar energy in Germany. The sub-question that will
be answered in this chapter is: What type of motives did the actors that were concerned
with the implementation of solar energy in Germany introduce?
3.1 Initial stage: the birth of actors
3.1.1 | Germany’s governmental structure
Germany is a federation of states. The federal authority resides in Berlin, but has only
limited authority over the 16 German states. Each of these 16 sixteen so-called Länder
has his own government and own legislation. Within these Länder, the municipalities
have a relatively large share of local autonomy.
All different levels of government in Germany have the authority to legislate
over energy policy according to the German Constitution. However, if conflict should
arise the federal law will take precedence over others laws. In reality the federal
government legislates the broad principles concerning energy policy. The states are
allowed to fill in the details of the specific law and handle the administration. The result
is that since the states have the competencies for implementing the federal laws, they
40
automatically have a large degree of freedom to pursue their own objectives in for
example energy and electricity policy.67
The states have two efficient tools to conduct their own energy goals. They pose
the regulatory competencies to license the procedures for tariffs, which enable them to
favour renewable energy over fossil energy. The second tool the states have is that they
are able to offer financial incentives to regionally based companies. Once a state has
decided to implement renewable energy, it this has the competency to encourage such
projects.
Before the liberalization of the German electricity market in April 1998, the
German utility structure was quite fragmented. The German market consisted of a large
number of utilities. The utilities operated on different levels. The dimension of the
utility determined if they operated on local, regional or federal level. The local
governments had a significant influence on these utilities. The influence was based on
two important facts. Many local governments owned shareholdings in the local and
regional utilities and were directly involved in the policy of the utilities. The second fact
was that the German constitution granted a large share of autonomy to local
governments. The local governments thus were politically responsible.
The direct result of the fragmented structure was that no statutory or state –wide
monopoly was possible for the generation of energy, and the supply of the energy. The
decentralised pattern of both the government and the energy sector opened up room for
lobbying organisations. Convincing different political actors at state and municipal level
of the potential of renewable energy proved easier, than organizing a successful lobby at
federal level.68
3.1.2 | Development of interest groups
The development of solar energy related organisations and institutions is closely
intertwined with crucial historical events. In the initial stage, two events are
distinguished that influenced the starting process of solar energy development
enormously: The oil-crisis of 1973 and the Chernobyl disaster in April 1986. Another
factor not linked to a particular event that stimulated solar energy development was
increasing environmental concern. This concern was firstly reported in 1972 after a
research by the Club of Rome and has continued ever since.
67 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’, 18-19. 68 Ibidem, 18-21.
41
In the aftermath of the first oil-crisis in 1973 the German government started
spending money on the development of renewable energy. In 1975 the first German
solar energy was founded in München, the Deutsche Gesellschaft fur Sonnenenergie.
The main concern of this organisation is to promote the interests of the producers and
consumers of solar energy, as well as the enlargement of the market for renewable
energy.69
Another type of solar energy organization that was founded in the seventies were
the industrial associations. In 1978 the German Solar Energy Industries Association was
founded. This association focused initially on the diffusion of technological
information. However, in the eighties it orientated more towards influencing members
of the German parliament. In 1979, the German Professional Association of Solar
Energy saw daylight.70
From 1977 until 1989 the German government funded 18 universities, 39 firms
and 12 research institutes to do research on solar energy and its development. The direct
result was the first solar demonstration project in Germany in 1983. The project was
entirely financed by the German government. The solar technology was developed by
the German firm Telefunken, later known as AEG. In 1989 the cooperation between the
regional utility Bayernwerk and Siemens on solar plant resulted in the foundation of
Siemens Solar. This firm is currently one of the largest firms in the solar industry.71 In
this manner the German government facilitated the creation of solar energy knowledge
development. Large companies were not encouraged by government investment. The
large potential market they perceived in alternative energy was the main trigger.72
After the Chernobyl disaster of 1986, two other important solar energy related
organisations were founded. In 1986, the Aachen based Förderverein Solar Energie was
founded, which would eventually be involved in the creation of the Aachen Model in
1993. The Aachen Model will be discussed in the following paragraph.
In 1988 the most influential lobby organisation EUROSOLAR was established.
EUROSOLAR has promoted the total replacement of nuclear and fossil energy sources
with renewable energy sources. The organisation acts to change conventional political
priorities and common infrastructures in favour of renewable energy, from the local to
69 International Solar Energy Society - Wie is die DGS? 70 Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 15. 71 Ibidem, 13-14. 72 Anonymous interview
42
the international. The main goal of EUROSOLAR has been to bring expertise together
from the fields of politics, industry, science and culture in order to successfully
introduce solar energy.73 Although EUROSOLAR claims to work independently of
political parties, institutions, commercial enterprises and interest groups, it is
noteworthy that Hermann Scheer is the current president of EUROSOLAR.
The Chernobyl disaster had a direct impact on the German government structure.
In response to the event the Ministry for the Environment, Nature Conservation and
Nuclear Safety was established on 6 June 1986. The ministry was formed from the
departments of the Ministries of the Interior, Agriculture and Health. The creation of
one responsible ministry was important for the organisational set-up of environment
competencies within the governmental institutional structure. The opportunity arose for
agenda-setting and the right of initiative for environmental related policy, as well as
competence in defining problems and the coordination at an inter-ministerial level. As a
result it became possible to influence environmental policy at cabinet level.74 Indirectly,
the foundation of the new ministry was thus favourable for the development of solar
energy in Germany.
Please refer to Appendix 5, Table K for the data of the increase in government
investment in the research and development of solar energy. The investment is clearly
related to the events mentioned earlier. The table highlights the important role that the
federal government initiative played during the seventies and eighties in encouraging
the development of solar energy.
3.1.3 | First step in the renewable direction: the Electricity Feed-in law
The Electricity Feed-in Law came into power in 1991. Although the law did not have a
direct impact on the development on solar energy, it created a favourable climate for the
development of renewable energy in Germany. Mainly, the wind energy sector
experienced a large boom after the implementation of the law. Nevertheless, the
development of renewable energy and solar energy is closely intertwined.
In Nordrhein Westphalia the first step towards a more renewable energy state
policy was marked in 1987. The social democratic state government implemented the
REN programme, the Programme for the Efficient Use of Energy and the Utilisation of
73 EUROSOLAR - What is EUROSOLAR? 74 Lenschow, Andrea, Environmental Policy Integration: Greening Sectoral Policies In Europe (London: Earthscan 2002), 65.
43
Renewable Sources. This programme was an example for other states. The REN
initiative has been assessed as having been very successful, especially because it
secured the extension of the wind power domestically when there were decreasing
federal subsidies for this technology.75 Although the REN initiative was a direct
stimulus for the development of wind energy in Germany, the development of solar
energy was encouraged by the initiative.
In 1988 the initiative was elevated to federal level. A parliamentary resolution
called for more RDD development. The ministry of Research responded with an
experimental 1000 roofs programme for solar energy in 1990, which led to the
generation 5.3 MW of electricity from solar energy during the nineties.76
The REN initiative coincided with other favourable developments of renewable
energy in other German states. Effective lobby groups for wind power succeeded in
gaining more support in states as North Rheine Westphalia, Lower Saxony and
Schleswig-Holstein. In southern states as Bavaria and Baden-Wurttemberg the lobby for
hydro-electric power was able to influence politicians. These two coincidental
developments created favourable conditions for the implementation of the Electricity
Feed-in Law in 1991.
EUROSOLAR coordinated the policy development of the Electricity Feed-in
Law. The organisation played a key role in the informal development, as well as the
later implementation of the law. EUROSOLAR facilitated the consensus between the
various members of parliament, which each represented different interests. The CDU
and FDP – the conservative and liberal parties- had a direct interest in the development
of hydro-electric power. The socialist fraction supported the development of wind
power. Due to the activities of EUROSOLAR, the Electricity Feed-in Law was ratified
without one dissenting vote.77
75 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’, 21. 76 Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 16. 77 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’, 23.
44
3.2 | The Middle Stage: Securing development
3.2.1 | Initiating solar energy on a local level: The Aachen Model
The Electricity Feed-in Law encouraged the development of renewables that were less
expensive to generate, mainly wind energy. However, for solar energy the Electricity
Feed-in Law was not cost-covering.
In 1992 the Förderverein Solar Energie came up with the concept of a feed-in
law that would support the local development of solar energy. The organisation started,
together with local environmental groups and EUROSOLAR, to promote the concept
law to local governments.78 In 1993 the lobby resulted in success. The city council of
Aachen was the first to approve the favourable tariff for solar PV.
Aachen, the home city of the Förderverein Solar Energie, calculated a tariff that
would allow recovery of the costs of solar PV plus a modest profit. The tariff was much
higher than the tariff of other technologies. But the Aachen city council said in effect:
‘We want solar and we are willing to pay what it takes.’79
The Aachen Model became a success for the development of solar PV in
Germany. The Bavarian city of Freising followed shortly thereafter, and between 1994
and 1997 about 30 Bavarian villages implemented a similar programme. Together these
villages created the willingness to pay for the cleanest type of energy, and not
necessarily the cheapest.80 The largest utilities were typically private companies with
some public ownership, whereas local utilities were often owned by the communities.
This opened the door to local political influence as in the case of local feed-in-tariffs for
solar energy.81
The federal supported 1000 roofs programme, together with the local initiated
Aachen model, continued the development of solar energy in Germany. The lobbying
on local level by solar organisations such as EUROSOLAR and Förderverein Solar
Energie made it easier to convince politicians. The German decentralised state system
granted this operating space.82 Local initiatives also encouraged large multinationals to
78 Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 16-17. 79 Windworks.org - Paul Gipe ‘The Aachen solar tariff’ 80 Ibidem. 81 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1687. 82 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’, 17-23.
45
participate in the development of solar energy on a municipal level. In 1998 the city of
Gelsenkirchen with the investment of Shell developed a new solar plant of 9.5 MW.
Meanwhile the federal government directly subsidized the development of solar;
between 1990 and 1999 this resulted in the funding of 15 universities, 41 firms and 17
research institutions.83 However, the federal government investment in the research and
development of solar energy diminished significantly during the nineties, please refer
for the absolute numbers to Appendix 5, Table L. The initiative during this period was
more located on a municipal level.
3.2.2 | Reunification: new opportunities in the east
The reunification of Germany had a deep impact on both East and West. The imbalance
between the two was enormous. The west had been shaped by American capitalism, the
east by Soviet market planning and the results were significant. The productivity in
West-Germany far exceeded that of its East-German counterparts. In 1990, estimates
placed East-German productivity at one-half to one-third that of West
Germany, with manufacturing lagging the farthest behind at around one-sixth of the
productivity of West-German manufacturing. 84
Nevertheless, East-Germany had a surprisingly well-educated skilled workforce
that was underutilized by the former market planning economy.85 The prospects were
thus overwhelmingly optimistic. The western part could bring in the necessary capital
and expertise. The eastern part, which harboured a cheap and skilled workforce, could
establish a large industrial base. The bonus was hidden in the fact that the unification
extended the German domestic consumer market.
In the end the reunification would demand large efforts. The political, economic
and institutional base in the eastern part required large resource commitment, and
inevitably patience. The prolonged investments would place a tremendous burden on the
fiscal and monetary infrastructure of the west. This would result in burdensome deficit,
inflationary pressure, and eventually future economic growth. And finally, the
rehabilitation of the east would be directed by government central planning that
emphasized public work projects and an equal distribution of benefits rather than the
encouragement of business investment and enterprise that would create productive new
83 Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 16. 84 Waqar, G, Samuel Szewczyk, Tayyeb Shabbir, ‘Financial Analysts’ Forecasts and Unprecedented Events: The Case of German Reunification’ in International Advances in Economic Research 13 (2007) 2, 123-138: 126 85 Ibidem, 127.
46
jobs.86 The development of a renewable energy industry in the eastern part could have
huge potential in former East-Germany.
The unification offered a great opportunity for actors that were in favour of the
implementation of renewable energy to build strong coalitions. Politicians were able to
score with ambitious projects that would develop the east in a sustainable manner. PV
was in this story extremely suitable to promote.87 By building up PV factories in East
Germany this area was supported and high-tech industry was introduced there. The PV
policy made it possible to support the East-German economy after the unification.88
Obviously, not only the PV industry was about to profit from the unification.
The wind turbine industry was established in the east. Together, with the solar
favourable actors they were able to mobilise an influential coalition. The wind lobby
showed even more influential, since they were supported by the Peasant trade union.
This union saw major possibilities for their members in the east.89 The argument that
the politicians and labour unions introduced had a direct impact on the evolution of
solar energy related industry in the east. The industry is today mostly located in East
Germany.
On the eve of 1998 the proponents of revising were outnumbering the potential
opponents. The SDP feared that the liberalization of the European market would further
a long-term decline in the energy sector. The wind turbine industry had grown to
become the second largest in the world following the Electricity Feed-in law. Although,
the liberalization could seriously hurt this achievement. They were eager to support
state measures that could prohibit this potential decline.90
The Greens involved, meanwhile the trade union IG Metall,91 the union for
metal worker, both blue and white collar. IG Metall is often considered to be the major
trend setting union in bargaining on a national level. This coalition extension seriously
strengthened the case for a more favourable renewable energy law. Many local and state
level politicians were involved in successful municipal and regional initiatives. That
86 Waqar, G, Samuel Szewczyk, Tayyeb Shabbir, ‘Financial Analysts’ Forecasts and Unprecedented Events: The Case of German Reunification’ in International Advances in Economic Research 13 (2007) 2, 123-138: 127. 87 Correspondence dr. Axel Michaelowa 88 Correspondence prof. dr. Michael Duren 89 Michaelowa, Axel, ‘The German Wind Lobby: How to successfully promote costly technological change’ Hamburg Institute of International Economics (2004), 8. 90Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 19. 91 Ibidem, 19.
47
even encouraged large companies to get involved in these projects.92 The new
opportunities in the east mobilised more proponents, most notably the peasant trade
union and IG metall. Finally, in 1998 a new government was formed between the SPD
and the Green Party. For the development of solar energy the situation became brighter,
since the SDP had formulated the 100.000 roofs programme back in 1994. Probably,
this ambitious programme was initiated by SDP Member of Parliament, and
EUROSOLAR president Hermann Scheer.
3.3 | The final stage: market formation and public acceptance
3.3.1 | Inactivating opposition
In 1990 many actors, who could have had eventual damage from the Electricity Feed-in
Law did not organise. The utilities, as many any actors underestimated the importance
of the law, and they were caught up in organising the reunification. During the nineties
the effects became more significant, and the opposition started to form coalitions.
On a local level resistance against PV installations was unknown during the
nineties, however, there were experiences with wind-energy. The authorities proved
extremely successful in coordinating the eventual local resistance by involving the
population in the projects.93 The Building Law of 1996 granted the local communities
the regulatory competencies to define the construction areas for power installations in
their use of zoning plans.94 The municipalities were thus able to determine where it is
feasible to build, for instance, wind plants.
Companies, on the other hand, tried to let the population take part in renewable
energy. They offered shares to people to become an active participant in a local project.
Many Germans obtained a direct interest in renewable energy themselves. During the
nineties, mainly the wind projects were successful in selling shares. In 1996, the utility
Bayernwerk introduced the first ‘green pricing’ scheme. The people were offered shares
to buy green electricity for about 20 pfennig per KwH. The example was followed by
Rheinisch-Westfälisches Elektrizitätswerk (RWE), and 15,000 subscribers were found
willing to pay twice the normal tariff for electricity generated by PV, hydropower and
92 Shell was mentioned as example, but also ASE, and Mobil Solar got involved, Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 18. 93 Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004)1, 47-57: 56 94 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’, 26.
48
wind energy.95 The German population was actively involved in the ‘greening’ of the
energy sector.
In 1996 the opposition to the current Electricity Feed-in law came from various
directions. The main opponent was the utilities association Vereinigung Deutscher
Elektrizitätswerke (VDEW). Some of the large utilities, who came out in stronger
opposition than ten years before, decided to follow this path as well. They were still not
benefiting from the Electricity Feed-in Law, but were carrying the burden of the new
policy. The large utilities feared for their investments in other types of energy, and the
lost of the extensive subsidies they received for the generation of coal. The utilities were
granted more than 4 billion annual subsidies from the federal government for the use of
hard coal in electricity generation.96
VDEW found an ally in Directorate General (DG) Competition, a subdivision of
the European Commission that is responsible for fair competition in the EU. DG
Competition considered the subsidies as unequal competition as they were granted in
the law. The subsidies were regarded as excessive state aid.
Another ally was the Association of German industry. They feared a diminishing
competition position for the German industry eventually caused by an increase of
energy prices.97 Other fierce opponents were logically the trade unions promoting the
interests of the miners, and chemical industry. 98 Perhaps, the most important opponent
was the Ministry of Economic Affairs.
The ministry had always been the main ally of the utility industry. They shared
the vision of a central energy supply based on nuclear and coal generation and perhaps
additional renewable energy. Nevertheless, small and decentralized forms of generation
were deemed uneconomic and foreign to the system.99 The Ministry of Economic
Affairs tried repeatedly to reduce the rates granted to the generators of renewable
energy under the Electricity Feed-in Law.100 In 1997 this culminated in a successful
95 Jacobsson, Staffan et al, ‘Transforming the Energy System – the evolution of the German technological system for solar cells’ in Technology Analysis and Strategic Management 16 (2004), 3-30: 17-18. 96 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 603. 97 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1687. 98 Ibidem, 1687-1688. 99 Lauber,Volkmar, ed, Switching to Renewable Power: A Framework for the 21st century (London: Earthscan 2005), 135. 100 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 602-605.
49
protest demonstration of the Metalworkers Union, different farmer and church groups
and renewable energy and environmental organisations.101
Once that had failed, the ministry tried to delay the ratification of the Renewable
Energy Act. They shared the fear with the German industry, that the competition
position abroad of German companies would be harmed. At one point the ministry even
persuaded the government to postpone the act until the European Commission had taken
a look at the new act. 102
The playing-field was changing. In 1996 in their battle against the Electricity
Feed-in Law VDEW looked unanimous in their opposition. In 1998 the utilities were
becoming divided. Preussen Electra shifted sides and became in favour of a new act.
The company demanded that under the new act the burden for renewable energy would
be shared on a national level, instead of being shared on a regional level. The entrance
of Preussen Elektra was of major importance, since it offered the proponents new
information on their counterparts.103
The utility was possibly inspired by a new amendment in the Renewable Energy
Act. The new law offered possibilities to include the electric utilities as potential
beneficiaries of compensation for the generation of renewable energy. Under the
Electricity Feed-in Law they were excluded from investment in renewable energy, since
that was prohibited for state owned companies. The liberalization of the energy sector
under the Industrial Energy Act in 1998 had made them private companies. The utilities
were now able to invest themselves in renewable energy. This opportunity had not only
weakened opposition from the utility industry, it also created new potential investors in
renewable energy.104
The municipal development of solar energy had successfully encouraged large
multinationals to participate. However, Siemens moved to the United States, since the
production conditions seemed more favourable. Another large company, ASE
threatened to make the same move if no market formation was initiated in Germany.
101 Hustedt, M., ‘Windkraft Made in Germany’ in Windiger Protest- Konflikte um das Zukunftpotential der Windkraft (Bochum: 1998). Used in: Breukers, Sylvia, Changing Institutional Landscapes for implementing wind power: A geographical comparison of institutional capacity building: The Netherlands, England and North Rhine-Westphalia (Amsterdam: 2006), 120. 102 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 610-611. 103 Lauber,Volkmar, ed, Switching to Renewable Power: A Framework for the 21st century (London: Earthscan 2005), 139. 104 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1981-1696: 1695.
50
This statement did put enormous pressure on the federal government to embrace a new
renewable energy act to promote solar energy in Germany.105
On 28 September 1999 the SDP and the Green Party agreed on a treaty with the
leading unionists to reform the energy law.106 The supporting coalition had grown too
strong and too intertwined within the German corporate structure, that it was impossible
to stop it. VDEW and DG competition continued their battle, but they were finally
defeated in 2001, when the European Court of Justice rejected their indictment in the
case of Preussen Elektra AG vs. Schleswag AG.
3.3.2 | Public Acceptance
The Red-Green coalition had achieved what they had promised in their coalition
agreement back in 1998. The Nuclear Phase Out followed in 2001. The direct result of
the 100,000 Roofs Programme and the Renewable Energy Act were essential for the
successful implementation of solar energy in Germany. The 100,000 Roofs Programme
was the incentive that was needed to encourage further development of PV in Germany.
The Renewable Energy Act guaranteed market formation. The so-called nursing market
brought twenty years of investment security with an assured profit. Solar energy became
a very attractable option for investment.
The Red-Green coalition was eager for success in terms of employment.
Unemployment had risen to nearly 4 million on the eve of the 2002 elections. The topic
automatically became the main issue of the campaign. Other hot topics were
immigrants, the wars in Kosovo and the American invasion of Afghanistan. Although
the Nuclear Phase Out of 2001 was a remarkable achievement and a clear breakthrough
it never dominated the campaign. The CDU and the FDP still were proponents of coal
and nuclear energy. An eventual victory by both parties would have had serious results
for the Renewable Energy Act. Nevertheless, the Red-Green coalition was victorious
once more in 2002.107
The Green Party got a larger share of votes in the 2002 elections. The main
implication was that the party won influence during the 2002 coalition negotiations. The
Green Party was able to transfer the responsibility for renewable energy from the
105 Lauber,Volkmar, ed, Switching to Renewable Power: A Framework for the 21st century (London: Earthscan 2005), 137. 106 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623: 607. 107 Pulzer, Peter, ‘The devil they know: the German federal election of 2002’ in West European Politics 26 (2003), 153-164.
51
Ministry of Economic Affairs to the Ministry for the Environment. The result was that
renewable energy became the responsibility of a Green minister instead of an SPD
minister. This shift moderated the ratification of the amendments of the Renewable
Energy Act in 2004. 108
In 2003 opposition arose once more, this time out of the inner-circle of the SPD.
Influential Minister of Economic Affairs Wolfgang Clement from the coal state North
Rheine Westphalia joined the opposition against the Renewable Energy Act. He argued
that the act seriously harmed various companies. Clement was successful with his
complaints. A hardship clause was adopted, which enlightened the burden for
companies that were significantly affected by the Renewable Energy Act.109 The SDP
was still of value for the coal lobby.
In the aftermath of renewable energy act of 2000 one could develop the firm
building of opposing coalitions. This trend from an all party consensus towards a more
polarised policy style was accentuated by the draft of the amendment of the Renewable
Energy Act in 2004. The governing coalitions again found support by various renewable
energy technology manufacturers and their associations, but also by the Peasant
organisation that saw growing opportunities for their members in renewable energy.
Members of the conservative and the liberal parties opposed the new initiatives.
However, opposing the implementation of renewable energy is not an attractive arena to
get a large share of support of voters in Germany.110 A number of utilities have also
altered their view on renewable energy. Some have started generating renewable energy
themselves. The VDEW was in 2005 no longer unanimous on the issue. Energie Baden-
Württemberg (EnBW), one of the four large utilities was in favour of the nuclear phase
out.111
3.4 | Conclusion
The first step that was taken in creating a solar energy favourable climate was the
investment in knowledge development and diffusion of solar energy, which involved
research institutes and universities by the federal government. This encouraged a large
108 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1688. 109 Lauber,Volkmar, ed, Switching to Renewable Power: A Framework for the 21st century (London: Earthscan 2005), 141. 110 Wustenhagen, Rolf and Michael Bilharz, ‘Green Market Development in Germany: Effective public policy and emerging customer demand’ in Energy Policy 34 (2006) 13, 1681-1696: 1688. 111 Lauber, Volkmar, ‘Three decades of Renewable Electricity Policies in Germany’ in Energy and Environment 15 (2004), 599-623.
52
group of firms and organisations (lobby groups) to participate in the development of
solar energy, the second key feature of a Technological Innovation System. Politicians
stimulated institutional change, supported by EU legislation that created essential
nursing markets for solar energy. Institutions were also imported in terms of
government structure. The federal organisation of the German state encouraged the
diffusion of solar energy. Legitimacy for the necessity of solar energy, and more general
renewable energy was caused by historical events, the oil-crises, climate change and
Chernobyl. The reunification meant new resources for the further development of solar
energy in Germany. The success of the solar energy policy was broadly stimulated by
the belief of politicians in this new type of energy. The lack of ability of opponents to
organise successfully weakened the blocking mechanism.
The motives of the actors involved were mainly ecological. The Chernobyl
accident meant an important incentive for the development of solar energy in Germany.
Until that time the policy to achieve energy security was dominated by preference for
nuclear and coal energy. The winning coalition illustrated the definitive support for
renewable energy with the Renewable Energy Act of 2000 and the nuclear phase out.
The law guaranteed the development of solar energy in Germany. In the next chapter it
will be discussed whether the development of solar energy in Germany is a success or
an illusion.
53
CHAPTER 4 | THE GERMAN SOLAR ENERGY POLICY REVIEWED
In this chapter the success of the German solar energy policy will be considered.
Chapter two and three made a couple of aspects clear. Germany will inevitably face
scarcity of fossil resources. Since it phased out further development of nuclear energy
and coal seriously harms the environment, the burden for the future is placed on
renewable energy. Can solar energy play a role to avoid the future problems of energy
security, environmental concern and economic decline for Germany against a realistic
cost? As was stated by the proponents of solar energy. The solar energy policy will be
judged on each of the three different points.
4.1 | Energy Security
The outcome of the analysis of the energy position of Germany was that probably by
2030 already the country will carry the burden of the increase of scarcity of fossil fuels,
if the country will not adapt to alternatives. In order to avoid the future scarcity
Germany has two objectives: an increase in both energy efficiency and share of
renewable energy. The increase in energy efficiency will result in a decline of primary
energy consumption from 13842 petajoule (PJ)/yr in 2007 to 10252 PJ/yr in 2030.
Renewable energy will increase from 932 PJ/yr in 2007 to 2599 PJ/yr in 2030. Please
refer for a more detailed scenario to Appendix 6, Table N .
When the EU energy market was liberalized, encouraging an important role for
renewable energy was one of the objectives. The EU implied a target on their member
states concerning a 4.2 percent minimum share of renewable energy in the total energy
supply. Germany surpassed this goal already in 2006. 112 Not only was Germany ahead
of the European targets, it reached its own 2010 target of a 12.5 % share of renewable
energy in electricity generation in early 2007.113 Please refer to Appendix 6, Table O for
the contribution of renewable energy in Germany from 1975-2007.
The German renewable energy policy has been promising so far. PV was by
2007 marginal contributor to this success. The share of PV in the total final energy
supply from renewable energy sources was only 1.6 percent. A comparison, wind
energy made up 17.6 percent of the total final energy supply from renewable energy
112 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 11. 113 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Economic analysis and evaluation of the effects of the EEG.
54
sources. In the total of the electricity supply generated by renewable energy, PV had a
share of 4 percent, compared to wind energy, which had a share of 45, 2.114 See
Appendix 6, figures B and C for a complete overview of all sources of renewable
energy.
Nevertheless, the growth figures of PV in Germany show a remarkable
development. The 100.000 Roofs Programme in 1999 initiated the start of the serious
development of solar energy in Germany. In 2007 Germany had become the absolute
champion in PV power generation worldwide. Germany produced approximately 3, 5
Terawatt Hour (TWh) of electricity produced from PV.115 In less than eight years PV
had developed to provide a serious contribution on Germany’s energy burden. The
contender for Germany on world-scale was Japan, which a PV capacity of about 1.9
TWh in 2007. The United States were ranked as the third producer worldwide with a
capacity of 0.83 TWh. Spain was the only other European country that produced a
notable capacity, near 0.655 TWh in 2007.116
In 2000 Germany produced only 42 gigawatt hour (GWh) energy from PV. This
rate increased enormously, in 2007 3.500 GWh energy was produced from PV. Wind
energy, in comparison multiplied only from 5.528 to 39.500 GWH in 2007.117 The
shared total of installed capacity of PV rose also significantly, from 0.9 percent in 2000
to 11.2 percent in 2007.118
PV will grow explosively during the following twenty years. The Lead Scenario
2008 predicts the 3.5 TWh/yr of 2007 will increase to 21.9 TWh/yr in 2030. However,
PV will still produce in 2030 a small percentage of in comparison the production of
nuclear energy in 2005. Nuclear energy was in 2005 responsible for 23 times more
energy generation than PV will be in 2030. Where nuclear energy generated only 12 %
of Germany’s total energy supply.119
PV alone will not make a serious contribution to energy security for Germany,
since it will generate only a marginal amount of energy. Renewable energy in Germany
will make gigantic leap forward during the next twenty years. Renewable energy120 will
114 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 14. 115 Ibidem, 11. 116 International Energy Agency - Numbers PV. 117 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 16. 118 Ibidem, 16. 119 Please refer to Appendix 2 Table B and Appendix 3N Table, for the data of respectively nuclear energy in 2005, and PV in 2030, a comparison of nuclear and PV gives the outcome 23 times.
55
generate in 2030 about 2599 PJ/yr, and will come close to oil and gas. Oil will generate
3458 PJ/yr, gas 2873 PJ/yr. Please refer to Appendix 6 Table N for a more detailed
scenario. Renewable energy will make in 2030 a serious contribution to German energy
security.
The current German solar energy policy is principally aimed at the development
of PV. This policy will within the next twenty years not be able to develop solar energy
to a scale on which it can make a serious contribution to energy security. However, PV
will play a minor role in the development of renewable energy in Germany. Renewable
energy will in 2030 be a serious contributor to energy security in Germany.
4.2 | Environmental concern
The absolute contribution of renewable energy to the final energy consumption rose
between 1997 and 2007 almost threefold to 224 J/yr, its relative contribution growing
from 3% to 8.6%. This corresponds to an average growth rate of almost 11% and in the
electricity sector even 13%.121 This remark sounds as a victory for the environment, and
it was not only this remark that was enthusiast about the environmental benefits of the
German renewable energy policy. The International Energy Agency (IEA) was in 2007
optimistic as well about Germany’s greenhouse emission reduction. It stated: ‘The
country is well on its way to achieving its Kyoto protocol target of a 21% reduction in
greenhouse emissions in 2012 compared to 1990.’122
The contribution of renewable energy sources to climate protection is larger than its
contribution to energy supply. In 2007, the exhaust of 115 million tonnes of CO2 was
avoided through the use of renewable energies. This means that without their use, total
CO 2 emissions (approximately 774 million tonnes) would be around 15 % higher. By
contrast, the contribution of renewable energy to primary energy consumption accounts
for just 6.7 %.
In 2007, the Renewable Energy Sources Act (EEG) alone was responsible for 57
million tonnes of avoided CO 2.123 However, PV was not a major contributor to the
reduction of CO2 emissions in both absolute and relative share. In absolute terms PV
contributed 3 percent to the total of achieved CO2 reduction in 2007. Wind energy had,
121 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead study 2008, 14. 122 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 11. 123Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 23.
56
for example, a share of 43.1 percent. The saving factor (g CO2/kWh) for PV was
estimated at 683 in 2007, relatively low compared to other renewables. Wind energy
had a saving factor of 862; hydro power topped the bill with 1088.124 Please refer for a
more detailed scheme of the contribution of renewable energy to CO2 reduction to
Appendix 7, Table P.
According to their proponents, the subsidies for PV and for renewable energy in
general, are justified by emphasizing their role as a vital environmental and climate
protection measure. 125 However, there are some criticasters, who oppose this argument.
The first relates to the effects of CO2 reduction due to renewable energy under the
current law. 1 January 2005 the EU Emissions Trading Scheme came into force. The
scheme imposed a quantitative limit on CO2 emissions, and a market-price had to be
paid for CO2 emissions by virtually all stationary, industrial, and electricity-generating
installations within the EU. Each country was not bounded by any restrictions on how to
allocate the expected of shortage of the so-called European Union Allowances
(EUAs).126
The EU countries were particularly clear on how they would allocate the EUAs;
most of them would be assigned to the electricity sector. The first argument was that
electricity utilities were not threatened by non-EU competition. They could thus pass
the added costs of the abatement on to the consumers. Industrial firms faced world-wide
competition, which hindered them from putting the additional costs to the consumer’s
burden. The second argument for allocating the shortage to the electricity sector was
that abatement would eventually be cheaper for the electricity utilities. The utilities
would need fewer allowances.127
The consequence of the prevailing coexistence between the Renewable Energy
Act of 2000 and the EU emission Trading made the gained reduction of the EEG
obsolete. The increased use of renewable energy technologies in Germany did not imply
any additional emission reductions next to those that were already achieved by the EU
emission Trading alone. The result was that the promotion of renewable energy
technologies reduced the emissions of electricity sector. The reduction allowed the
industry sector to use the EUAs for their production. The effect of the Renewable
124 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 23. 125 Frondel, Manuel et al, ‘Germany’s solar cell promotion: Dark clouds on the horizon’ in Energy Policy 36 (2008) 11, 4198-4204: 4199. 126 Oxford Journals - ‘The EU emissions trading scheme; origins allocation and early results’. 127 Ibidem
57
Energy Act was more a shift of CO2 reduction, than that it had a serious effect on the
volume of emissions.128
The IEA was in its Country Report on Germany very critical of the cost-
effectiveness of PV, and the effect on CO2 reduction related to their costs. The IEA
estimated that between 2000 and 2012, the feed-in tariff will cost 68 billion Euros in
total. It stipulated the very high subsidies provided to PV in relation to their output in
Co2 reduction. The example that was given in the report was:
‘While many building efficiency measures have negative costs, even the more expensive
building efficiency retrofit projects have costs only up to EUR 20 to 30 per tonne CO2
making these policies 30 to 50 times less expensive than the feed-in tariff for solar PV in
terms of abated CO2. Overall in addition to being much cheaper than renewables
policies now, enhanced support for efficiency policies and measures could help thrive
technology development, lower their costs and install a world-class efficiency industry
in Germany, as is the goal of the current feed-in tariff for solar PV.’129
The IEA was also critical on the assumption that the nuclear shutdown can be
accomplished without increased emissions of carbon dioxide. The agency highly
questioned the ability of renewable energy to meet it future demands. The IEA
considered it likely that the shut-down will result in increases of lignite, hard coal, and
gas fired plants, particularly as company’s current slate of proposed and planned power
plants lean heavily on these fuels, leading to higher overall carbon dioxide emissions.130
Renewable energy makes a contribution to the reduction of CO2 emissions in
Germany. The coincidence with the EU law on emission trading is an easy problem to
be solved. The cost-price of PV related to the benefits for the environment are too low,
as was introduced by the IEA.
4.3 | Economic effects of PV
This part is divided into two parts. The first part considers the policy that was used to
introduce solar energy in Germany. The second considers the actual effects for the
German economy.
128 Frondel, Manuel et al, ‘Germany’s solar cell promotion: Dark clouds on the horizon’ in Energy Policy 36 (2008) 11, 4198-4204: 4200-4201. 129 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 74. 130 Ibidem, 8.
58
4.3.1 | Feed-in Tariffs and its costs
Germany opted for the feed-in tariff in 1990, and has continued this policy until today.
The mechanism is particularly simple. The national electricity utilities are obligated to
buy all renewable energy produced by third-parties. The prices are fixed by the
government for a certain period; however they will decrease, and are above the market
rates. Apart from Germany, countries as Denmark and Spain have as well introduced a
comparable feed-in tariff system.
The counterpart of the feed-in tariff is the Renewable Portfolio Standard (RPS).
The RPS has the same objective as the feed-in tariff: the increase of the production of
energy from renewable energy sources. However, it functions completely different. The
RPS mechanism obligates generally the electricity supply companies to produce a
specified fraction of their electricity from RES. The supply companies can buy their
renewable energy electricity from certified renewable energy generators. These
generating companies can earn certificates for each unit of electricity they produce.
They can sell these certificates together with the electricity they produce to the supply
companies. The supply companies live up to their obligations by obtaining the quoted
certificates. Since the supply companies will spend as less as possible on the
certificates, the renewable energy generating companies are forced to produce as cost-
effective as possible. The countries that have introduced a RPS are, for instance, the
United States and Great Britain.
Both systems have advantages, as well as disadvantages. The political
attainability of each mechanism does merely depend of the culture. Countries, which are
more welfare state oriented, are more likely to implement the feed-in tariff. On the
contrary countries that have adopted a more neo-liberal policy prefer the RPS. In the
past the European Commission supported the RPS. The RPS approached the policy of
the European Commission to deregulate and liberalize public sector monopolies.131
Feed-in tariffs has one major advantage over RPS. It can more easily create
markets for producers of RES-E equipment by supporting a variety of technologies from
an early stage of development until market competiveness.132 The results of this policy
131 Lauber, Volkmar, ‘REFIT and RPS: options for a harmonised community framework’ in Energy Policy 32 (2004), 1405-1414: 1405. 132 Ibidem, 1406-1407.
59
were marked in the previous paragraph. The Renewable Energy Act of 2000 has been
able to develop a large market for renewable energies in Germany.
The RPS offers other benefits. The mechanism is bureaucratically simple to
organize. It does not need to finance capital intensive installations, since the investment
risks are on the burden of the renewable energy generating companies. The most notable
advantage of the RPS is that it creates competition among generators. The competition
guarantees pressure on the electricity prices without any need for further public
intervention.133
The feed-in tariffs are based on the anticipation of investment costs and
desirable rates of return to investors in order to create investment incentives. As the
feed-in tariff is not based on market mechanisms, efficient resource allocation is not
obtained. The efficiency of the feed-in tariffs is subordinated to direct effectiveness,
focusing mainly on the maximum installation of power plants.134 The generous feed-in
tariff systems based on external cost calculations strongly favour early and rapid
growth, RPS systems can be designed more easily to accommodate stable and
predictable growth.135
RPS schemes are more appropriate to the phase of near-market competiveness.
They usually are of little help for the earlier phases of technology development, due to
the goal of keeping prices as low as possible. The development of PV, which is still in
premature and cost-expensive phase, is not yet achievable following a RPS scheme.
The countries that have implemented the RPS have not been successful in
promoting the development of renewable energy. The large investment risks for the
generating companies have denied potential investors. The best example of this failure
is Great Britain. It developed her renewable energy policy during the same period as
Germany. Unless, the conditions for the development of wind energy on the island are
highly favourable to the conditions in Germany, Great Britain was not able to develop a
similar market for wind energy.136 The United States, especially the state California had
133 Lauber, Volkmar, ‘REFIT and RPS: options for a harmonised community framework’ in Energy Policy 32 (2004), 1405-1414: 1407-1408. 134 Holzer, Verena, ‘The Promotion of Renewable Energies and Sustainability: A critical assessment of the German Renewable Energy Act’ in Intereconomics jan/feb (2005), 36-45: 41. 135 Lauber, Volkmar, ‘REFIT and RPS: options for a harmonised community framework’ in Energy Policy 32 (2004), 1405-1414: 1406-1407. 136 SSRN - Andre Suck, ‘Renewable Energy Policy in the UK and Germany’.
60
more success. However, later research indicated that this was caused by additional tax
preferences for investors, and not by the RPS.137
The main advantage of a feed-in tariff is that is has shown that it can
successfully create a large market for new renewable energy technologies. The
justification given by proponents for the high feed-in tariffs is that it will encourage
large scale production. This will eventually not only make production of the new
technology less expensive, but will also encourage investment in more research of the
technology itself, which will have a similar effect.
Empirical investigation has indicated that although subsidized market
penetration triggers learning effects in the construction and implementation of PV
modules, these effects do not substantially improve module efficiency.138 Research by
Gregory F. Nemet concluded that experience alone will not be sufficient to make PV a
serious alternative. He estimated that investment in PV is needed in order of a trillion
dollars to make PV contribute to an energy supply at terawatt scale. The continuation of
the German policy would miss one of the main targets of the feed-in tariff: making PV
market proof. While Japan, another leading country on solar energy, followed the path
of investing in both research and encouragement of installation, Germany chose to bet
on a breakthrough in solar energy by creating a large market. Please refer to Appendix
5, Table M for the difference in investment between Germany and Japan.
In its country report on Germany’s energy policy, the IEA recommends
considering policies other than the very high feed-in tariffs to promote PV. The IEA
stated in its Country Report on Germany 2007:
‘We also encourage the government to make cost-effectiveness a higher priority
when selecting policies to promote renewables and between renewables policies and
other policies, as this will allow it to maximize the value of its limited expenditures. The
country’s feed-in tariff for renewables has resulted in the rapid deployment of new
electricity capacity, but has done so at a high cost. Estimates show that between 2000
and 2012, the feed-in tariff will cost 68 billion EURO in total. In particular, the
137 Wiser, Ryan, Kevin Porter and Robert Grace, ‘Evaluating experience with RPS in the United States’ in Mitigation and Adaption Strategies for Global Change 10 (2005) 2, 237-263. 138 Nemet, Gregory, ‘Beyond the learning curve: factors influencing cost reductions in photovoltaïcs’ in Energy Policy 34 (2006), 3218-3232. Shared by: Frondel, Manuel et al, ‘Germany’s solar cell promotion: Dark clouds on the horizon’ in Energy Policy 36 (2008) 11, 4198-4204: 4201-4202.
61
subsidies provided to solar PV are very high in relation to output; they will eat up 20%
of the budget, but contribute less than 5% of the resulting generation. In comparison,
many energy efficiency measures cost multiples less in terms of their reductions in
carbon dioxide emissions.’139
The IEA was particularly clear in her report on Germany. The agency
commended Germany on its achievements concerning the implementation of renewable
energy. However, it was very critical on the generous feed-in tariffs, especially the
tariffs for PV. The IEA recommended reconsidering of the cost-effectiveness of the
measures used to stimulate the development of renewable energy. The comment on the
high feed-in tariff of PV was even more direct: ‘Is an issue to tackle henceforward.’140
The IEA made in the report the following final recommendation: ‘As Germany’s
renewables supply is now well established, we encourage the government to consider
more market-based renewables promotion policies, such as a renewables obligation
scheme, in the next phase of renewables promotion.’141
The recommendation actually stipulates the dilemma between feed-in tariffs and
RPS, or renewable obligation scheme. In promoting the development of renewable
energy the RPS proved itself highly unsuccessful. A country with a high wind-energy
potential, such as the United Kingdom has, was unable to develop a substantial market
for renewable energy. Germany, which has a less favourable climate for wind-energy,
created a large market for wind-energy. The PV market has developed itself obviously,
unless the questionable conditions for PV in Germany. However, the market for
renewable energy was created at a large cost. The renewable energy is not generated
against cost-effective rates. These rates were determined in order to encourage large
scale development of renewable energy, and thus needed to be attractive.
The stimulus to make the renewable energy more cost-efficient that is
implemented in the feed-in tariffs is a degression of the tariffs. This is to retain the
incentive for manufacturers to systematically reduce production costs and to offer more
efficient products every year.142 Although, this degression is not fixed that sharp in
order to put firm pressure on the producers to innovate. This is the result of the fact that
139 International Energy Agency - Energy Policies of IAE countries: Germany 2007 review, 12. 140 Ibidem, 40. 141 Ibidem, 75. 142 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Feed-in Systems in Germany and Spain and a comparison.
62
the system needed to stay attractive to potential investors. RPS has the advantage that it
obligates the generating companies to produce as cost-effective as possible, since they
will otherwise not sell their certificates.
The recommendation given by the IEA is not realistic. The German success of
the feed-in tariff is mainly caused by the guaranteed tariffs for renewable energy for a
long-term fixed period. RPS has shown opposite results. The high costs of the feed-in
tariff will yield results already in 2030, as was indicated in the previous paragraph. The
high investment in PV remains highly questionable, since the output created by the
investment is low. This will be further elaborated in the next paragraph.
4.3.2 | Economic effects
Renewable energy was responsible for the creation of nearly 250.000 jobs in 2007. Only
three years before in 2004, approximately 160.000 people had earned their living due to
renewable energy. This meant an increase of 55 percent. The German government
estimated that at least 60 percent of the total amount of jobs created was attributable to
the Renewable Energy Act of 2000.143 Please refer to Appendix 8, Figure D for a more
detailed scenario.
Solar energy had a large share in the enormous growth in jobs related to
renewable energy. This was mainly the consequence of the solar favoring programs that
were started in 1999. The growth is not to be expected to continue with the same rate
after 2010, since the subsidization for solar installations will decline after this date.144
Solar energy was responsible for about 25,100 jobs in 2004, this amount increased to
40,200 in 2006, and was estimated in 2007 50,700. The total amount of jobs related to
renewable energy augmented as well, however not as explosive as the solar energy
related jobs. The total amount of jobs in renewable energy developed from 160,500 in
2004, to 249.300 in 2007.145 Please refer for a more detailed scenario to Appendix 8,
Figure D.
Recent studies, have indicated although negative employment results due to the
implementation of renewable energy. These studies concluded that the overall
143 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 31. 144 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead study 2008, 99. 145 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Renewable Energy sources in figures: National and international development status June 2008, 31.
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employment effects of the promotion of renewable energy technologies such as wind
and solar power systems are negative, although it indicates initially positive impacts.146
Professor Dr. Wolfgang Pfaffenberger of the Bremen Energie Institute calculated
a negative balance of 19.000 jobs. The argument was affirmed by the negative effects of
the labour displacement due to the rising costs for the industry.
The effects were rated substantially higher than the positive labour effects of the
Renewable Energy Act. As he explained:
‘We distinguish between the gross effect and the net effect of investment in
renewable energy. The gross effect is always positive when you spend money
on whatsoever. (By spending you implicitly employ the people who produce
whatever you spend money for). The gross effect maybe small if a lot of the
production is not domestic. The net effect considers the extra expenditure of consumers
if they are forced to pay for the renewable energy which is more expensive than other
energy. In this way purchasing power is reallocated away from other items to
energy. In the long run this leads to a negative effect. In the beginning the investment
effect maybe high, but in the long rung the cumulative negative reallocation effects will
catch up or even become larger than the original investment effect.’147
The argumentation that was used was that from direct crowing-effects on conventional
energy production and indirect negative impacts on upstream sectors, supporting
renewable energy technologies ultimately raises the price of electricity. The resulting
drain of purchasing power and investment capital of private and industrial electricity
consumers causes negative employment effects in other sectors.148
The total amount of the additional costs for renewable energy was in 2007 about
6, 25 billion Euros. For the generation of electricity from renewable energy sources
alone the costs were in 2007 approximately 4 billion Euro. PV had a large share in these
additional costs. It was estimated that PV contributed for about 1, 6 billion Euros to the
total additional costs for electricity generation only.149 This value impressively confirms
146Frondel, Manuel et al, ‘Germany’s solar cell promotion: Dark clouds on the horizon’ in Energy Policy 36 (2008) 11, 4198-4204: 4201. Based on Critical studies on employment: Pfaffenberger 2006, Wertschopfung und beschaftigung durch grune energieproduktion? 147 Correspondence with prof dr. Pfaffenberger 148 Frondel, Manuel et al, ‘Germany’s solar cell promotion: Dark clouds on the horizon’ in Energy Policy 36 (2008) 11, 4198-4204: 4201. 149 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead study 2008, 28.
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the macro economic benefit of the energy policy support instrument that is the
Renewable Energy Act. 150
The additional costs of the implementation of PV are enormous, definitely when
taking regard of the additional costs of the other renewable energy sources. Please refer
for a scenario that includes and excludes PV to Appendix 8, Figure E. The
argumentation that favours the high additional costs is that this investment will finally
earn itself. However, this will be after 2030. The new installed PV capacity annually
reached a record level in 2007 of 1150 MW p/yr. It is assumed that further PV growth
continues to serve to establish over the medium term a domestic market sufficiently
large to allow German companies to operate successfully on the international markets.
Dynamic expansion of the global market is crucially important for PV if the double-
digit growth rates required over a lengthier period are to be maintained.151 Conclusively,
the relatively high initial investment for PV will only yields domestic profits after 2030,
but will already deliver macro-economic benefits beforehand by providing
technological leadership and boosting the associated export markets.152
However, this assumption is highly questionable. It bears noting that domestic
production was unable to satisfy the boost in demand for PV modules in the aftermath
of the EEG modification. The solar energy report in 2007 of the Sarasin bank showed
that in 2004 48% of all the modules necessary for PV were imported. Most of these
modules were in either Japan, or China. The imports totalled the amount of 1.44 billion
Euros. On the other hand the exports accounted for only 0.2 billion Euros. The numbers
for 2006 and 2007 were similar.153 Japan and China made a huge leap forward in the
annual production of PV, while Europe stayed behind. Please refer for the exact
numbers to Appendix 8, Table Q. Germany on the other hand increased the amount of
PV installations enormously, while Japan did not show a significant increase on this
field. Please refer for the number of annual installations per country/region to Appendix
8, Table R.
Not only produces Japan the highest level of PV modules, the country has also
the highest number of large PV producing companies. Please refer for the top ten PV
producing companies world-wide to Appendix 8, Table S. The argument introduced by
150 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead study 2008, 28. 151 Ibidem. 152 Ibidem. 153 Sarasin Bank - Solar Energy 2007.
65
German politicians was that the establishment of a feed-in tariff would encourage large
PV companies in mainly East-Germany. This policy has, however, not had the desired
result. Most of the large companies are located in Asia today, and not in East-Germany.
Deutsche Solar/Shell quitted the solar industry last year, leaving only one of the ten
large companies based in Germany. Although, Q cells is located in East-Germany.
The burden for the cost of the EEG to an average household with an electricity
consumption of 3,500 kWh per annum was negligible. The additional costs for the
whole EEG were around 3 Euros per month per family. Nevertheless, a large percentage
of these additional costs were caused by the implementation of PV, as was indicated.
The effects that were introduced by the proponents of PV, that it will encourage
employment can be discussed. The high additional costs of PV can only be legitimated
if the German companies will be able to guarantee a large market global market share.
The current numbers indicate, however, different.
4.4 | Conclusion
PV will not be able to make a serious contribution to energy security. However,
renewable energy will develop to be an alternative in 2030. The benefits for the
environment of PV are marginal, certainly related to the high costs of the
implementation. The feed-in tariff proved to be a policy to develop renewables.
However, for a premature technology, such as PV, other policy instruments seem to
offer a higher chance on success. In conclusion, PV is a very expensive technology at
this moment. When it does not yield results for the employment and economy as
introduced in this chapter, one should reconsider the policy.
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5. | CONCLUSIONS
In this chapter the three sub-questions will be answered separately. The findings will be
taken into consideration, before giving the answer to the main research question.
The first sub-question concerns energy security, that means, are there at any
given time, sufficient sources of energy to meet demand. In the second chapter the
German status concerning energy security was investigated. The theoretical tool that
was used was the Resource Scarcity Model. The analysis of the German situation
concerning energy security proved pessimistic. Germany herself lacks fossil fuel
reserves of oil and natural gas, while her economy depends heavily on these resources.
According to the model used, the situation will worsen during the next twenty years.
Growth of the population, increase in GDP and technological prosperity will encourage
demand-induced scarcity. Dwindling resources will stimulate supply-induced scarcity.
Structural scarcity can make Germany more dependent on Russia. The critical situation
with regard to oil and gas left the options of nuclear energy, coal and renewable energy.
The second part of the first sub-question handled what laws were implemented
to support the introduction of renewable energy. The German government implemented
two major laws to introduce renewable energy: the Electricity Feed-in Law and the
Renewable Energy Resources Act (EEG). These two laws guaranteed a fixed price for
the generation of renewable energy. The EEG was formulated even more strictly in
favor of renewable energy. The EEG promoted renewable energy above polluting
energies, such as coal. Nuclear energy was abandoned by the Red-Green Government in
2001 by a law that followed the EEG of 2000. These developments in Germany pushed
the country towards renewable energy as the solution to future problems of energy
security and ecological threats. The phase-out of nuclear energy meant that
environmental concern was of higher importance than energy security, given the large
potential of nuclear energy. Another argument to promote the feed-in laws was the
positive economic effects. Energy security was one of the objectives of the feed-in laws.
However, environmental concern was considered a more important argument. Positive
economic effects were considered a third argument.
The second sub-question focuses on the implementation of solar energy in
Germany, and was studies by the three elements of the Technological Innovation
67
System Theory: actors, networks and institutions. The first step that was taken in
creating a solar energy favourable climate was the investment in knowledge
development and diffusion of solar energy by the federal government, what involved
research institutes and universities. This encouraged a large group of firms and
organisations (lobby groups) to participate in the development of solar energy, the
second key feature of a Technological Innovation System. Politicians stimulated
institutional change, supported by EU legislation that created essential nursing markets
for solar energy. Institutions were also imported in terms of government structure. The
federal organisation of the German state encouraged the diffusion of solar energy.
Legitimacy for the necessity of solar energy, and further introduction of renewable
energy was caused by historical events, the oil-crises, climate change and Chernobyl.
The reunification meant new resources for the further development of solar energy in
Germany. The success of the solar energy policy was broadly stimulated by the belief of
politicians in this new type of energy. The lack of ability of opponents to organise
successfully weakened the blocking mechanism. The arguments that were introduced by
the different actors were not based on one type of arguments. Environmental concern
was important, as were potential economic benefits.
The third sub-question was: At what cost did Germany implement the solar
energy policy, and was this investment worth it? In chapter 4 the findings of the two
previous chapters were already taken into consideration in order to give a more detailed
answer on this question. PV cannot contribute to the demand of energy security within
the next forty years. Within the best scenario it can make a limited contribution to a
broader renewable energy policy that will improve energy security. An evaluation of the
contribution of PV in avoiding ecological threats results in the same conclusion. The
feed-in tariff for PV led to a fabulous increase in PV in Germany, but against a high
price. Energy security and promotion of the environment are slightly stimulated by the
introduction of PV against a very high price. The argument that the development of PV
would encourage the economy, and create more employment proved to be false. The
high costs of the development of PV achieved the opposite. Most of the successful PV
companies are based in Asia. Conclusively, to answer the question: At what cost? At
very high cost. Was it worth it? In terms of costs it is not under the current
circumstances. When we speak in terms of future cost effectiveness it is still too early to
make a definitive judgment.
68
The main research question was: Is the current solar energy policy of Germany
able to make a serious contribution to energy security and avoiding ecological threats in
an economic responsible manner? This question can be answered negative. Neither can
the solar energy policy make a serious contribution to energy security and avoiding
ecological threats, nor can it do so in an economic responsible manner. PV was
introduced in Germany as a solution to energy security, ecological threats and economic
decline. The various companies, politicians and organizations that were in favor of solar
energy profited from the trend of renewable energy in Germany. Although, they forgot
in their enthusiasm the attainability of the objectives energy security and avoiding
ecological threats. The only contribution that PV can make in the nearby future to these
objectives will be as a part of a larger renewable energy mix. However, the costs of the
implementation of the solar energy policy will not be in any proportion to the yields for
the renewable energy mix caused by the policy. Perhaps, PV can be part of the future
solution to energy security and ecological threats, but one should remain realistic, and
have patience for better solar energy technology retrieval to develop.
The negative outcome of this research came not out of the blue. Shell, one of the
world’s leading energy companies abandoned investment in solar energy last year.
Various researchers had already investigated the German solar policy, some came out
positive, others negatively. This thesis gives an integrated overview of all aspects of the
German solar energy policy, and brings together the arguments to adapt the solar energy
policy, and an assessment of these arguments. The result is a clear view of how
opportunistic the German politicians implemented the solar energy policy. This research
opens up new questions. The most urgent seems to compare the German policy with
that of both Japan and China. These two countries have become two of the world’s
major producers of PV, and a comparison with Germany would clarify more about the
best formula to promote solar energy. This research aimed at the current German solar
energy policy, concentrated around PV. Another interesting future question is what are
the prospects for other solar energy technologies, such as solar thermal energy?
One development is certain, the analysis the Resource Scarcity Model for
Germany will not differ that much from that of many other countries. Especially in
developed countries, with an active civil society, both nuclear and coal energy will
remain highly unpopular alternatives. Environmental concern will only grow during the
69
following decades. Inevitably, we will need alternatives, and solar energy still looks an
attractive alternative resource. Only, through further research and development an
efficient way to retrieve solar energy can be developed, supported by the lessons learned
from the German case.
70
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73
International Solar Energy Society, German Section * May 4th 2009 - Wie is die DGS? http://www.dgs.de/146.0.html Oxfordjournals
* May 2th 2009 – Danny Ellerman and Barbara Kuchner, ‘The EU emissions trading scheme; origins allocation and early results’
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Appendix 1 | Scheme of Analysis TIS
Figure A | Scheme of Analysis TIS
Source | Bechberger, Mischa and Danyel Reiche, ‘Renewable Energy Policy in Germany: Pioneering and Exemplary Regulations’ in Energy for Sustainable Development VIII (2004) 1, 47-57.
Appendix Page 1
Appendix 2 | Germany Resource Status
Table A | Energy Consumption and Production Germany 1991-2006
Total Primary Energy History(Quadrillion Btu)
1991 1993 1995 1997 1999 2001 2003 2005 2006
Production* 6,4 5,8 5,6 5,7 5,3 5,3 5,3 5,2 5,2
Consumption** 14,3 14,1 14,3 14,4 14,1 14,6 14,6 14,5 14,6
* Production of petroleum (crude oil and natural gas plant liquids), dry natural gas, and coal, and net generation of hydroelectric, nuclear, and geothermal, solar, wind, and wood and waste electric power.** Consumption of petroleum, dry natural gas, and coal, and net hydroelectric, nuclear, and geothermal, solar, wind, and wood and waste electricity. Also includes net electricty imports.Source | EIA.org, http://tonto.eia.doe.gov/country/country_time_series.cfm?fips=GM#prim
Table B | Supply-Demand Balance Germany 2005
Unit Mtoe Total Oil Coal Natural Nuclear Biomass* Solar, Hydro Geo- Elec- Heat
Gas wind thermal tricity
Supply
Production 134,5 4,6 56,5 14,2 42,5 12,2 2,7 1,7 0,1 0,0 0,0
Imports (net of exports) 214,5 123,4 25,7 65,7 0,0 0,0 0,0 0,0 0,0 -0,4 0,0
Other -4,2 -4,6 -0,5 0,9 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Total supply (TPES) 344,7 123,4 81,7 80,8 42,5 12,2 2,7 1,7 0,1 -0,4 0,0
Demand
Electricity production ** 58,3 4,0 67,6 17,9 42,5 5,3 2,5 1,7 0,0 -52,7 -30,5
Industrial consumption *** 83,2 26,9 7,3 21,4 0,0 0,0 0,0 0,0 0,0 20,0 7,8
Transport 63,3 60,0 0,0 0,0 0,0 1,9 0,0 0,0 0,0 1,4 0,0
Residential 63,7 16,9 0,5 29,0 0,0 4,8 0,2 0,0 0,1 12,2 0,0
Other sectors 50,7 8,1 0,4 10,9 0,0 0,0 0,0 0,0 0,0 11,0 20,4
Other (including losses) 25,5 7,6 5,9 1,7 0,0 0,1 0,0 0,0 0,0 7,8 2,4
Total 344,7 123,4 81,7 80,8 42,5 12,2 2,7 1,7 0,1 -0,4 0,0
Fuel as share of total 100% 36% 24% 24% 12% 4% 1% 0% 0% 0% 0%
* Includes industrial and non-renewable muricipal waste.
** The electricity generation row provides data on the fuel used to generate electricity and heat (141,5 Mtoe total from oil, coal,
nuclear, natural gas, biomass, solar, wind, hydro and geothermal), the total output (83,3 Mtoe in the form of electricity and
heat) and losses (58,3 Mtoe).
*** Includes non-energy use.
Source | IAE.org: International Energy Agency, Energy Policies of IAE countries: Germany 2007 revew, 17.
Appendix Page 2
Appendix 3 | Demand-induced Scarcity
Table C | World Population by Region, Reference Case, 1990-2030 (Millions)
History Projections AveregeAnnual %
Region/Country 1990 2005 2006 2010 2015 2020 20252030 Change2006-2030
OECDOECD North America 366 433 438 455 478 500 521 542 0,9United States* 254 297 300 311 327 343 359 275 0,9Canada 28 32 33 34 35 37 38 39 0,8Mexico 84 104 105 110 116 121 125 128 0,8OECD Europe 497 536 538 547 555 561 565 568 0,2OECD Asia 187 200 201 202 203 202 200 197 -0,1Japan 124 128 128 128 127 124 122 118 -0,3South Korea 43 48 48 49 49 49 49 48 0,0Australia/New Zealand 20 24 25 26 27 28 29 30 0,8 Total OECD 1.050 1.169 1.176 1.204 1.235 1.2621.286 1.307 0,4
Non-OECDNon -OECD Europe & Eurasia 348 342 342 340 337 333 328 322 -0,2Russia 149 144 143 140 136 132 128 124 -0,6Other 200 198 198 199 200 201 200 198 0,0Non-OECD Asia 2.760 3.431 3.471 3.631 3.826 4.007 4.167 4.300 0,9China 1.149 1.313 1.321 1.352 1.389 1.421 1.446 1.458 0,4India 860 1.134 1.152 1.220 1.303 1.379 1.337 1.506 1,1Other Non-OECD Asia 751 984 999 1.060 1.135 1.206 1.274 1.336 1,2Middle East 137 193 197 213 234 255 275 294 1,7Africa 637 922 944 1.032 1.149 1.271 1.394 1.518 2,0Central & South America 360 454 460 483 512 539 563 585 1,0Brazil 150 187 189 199 210 220 229 236 0,9Other Central & South America 211 267 270 284 302 319 335 348 1,1 Total Non-OECD 4.243 5.342 5.413 5.699 6.085 6.405 6.728 7.020 1,1
Total World 5.293 6.512 6.590 6.903 7.293 7.667 8.014 8.327 1,0* Includes the 50 states and the District of ColumbiaSource | United States: EIA, Annual Energy Outlook 2009, DOE/EIA-0383(2009) (Washington, DC, March 2009), AEO2009 National Energy Modeling System, run AEO2009.D120908A, web site www.eia.doe.gov/oiaf/aeo. Other Countries: United Nations, Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision and World Urbanization Prospects (February 25, 2006), web site http://esa.un.org/unpp, 135.
Appendix Page 3
Table D | World Gross Domestic Product (GDP) by Region Expressed in Purchasing Power Parity, Referce Case, 1990-2030 (Billion 2005 Dollars)
History Projections AveregeAnnual %
Region/Country 1990 2005 2006 2010 2015 2020 20252030 Change2006-2030
OECDOECD North America 9.651 14.885 15.331 16.073 18.789 21.341 24.283 27.802 2,5United States* 8.040 12.422 12.768 13.315 15.538 17.548 19.885 22.737 2,4Canada 773 1.167 1.204 1.275 1.453 1.629 1.822 2.035 2,2Mexico 838 1.296 1.359 1.483 1.798 2.164 2.575 3.030 3,4OECD Europe 9.703 13.756 14.224 15.015 16.839 18.811 20.894 23.105 2,0OECD Asia 4.080 5.509 5.667 6.045 6.775 7.314 7.819 8.357 1,6Japan 3.222 3.873 3.966 4.105 4.438 4.601 4.688 4.773 0,8South Korea 374 843 886 1.040 1.281 1.492 1.713 1.939 3,3Australia/New Zealand 485 794 815 899 1.056 1.222 1.418 1.645 3,0 Total OECD 23.434 34.150 35.221 37.133 42.40347.466 52.996 59.264 2,2
Non-OECDNon -OECD Europe & Eurasia 3.039 2.932 3.159 3.940 4.8655.725 6.536 7.381 3,6Russia 1.880 1.703 1.829 2.328 2.854 3.331 3.770 4.230 3,6Other 1.159 1.229 1.330 1.612 2.011 2.393 2.766 3.151 3,7Non-OECD Asia 4.457 12.272 13.408 17.934 24.606 32.726 41.428 50.834 5,7China 1.265 5.389 6.014 8.686 12.263 16.888 21.664 26.501 6,4India 1.019 2.436 2.672 3.497 4.871 6.428 8.039 9.877 5,6Other Non-OECD Asia 2.713 4.448 4.723 5.751 7.472 9.410 11.725 14.456 4,8Middle East 1.072 1.919 2.053 2.484 3.030 3.621 4.300 5.102 3,9Africa 1.387 2.211 2.341 2.870 3.612 4.384 5.182 5.958 4,0Central & South America 2.270 3.555 3.757 4.495 5.415 6.450 7.615 8,945 3,7Brazil 1.045 1.534 1.591 1.895 2.296 2.753 3.292 3.922 3,8Other Central & South America 1.224 2.021 2.165 2.600 3.119 3.697 4.324 5.023 3,6 Total Non-OECD 12.225 22.888 24.717 31.723 41.529 52.907 65.062 78.220 4,9
Total World 35.659 57.038 59.939 68.856 83.932 100.373 118.058 137.484 3,5* Includes the 50 states and the District of ColumbiaNotes: Totals may not equal sum of component due to independent rounding. GDP frowth rates for Russia andother non-OECD Europe and Eurasia, China, India, Africa and Central and South America (excluding Brazil) wereadjusted, based on the analyst's judgment.Source | History: IHS Global Insight, World Overview (Lexington, MA, various issues). Prjections: IHS Global Insight, World Overview, Fourth Quarter 2008 (Lexington, MA, January 2009); and EIA, Annual Energy Outlook2009, DOE/EIA-0383(2009) (Washington, DC, March 2009), AEO2009 National Energy Modeling System, runAEO2009.D120908A, web site www.eia.doe.gov/oiaf/aeo, 124.
Appendix Page 4
Appendix 4 | Supply-induced Scarcity
Table E | Proven Oil Reserves 2009 (Billion)
At end 1988 At end 1998 At end 2007 At end 2008Thousand Thousand Thousand Thousand Thousandmillion million million million million Share R/Pbarrels barrels barrels tonnes barrels of total ratio
United States 35,1 28,6 30,5 3,7 30,5 2,4% 12,4Canada 11,9 15,1 28,6 4,4 28,6 2,3% 24,1Mexico 53,0 21,6 12,2 1,6 11,9 0,9% 10,3Total North America 100,0 65,3 71,3 9,7 70,9 5,6% 14,8Brazil 2,8 7,4 12,6 1,7 12,6 1,0% 18,2Colombia 2,1 2,5 1,5 0,2 1,4 0,1% 6,0Ecuador 1,5 4,1 4,0 0,5 3,8 0,3% 20,3Peru 0,9 0,9 1,1 0,2 1,1 0,1% 25,5Venezuela 58,5 76,1 99,4 14,3 99,4 7,9% -Other S. & Cent. America 0,6 1,1 1,4 0,2 1,4 0,1% 27,7Total S. & Cent. America 69,2 95,6 123,5 17,6 123,2 9,9% 50,3Azerbaijan n/a n/a 7,0 1,0 7,0 0,6% 20,9Denmark 0,5 0,9 1,1 0,1 0,8 0,1% 7,7Italy 0,8 0,8 0,9 0,1 0,8 0,1% 21,1Kazakhstan n/a n/a 39,8 5,3 39,8 3,2% 70,0Norway 7,3 11,7 8,2 0,9 7,5 0,6% 8,3Romania 1,2 1,2 0,5 0,1 0,5 - 13,3Russian Federation n/a n/a 80,4 10,8 79,0 6,3% 21,8Turkmenistan n/a n/a 0,6 0,1 0,6 - 8,0United Kingdom 4,3 5,1 3,4 0,5 3,4 0,3% 6,0Uzbekistan n/a n/a 0,6 0,1 0,6 - 14,6Other Europe & Eurasia 63,2 2,1 2,1 0,3 2,1 0,2% 13,4Total Europe & Eurasia 77,3 104,9 144,6 19,2 142,2 11,3% 22,1Iran 92,9 93,7 138,2 18,9 137,6 10,9% 86,9Iraq 100,0 112,5 115,0 15,5 115,0 9,1% -Kuweit 94,5 96,5 101,5 14,0 101,5 8,1% 99,6Oman 4,1 5,4 5,6 0,8 5,6 0,4% 20,9Qatar 4,5 12,5 27,4 2,9 27,3 2,2% 54,1Saudi Arabia 255,0 261,5 264,2 36,3 264,1 21,0% 66,5Syria 1,8 2,3 2,5 0,3 2,5 0,2% 17,2United Areb Emirates 98,1 97,8 97,8 13,0 97,8 7,8% 89,7Yemen 2,0 1,9 2,7 0,3 2,7 0,2% 23,9Other Middle East 0,1 0,2 0,1 - 0,1 - 10,6Total Middle East 653,0 684,3 755,0 102,0 754,1 59,9% 78,6Algeria 9,2 11,3 12,2 1,5 12,2 1,0% 16,7Angola 2,0 4,0 13,5 1,8 13,5 1,1% 19,7Chad – – 0,9 0,1 0,9 0,1% 19,4Republic of Congo 0,8 1,7 1,9 0,3 1,9 0,2% 21,3Egypt 4,3 3,8 4,1 0,6 4,3 0,3% 16,4Gabon 0,9 2,6 3,2 0,4 3,2 0,3% 37,0Libya 22,8 29,5 43,7 5,7 43,7 3,5% 64,6Nigeria 16,0 22,5 36,2 4,9 36,2 2,9% 45,6Sudan 0,3 0,3 6,7 0,9 6,7 0,5% 38,1Tunisia 1,8 0,3 0,6 0,1 0,6 - 18,5Other Africa 1,0 0,7 0,6 0,1 0,6 - 12,0Total Africa 59,0 77,2 125,3 16,6 125,6 10,0% 33,4Australia 3,4 4,1 4,2 0,5 4,2 0,3% 20,4Brunei 1,2 1,0 1,1 0,1 1,1 0,1% 16,9China 17,3 17,4 16,1 2,1 15,5 1,2% 11,1India 4,5 5,4 5,5 0,8 5,8 0,5% 20,7Indonesia 9,0 5,1 4,0 0,5 3,7 0,3% 10,2Malaysia 3,4 4,7 5,5 0,7 5,5 0,4% 19,8Thailand 0,1 0,4 0,5 0,1 0,5 - 3,9Vietnam 0,1 1,9 3,4 0,6 4,7 0,4% 40,8Other Asia Pacific 1,0 1,3 1,1 0,1 1,1 0,1% 12,8Total Asia Pacific 39,9 41,3 41,3 5,6 42,0 3,3% 14,5Total World 998,4 1068,5 1261,0 170,8 1258,0 100,0% 42,0of which: European Union 8,3 8,9 6,7 0,8 6,3 0,5% 7,7
OECD 118,3 89,2 90,3 12,0 88,9 7,1% 13,2OPEC 764,0 827,2 957,1 129,8 955,8 76,0% 71,1Non-OPEC 173,5 157,6 174,7 23,6 174,4 13,9% 14,8Former Soviet Union 60,9 83,8 129,2 17,4 127,8 10,2% 27,2
Canadian oil sands n/a n/a 150,7 24,5 150,7Proved reserves and oil sands n/a n/a 1411,7 195,3 1408,7Source | BP Statistical Review 2009
Appendix Page 5
Table F | World Oil Production 1998-2008
change 20082008 over share
Thousand Barrels Daily 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2007 of totalUnited States 8011 7731 7733 7669 7626 7400 7228 6895 6841 6847 6736 -1,8% 7,8%Canada 2672 2604 2721 2677 2858 3004 3085 3041 3208 3320 3238 -2,0% 4,0%Mexico 3499 3343 3450 3560 3585 3789 3824 3760 3683 3471 3157 -9,1% 4,0%Total North America 14182 13678 13904 13906 14069 14193 14137 13696 13732 13638 13131 -3,8% 15,8%Argentina 890 847 819 830 818 806 754 725 716 699 682 -2,6% 0,9%Brazil 1003 1133 1268 1337 1499 1555 1542 1716 1809 1833 1899 3,6% 2,4%Colombia 775 838 711 627 601 564 551 554 559 561 618 10,3% 0,8%Ecuador 385 383 409 416 401 427 535 541 545 520 514 -1,2% 0,7%Peru 116 107 100 98 98 92 94 111 116 114 120 4,0% 0,1%Trinidad & Tobago 134 141 138 135 155 164 152 171 174 154 149 -5,0% 0,2%Venezuela 3480 3126 3239 3142 2895 2554 2907 2937 2808 2613 2566 -1,9% 3,4%Other S. & Cent. America 125 124 130 137 152 153 144 143 141143 138 -2,7% 0,2%Total S. & Cent. America 6908 6699 6813 6722 6619 6314 6680 6899 6866 6636 6685 0,6% 8,5%Azerbaijan 231 279 282 301 311 313 315 452 654 869 914 4,2% 1,1%Denmark 238 299 363 348 371 368 390 377 342 311 287 -7,7% 0,4%Italy 117 104 95 86 115 116 113 127 120 122 108 -10,9% 0,1%Kazakhstan 537 631 744 836 1018 1111 1297 1356 1426 1484 1554 5,1% 1,8%Norway 3138 3139 3346 3418 3333 3264 3189 2969 2779 2556 2455 -4,1% 2,9%Romania 137 133 131 130 127 123 119 114 105 99 99 -0,4% 0,1%Russian Federation 6169 6178 6536 7056 7698 8544 9287 9552 9769 9978 9886 -0,8% 12,4%Turkmenistan 129 143 144 162 182 202 193 192 186 198 205 3,8% 0,3%United Kingdom 2807 2909 2667 2476 2463 2257 2028 1809 1636 1638 1544 -6,3% 1,8%Uzbekistan 191 191 177 171 171 166 152 126 125 114 111 -2,7% 0,1%Other Europe & Eurasia 506 474 465 465 501 509 496 468 457 451 427 -5,3% 0,5%Total Europe & Eurasia 14199 14480 14950 15450 16289 16973 17579 17541 17598 17819 17591 -1,3% 21,7%Iran 3855 3603 3818 3794 3543 4183 4248 4233 4282 4322 4325 -0,2% 5,3%Iraq 2121 2610 2614 2523 2116 1344 2030 1833 1999 2144 2423 13,0% 3,0%Kuweit 2232 2085 2206 2148 1995 2329 2475 2618 2690 2636 2784 5,3% 3,5%Oman 905 911 959 961 900 824 785 782 747 701 728 3,7% 0,9%Qatar 701 723 757 754 764 879 992 1028 1110 1197 1378 13,2% 1,5%Saudi Arabia 9502 8853 9491 9209 8928 10164 10638 11114 10853 10449 10846 4,0% 13,1%Syria 576 579 548 581 548 527 495 450 435 415 398 -4,1% 0,5%United Areb Emirates 2643 2511 2626 2534 2324 2611 2656 2753 2971 2925 2980 2,0% 3,6%Yemen 380 405 450 455 457 448 420 416 380 345 305 -11,6% 0,4%Other Middle East 49 48 48 47 48 48 48 34 32 35 33 -5,7% -Total Middle East 22964 22328 23516 23006 21623 23357 24788 25262 25499 25168 26200 4,0% 31,9%Algeria 1461 1515 1578 1562 1680 1852 1946 2015 2003 2016 1993-1,3% 2,2%Angola 731 745 746 742 905 862 976 1246 1421 1720 1875 9,1% 2,3%Cameroon 105 95 88 81 72 67 89 82 87 82 84 2,3% 0,1%Chad – – – – – 24 168 173 153 144 127 -11,5% 0,2%Republic of Congo 264 266 254 234 231 215 216 246 262 222 249 12,3% 0,3%Egypt 857 827 781 758 751 749 721 696 697 710 722 1,3% 0,9%Equatorial Guinea 83 100 91 177 204 242 345 373 358 368 361 -2,1% 0,5%Gabon 337 340 327 301 295 240 235 234 235 230 235 2,2% 0,3%Libya 1480 1425 1475 1427 1375 1485 1624 1751 1834 1848 1846 -0,1% 2,2%Nigeria 2167 2066 2155 2274 2103 2263 2502 2580 2474 2356 2170-8,0% 2,7%Sudan 12 63 174 217 241 265 301 305 331 468 480 2,6% 0,6%Tunisia 85 84 78 71 74 68 71 73 70 97 89 -8,9% 0,1%Other Africa 63 56 56 53 63 71 75 72 66 59 54 -8,5% 0,1%Total Africa 7644 7583 7804 7897 7994 8402 9268 9846 9992 10320 10285 -0,4% 12,4%Australia 644 625 809 733 730 624 582 580 554 567 556 -1,5% 0,6%Brunei 157 182 193 203 210 214 210 206 221 194 175 -10,1% 0,2%China 3212 3213 3252 3306 3346 3401 3481 3627 3684 3743 3795 1,4% 4,8%India 737 736 726 727 753 756 773 738 762 770 766 -0,5% 0,9%Indonesia 1520 1408 1456 1389 1289 1183 1129 1087 1017 969 1004 3,2% 1,2%Malaysia 779 737 735 719 757 776 793 744 717 743 754 1,8% 0,9%Thailand 130 140 176 191 204 236 223 265 286 309 325 5,5% 0,3%Vietnam 245 296 328 350 354 364 427 398 367 337 317 -6,0% 0,4%Other Asia Pacific 217 218 200 195 193 195 186 201 203 229 2373,1% 0,3%Total Asia Pacific 7641 7556 7874 7813 7836 7750 7804 7845 7810 7862 7928 0,9% 9,7%Total World 73538 72325 74861 74794 74431 76990 80256 81089 81497 81443 81820 0,4% 100,0%of which: European Union 3553 3684 3493 3285 3339 3128 29022659 2422 2388 2239 -6,6% 2,7%
OECD 21500 21103 21521 21303 21430 21165 20766 19861 19458 19148 18400 -4,0% 22,0%OPEC 32277 31054 32569 31914 30318 32136 34658 35736 36007 35714 36705 2,7% 44,8%Non-OPEC 33870 33719 34278 34220 34580 34355 34191 33513 33171 32930 32295 -2,0% 39,3%Former Soviet Union 7391 7552 8014 8660 9533 10499 11407 11839 12318 12799 12821 0,2% 16,0%
Source | BP Statistical Review 2009
Appendix Page 6
Table G | World Liquid Fuels Production in the Reference Case, 2006-2030 (Million Barrels per Day)
History Projections Average AnnualPercent Change,
Source 2006 2010 2015 2020 2025 2030 2006-2030OPECConvential Liquids* 34,0 35,0 37,3 38,8 40,2 42,3 0,9Extra-Heavy Oil 0,6 0,6 0,7 0,8 1,0 1,2 2,8Bitumen 0,0 0,0 0,0 0,0 0,0 0,0 -Coal-to-Liquids 0,0 0,0 0,0 0,0 0,0 0,0 -Gas-to-Liquids 0,0 0,0 0,1 0,2 0,3 0,3 18,3Shale Oil 0,0 0,0 0,0 0,0 0,0 0,0 -Biofuels 0,0 0,0 0,0 0,0 0,0 0,0 -OPEC Total 34,7 35,6 38,1 39,9 41,4 43,8 1,0Non-OPECConvential Liquids* 47,5 46,3 46,1 47,9 49,4 50,9 0,3Extra-Heavy Oil 0,0 0,0 0,0 0,0 0,1 0,1 14,3Bitumen 1,2 1,9 2,8 3,3 3,8 4,2 5,3Coal-to-Liquids 0,1 0,2 0,3 0,5 0,8 1,2 9,0Gas-to-Liquids 0,0 0,0 0,1 0,1 0,1 0,1 -Shale Oil 0,0 0,0 0,0 0,0 0,1 0,2 13,9Biofuels 0,8 1,9 2,8 3,8 5,0 5,8 8,6Non-OPEC Total** 49,9 50,7 52,5 56,0 59,6 62,8 1,0WorldConvential Liquids* 81,5 81,3 83,4 86,7 89,6 93,1 0,6Extra-Heavy Oil 0,6 0,7 0,7 0,9 1,0 1,2 3,0Bitumen 1,2 1,9 2,8 3,3 3,8 4,2 5,3Coal-to-Liquids 0,1 0,2 0,3 0,5 0,8 1,2 9,0Gas-to-Liquids 0,0 0,1 0,2 0,3 0,3 0,3 19,3Shale Oil 0,0 0,0 0,0 0,0 0,1 0,2 13,9Biofuels 0,8 1,9 2,8 3,9 5,1 5,9 8,6World Total 84,6 86,3 90,6 95,9 101,1 106,6 1,0* Includes conventional crude oil and lease condensate, natural gas plant liquids (NGPL), and refinery gain.** Includes some U.S. petroleum product stock withdrawals, domestic sources of blending components, other hydrocarbons, and ethers.Source | EIA, Annual Energy Outlook 2009, 32.
Appendix Page 7
Table H | Proven Natural Gas Reserves
At end 1988 At end 1998 At end 2007 At end 2008Trillion Trillion Trillion Trillion Trillioncubic cubic cubic cubic cubic Share R/P
metres meters meters feet meters of total ratioUS 4,76 4,65 6,73 237,7 6,7 3,6% 11,6Canada 2,67 1,75 1,63 57,7 1,6 0,9% 9,3Mexico 2,08 0,85 0,51 17,6 0,5 0,3% 9,1Total North America 9,51 7,24 8,88 313,1 8,9 4,8% 10,9Argentina 0,77 0,69 0,44 15,6 0,4 0,2% 10,0Bolivia 0,15 0,15 0,71 25,1 0,7 0,4% 51,0Brazil 0,11 0,22 0,27 11,5 0,3 0,2% 23,6Colombia 0,13 0,20 0,12 4,0 0,1 0,1% 12,4Peru 0,34 0,25 0,33 11,8 0,3 0,2% 98,5Trinidad & Tobago 0,29 0,56 0,48 17,0 0,5 0,3% 12,2Venezuela 2,86 4,15 4,84 170,9 4,8 2,6% -Other S. & Cent. America 0,15 0,14 0,07 2,4 0,1 - 17,5Total S. & Cent. America 4,79 6,35 7,27 258,2 7,3 4,0% 46,0Azerbaijan n/a 0,81 1,16 42,3 1,2 0,6% 81,3Denmark 0,08 0,10 0,07 1,9 0,1 - 5,5Germany 0,36 0,26 0,14 4,2 0,1 0,1% 9,2Italy 0,33 0,27 0,13 4,2 0,1 0,1% 14,2Kazakhstan n/a 1,81 1,85 64,4 1,8 1,0% 60,3Netherlands 1,73 1,77 1,39 49,1 1,4 0,8% 20,6Norway 2,30 3,79 2,88 102,7 2,9 1,6% 29,3Poland 0,17 0,14 0,11 3,9 0,1 0,1% 27,1Romania 0,17 0,36 0,63 22,2 0,6 0,3% 54,6Russian Federation n/a 43,51 43,32 1529,2 43,3 23,4% 72,0Turkmenistan n/a 2,51 2,43 280,6 7,9 4,3% -Ukraine n/a 1,02 0,93 32,6 0,9 0,5% 49,2United Kingdom 0,59 0,76 0,34 12,1 0,3 0,2% 4,9Uzbekistan n/a 1,58 1,59 55,8 1,6 0,9% 25,4Other Europe & Eurasia 38,81 0,40 0,43 15,6 0,4 0,2% 43,2Total Europe & Eurasia 44,53 59,09 57,39 2220,8 62,9 34,0% 57,8Bahrain 0,19 0,14 0,09 3,0 0,1 - 6,3Iran 14,20 24,10 28,13 1045,7 29,6 16,0% -Iraq 2,69 3,19 3,17 111,9 3,2 1,7% -Kuwait 1,38 1,48 1,78 62,9 1,8 1,0% -Oman 0,28 0,57 0,98 34,6 1,0 0,5% 40,7Qatar 4,62 10,90 25,46 899,3 25,5 13,8% -Saudi Arabia 5,02 6,07 7,30 267,3 7,6 4,1% 96,9Syria 0,11 0,24 0,28 10,0 0,3 0,2% 51,8United Arab Emirates 5,66 6,00 6,44 227,1 6,4 3,5% -Yemen 0,16 0,48 0,49 17,3 0,5 0,3% -Other Middle East - - 0,05 1,7 0,1 - 18,4Total Middle East 34,34 53,17 74,17 2680,9 75,9 41,0% -Algeria 3,23 4,08 4,50 159,1 4,5 2,4% 52,1Egypt 0,33 1,02 2,07 76,6 2,2 1,2% 36,9Libya 0,83 1,32 1,54 54,4 1,5 0,8% 96,9Nigeria 2,48 3,51 5,22 184,2 5,2 2,8% -Other Africa 0,82 0,84 1,21 43,3 1,2 0,7% 66,2Total Africa 7,68 10,77 14,54 517,5 14,7 7,9% 68,2Australia 1,11 1,65 2,41 88,6 2,5 1,4% 65,6Bangladesh 0,35 0,30 0,37 13,1 0,4 0,2% 21,4Brunei 0,32 0,38 0,34 12,4 0,4 0,2% 28,8China 0,92 1,37 2,26 86,7 2,5 1,3% 32,3India 0,60 0,67 1,06 38,5 1,1 0,6% 35,6Indonesia 2,56 2,18 3,00 112,5 3,2 1,7% 45,7Malaysia 1,49 2,41 2,39 84,3 2,4 1,3% 38,2Myanmar 0,27 0,29 0,49 17,5 0,5 0,3% 39,9Pakistan 0,65 0,61 0,85 30,1 0,9 0,5% 22,7Papua New Guinea 0,13 0,43 0,44 15,6 0,4 0,2% -Thailand 0,20 0,42 0,32 10,7 0,3 0,2% 10,5Vietnam n/a 0,17 0,48 19,7 0,6 0,3% 70,1Other Asia Pacific 0,27 0,51 0,40 13,9 0,4 0,2% 22,1Total Asia Pacific 8,86 11,39 14,80 543,5 15,4 8,3% 37,4Total World 109,72 148,01 177,05 6534,0 185,0 100,0% 60,4of which: European Union 3,65 3,77 2,91 101,4 2,9 1,6% 15,1
OECD 16,57 16,17 16,56 587,3 16,6 9,0% 14,6Former Soviet Union 38,46 51,48 51,50 2013,1 57,0 30,8% 71,8
Source | BP Statistical Review 2009
Appendix Page 8
Table I | World Gas Production 1998-2008
change 20082008 over share
Thousand Barrels Daily 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2007 of totalUS 538,7 533,3 543,2 555,5 536,0 540,8 526,4 511,1 524,0 540,5 582,2 7,5% 19,3%Canada 173,4 176,8 182,2 186,5 187,9 184,7 183,7 187,4 188,4184,1 175,2 -5,1% 5,7%Mexico 38,4 37,1 37,8 37,4 38,9 41,2 42,7 45,0 51,6 54,0 54,9 1,3% 1,8%Total North America 750,5 747,2 763,2 779,4 762,8 766,6 752,8 743,6 764,0 778,7 812,3 4,1% 26,7%Argentina 29,6 34,6 37,4 37,1 36,1 41,0 44,9 45,6 46,1 44,8 44,1 -1,9% 1,4%Bolivia 2,8 2,3 3,2 4,7 4,9 6,4 9,8 11,9 12,9 13,8 13,9 0,5% 0,5%Brazil 6,3 7,4 7,5 7,7 9,2 10,0 11,0 11,0 11,3 11,3 13,9 22,4% 0,5%Colombia 6,3 5,2 5,9 6,1 6,2 6,1 6,4 6,7 7,0 7,5 9,1 19,8% 0,3%Trinidad & Tobago 8,6 11,7 14,1 15,2 17,3 24,7 27,3 30,3 36,4 39,0 39,3 0,5% 1,3%Venezuela 32,3 27,4 27,9 29,6 28,4 25,2 28,4 27,4 31,5 32,1 31,5 -2,2% 1,0%Other S. & Cent. America 2,9 3,5 3,7 3,9 3,8 3,6 4,0 4,9 5,8 6,5 7,2 11,6% 0,2%Total S. & Cent. America 88,8 92,0 99,7 104,3 106,0 117,1131,7 137,9 151,1 155,0 158,9 2,2% 5,2%Azerbaijan 5,1 5,4 5,1 5,0 4,7 4,6 4,5 5,2 6,1 9,8 14,7 50,0% 0,5%Denmark 7,6 7,8 8,2 8,4 8,4 8,0 9,4 10,4 10,4 9,2 10,1 9,1% 0,3%Germany 16,7 17,8 16,9 17,0 17,0 17,7 16,4 15,8 15,6 14,3 13,0-9,2% 0,4%Italy 17,4 16,0 15,2 14,0 13,4 12,7 11,9 11,1 10,1 8,9 8,4 -6,1% 0,3%Kazakhstan 7,2 9,0 10,4 10,5 10,2 12,6 20,0 22,6 23,9 26,4 30,2 13,9% 1,0%Netherlands 64,8 60,2 58,1 62,4 60,3 58,1 68,5 62,5 61,6 60,567,5 11,2% 2,2%Norway 44,2 48,5 49,7 53,9 65,5 73,1 78,5 85,0 87,6 89,7 99,2 10,4% 3,2%Poland 3,6 3,4 3,7 3,9 4,0 4,0 4,4 4,3 4,3 4,3 4,1 -6,6% 0,1%Romania 14,0 14,0 13,8 13,6 13,2 13,0 12,8 12,4 11,9 11,5 11,5-0,3% 0,4%Russian Federation 534,8 534,6 528,7 526,2 538,8 561,4 573,3 580,1 593,8 592,0 601,7 1,4% 19,6%Turkmenistan 12,0 20,6 42,5 46,4 48,4 53,5 52,8 57,0 60,4 65,4 66,1 0,7% 2,1%Ukraine 16,3 16,4 16,2 16,6 16,9 17,5 18,5 18,8 19,1 19,1 18,7-2,3% 0,6%United Kingdom 90,2 99,1 108,4 105,8 103,6 102,9 96,4 88,2 80,0 72,1 69,6 -3,7% 2,3%Uzbekistan 49,6 50,3 51,1 52,0 51,9 52,0 54,2 54,0 54,5 59,1 62,2 4,9% 2,0%Other Europe & Eurasia 12,3 11,5 11,2 11,0 11,3 10,7 11,1 10,7 11,5 10,8 10,3 -5,4% 0,3%Total Europe & Eurasia 895,8 914,7 939,2 946,7 967,6 1001,7 1032,5 1038,2 1050,7 1053,3 1087,3 2,9% 35,4%Bahrain 8,4 8,7 8,8 9,1 9,5 9,6 9,8 10,7 11,3 11,8 13,4 13,8% 0,4%Iran 50,0 56,4 60,2 66,0 75,0 81,5 84,9 103,5 108,6 111,9 116,3 3,6% 3,8%Kuwait 9,5 8,6 9,6 10,5 9,5 11,0 11,9 12,2 12,5 12,1 12,8 5,5% 0,4%Oman 5,2 5,5 8,7 14,0 15,0 16,5 18,5 19,8 23,7 24,1 24,1 -0,3% 0,8%Qatar 19,6 22,1 23,7 27,0 29,5 31,4 39,2 45,8 50,7 63,2 76,6 20,9% 2,5%Saudi Arabia 46,8 46,2 49,8 53,7 56,7 60,1 65,7 71,2 73,5 74,4 78,1 4,7% 2,5%Syria 5,3 5,4 5,5 5,0 6,1 6,2 6,4 5,5 5,7 5,6 5,5 -2,8% 0,2%United Arab Emirates 37,1 38,5 38,4 44,9 43,4 44,8 46,3 47,8 49,0 50,4 50,2 -0,7% 1,6%Other Middle East 3,2 3,4 3,4 3,0 2,6 1,8 2,5 3,4 4,1 4,1 4,1 -1,7% 0,1%Total Middle East 185,0 194,7 208,1 233,3 247,2 262,9 285,1 319,9 339,1 357,6 381,1 6,3% 12,4%Algeria 76,6 86,0 84,4 78,2 80,4 82,8 82,0 88,2 84,5 84,8 86,51,7% 2,8%Egypt 14,0 16,8 21,0 25,2 27,3 30,1 33,0 42,5 54,7 55,7 58,9 5,4% 1,9%Libya 6,4 5,0 5,9 6,2 5,9 5,5 8,1 11,3 13,2 15,3 15,9 3,6% 0,5%Nigeria 5,1 6,0 12,5 14,9 14,2 19,2 22,8 22,4 28,4 35,0 35,0 -0,2% 1,1%Other Africa 5,1 5,8 6,3 6,8 7,5 7,1 9,3 11,2 11,8 13,6 18,5 35,7% 0,6%Total Africa 107,2 119,7 130,1 131,3 135,3 144,8 155,2 175,6 192,6 204,4 214,8 4,8% 7,0%Australia 30,4 30,8 31,2 32,5 32,6 33,2 35,3 37,1 38,9 40,0 38,3 -4,5% 1,2%Bangladesh 7,8 8,3 10,0 10,7 11,4 12,3 13,2 14,5 15,3 16,3 17,3 6,0% 0,6%Brunei 10,8 11,2 11,3 11,4 11,5 12,4 12,2 12,0 12,6 12,3 12,1 -1,2% 0,4%China 23,3 25,2 27,2 30,3 32,7 35,0 41,5 49,3 58,6 69,2 76,1 9,6% 2,5%India 24,5 25,1 26,4 26,4 27,6 29,5 29,2 29,6 29,3 30,1 30,6 1,4% 1,0%Indonesia 64,6 70,0 65,2 63,3 69,7 73,2 70,3 71,2 70,3 67,6 69,7 2,7% 2,3%Malaysia 38,5 40,8 45,3 46,9 48,3 51,8 53,9 59,9 59,7 60,8 62,5 2,5% 2,0%Myanmar 1,8 1,7 3,4 7,0 8,4 9,6 10,2 12,2 12,6 13,5 12,4 -8,5% 0,4%New Zealand 4,6 5,3 5,6 5,9 5,6 4,3 3,8 3,6 3,7 4,1 3,8 -6,3% 0,1%Pakistan 17,8 20,3 21,5 22,7 24,6 30,4 34,5 35,5 36,1 36,5 37,5 2,6% 1,2%Thailand 17,5 19,2 20,2 19,6 20,5 21,8 22,4 23,7 24,3 26,0 28,9 10,7% 0,9%Vietnam 0,9 1,3 1,6 2,0 2,4 2,4 4,2 6,9 6,8 7,1 7,9 11,9% 0,3%Other Asia Pacific 3,3 3,3 3,3 3,6 5,3 6,4 6,2 7,0 10,5 13,0 14,1 8,5% 0,5%Total Asia Pacific 245,7 262,6 272,1 282,4 300,6 322,3 336,8 362,6 378,5 396,3 411,2 3,5% 13,4%Total World 2273,0 2330,9 2412,4 2477,4 2519,4 2615,5 2694,1 2777,8 2876,1 2945,3 3065,6 3,8% 100,0%of which: European Union 223,4 226,6 232,0 232,9 227,7 223,6 227,4 211,9 201,3 187,5 190,3 1,2% 6,2%
OECD 1041,8 1047,2 1071,0 1093,8 1083,9 1091,2 1088,0 1072,1 1086,6 1092,1 1136,6 3,9% 37,3%Former Soviet Union 625,3 636,6 654,4 657,1 671,2 701,9 723,5 738,0 758,0 772,2 793,7 2,5% 25,8%Other EMEs 605,9 647,0 687,0 726,5 764,3 822,4 882,6 967,7 1031,5 1081,1 1135,3 4,7% 36,9%
Source | BP Statistical Review 2009
Appendix Page 9
Table J | World Natural Gas Productions by Region and Country, 2006-2030 (Trillion Cubic Feet)
History Projections AveregeAnnual %
Region/Country 2006 2010 2015 2020 2025 2030 Change2006-2030
OECDOECD North America 26,6 27,7 27,9 29,0 31,1 31,9 0,8United States* 18,3 20,1 20,5 21,5 23,3 23,6 1,1Canada 6,5 5,5 5,4 5,4 5,6 5,7 -0,6Mexico 1,7 2,1 2,1 2,1 2,3 2,5 1,6OECD Europe 10,7 10,9 11,0 10,9 10,7 10,4 -0,1OECD Asia 1,8 2,3 2,8 3,6 4,0 4,6 3,9Japan 0,2 0,2 0,2 0,2 0,2 0,2 0,0South Korea 0,0 0,0 0,0 0,0 0,0 0,0 0,0Australia/New Zealand 1,7 2,1 2,6 3,4 3,8 4,4 4,2 Total OECD 39,1 40,9 41,7 43,4 45,8 46,9 0,8
Non-OECDNon-OECD Europe & Eurasia 30,0 31,8 35,0 36,8 38,2 40,3 1,2Russia 23,2 24,3 26,7 28,0 29,2 31,3 1,3Other 6,8 7,6 8,3 8,9 9,0 9,1 1,2Non-OECD Asia 11,1 13,0 15,6 17,3 18,7 19,8 2,5China 2,1 2,5 3,4 3,8 4,2 4,3 3,1India 1,1 1,6 2,0 2,3 2,4 2,4 3,3Other Non-OECD Asia 7,9 8,9 10,3 11,2 12,1 13,2 2,2Middle East 12,0 14,8 17,8 19,9 22,0 22,6 2,7Africa 6,6 7,9 9,6 11,6 12,8 13,9 3,2Cent. & S. America 5,1 6,2 7,0 7,8 8,6 9,1 2,5Brazil 0,3 0,6 1,0 1,2 1,5 1,6 6,6Other Cent. & S. America 4,7 5,5 6,0 6,5 7,1 7,5 1,9 Total Non-OECD 64,6 73,6 85,0 93,4 100,3 105,8 2,1
Total World 103,8 114,5 126,7 136,8 146,1 152,7 1,6* Includes supplemental production or forecast discrepancy. For details, see Energy InformationAdministration (EIA), Annual Energy Outlook 2009, p. 135, Table A13, "Natural Gas Supply, Disposition,and Prices."Note: Totals may not equal sum of components due to independent rounding.Source | History: EIA, International Energy Annual 2006 (June-December 2008), web site www.eia.doe.gov/iea. Projections: United States: EIA, Annual Energy Outlook 2009, DOE/EIA-0383(2009) (Washington, DC, June 2009), web site www.eia.doe.gov/oiaf/aeo. Others: EIA, World Energy Projections Plus (2009).
Appendix Page 10
Appendix 5 | Investment in Research and Development of Solar Energy
Table K | Federal Government Spending in Research and Development of Solar Energy in relation with relevant events.
First oil Second oilcrisis crisis Chernobyl1974 1978 1979 1982 1983 1986 1990 19911.100 28.291 82.790 134.119 55.308 49.828 85.631 93.157
Source | IAE.org; statistics investment in R&D in solar energy in Germany, amount in million euro 2007 prices and exchange rates.
Table L | Federal Government Spending in Research and Development of Solar Energy
1991 1993 1995 199993.157 87.115 51.586 48.806
Source | IAE.org; statistics investment in R&D in solar energy in Germany, amount in million euro 2007 prices and exchange rates.
Table M | Goverments Spending in Research and Development in Germany and Japan 1974-1999
1974 1980 1990 2000 2005Germany 1.100 66.001 85.631 53.213 53.265Japan 8.912 68.374 42.258 81.684 97.918Source | IAE.org; statistics investment in R&D in solar energy in Germany, amount in million euro 2007 prices and exchange rates.
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Appendix 6 | Energy Security
Table N | Key data of the Lead Scenario 2008, highlighting the contributions of renewables (RES)
History Projections2005 2007 2010 2020 2030 2040 2050
Primary energy, PJ/yr 14469 13842 13855 12044 10252 8972 8066Primary energy RES, PJ/yr 665 932 1317 1953 2599 3218 3843Share of RES, % 4,7 6,7 9,5 16,2 25,4 35,9 47,6
Final energy, PJ/yr 9240 9423 8996 8133 7283 6469 5845Final energy RES, PJ/yr 602 807 966 1480 2019 2552 3045Share of RES, % 6,6 8,6 10,7 18,2 27,9 39,4 52,1
Electricity final energy, PJ/yr 1852 1829 1871 1791 16871622 1568Electricity RES, PJ/yr 229 314 361 624 909 1194 1364Share of RES, % 12,3 17,2 19,3 34,8 53,9 73,6 87
Heat final energy, PJ/yr 4859 4995 4605 4033 3499 2919 2480Heat RES, PJ/yr 292 325 385 579 785 971 1198Share of RES, % 6,0 6,6 8,4 14,4 22,4 33,3 48,3
Fuels final energy, PJ/yr 2529 2599 2521 2308 2051 1928 1796Fuels RES, PJ/yr 81 167 220 277 325 387 472Share of RES, % 3,2 6,4 8,7 12 15,8 20,1 26,9
Gross electricity consumption, TW/yr 2529 617 617 586 562 565 583Generation RES, TWh/yr 81 87,5 104 178 282 387 472Share of RES, % 3,2 14,2 16,9 30,4 50,1 68,5 80,9
Primary energy, PJ/yr 11469 13842 13855 12044 10252 8972 8066Renewable energies 665 932 1317 1953 2599 3218 3843Mineral oil 5154 4678 4855 4219 3458 2853 2387Coal (Hardcoal, Lignite) 3576 3563 2871 2244 1321 707 301Natural gas 3295 3136 3315 3269 2873 2193 1535Fossil fuels, total 12025 11377 11141 9732 7652 5768 4223Energy productivity GDP/PEC (1990 = 100) 130 142 149 202 269 336 394Reduction in CO2 emissions since 1990; % 15,5 17,2 23,7 35,7 52,7 67,1 78,5CO2 emissions avoided by renewables, million t/yr 86 115 129 192 271 356 416Source | Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead Study 2008, 13.
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Figure B | Contribution of Renewables to Final Energy by Type of Source, 1975-2007
Source | Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead Study 2008, 14.
Figure C | Structure of Final Energy Supply from Renewable Energy Sources in Germany, 2007
Source | Renewable Energy Sources in Figures: national and international development status June 2008, 14.
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Appendix 7 | Environmental concern
Table P | Total CO2 avoidance via the use of renewable energy sources in Germany
Savings Avoidedfactor emissions Share
Electricity [g CO2 /kWh] [1.000 t] [%]Hydopower 1.088 22.528 28,5Wind energy 862 34.046 43,1Photovoltaic energy 683 2.392 3,0Biogenic solid fuels 886 6.549 8,3Biogenic liquid fuels 748 1.938 2,5Biogas 748 5.560 7,0Sewage gas 1.088 1.132 1,4Landfill gas 1.088 1.143 1,4Biogenic share of waste 886 3.766 4,8Geothermal energy 0 0 0,0Total electricity - 79.053 100Source | Renewable Energy sources in figures: national and international development status June 2008, 23.
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Appendix 8 | Figures on Renewables
Figure D | Jobs in the Renewable Energy Sector in Germany
Source | Renewable Energy Sources in Figures: national and international development status June 2008, 31.
Figure E | Total Additional Costs of Renewable Electricity Supply According to Lead Scenario2008 for Price Paths A and B, including and excluding Photovoltaics
Source | Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Lead Study 2008, 29.
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Table Q | Annual Photovoltaic Production by Country, 1995-2006
History1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
United States 34,8 38,9 51,0 53,7 60,8 75,0 100,3 120,6 103,0 138,7 154,0 201,6Japan 16,4 21,2 35,0 49,0 80,0 128,6 171,2 251,1 363,9 601,5 833,0 926,9Europe 20,1 18,8 30,4 33,5 40,0 49,8 73,9 122,1 200,2 311,8 476,6 678,3China n/a n/a n/a n/a n/a 2,5 3,0 8,0 9,0 35,0 134,0 369,5Taiwan n/a n/a n/a n/a n/a n/a 3,5 8,0 17,0 40,0 88,0 177,5India n/a n/a n/a n/a n/a 10,5 12,5 19,1 23,1 31,1 35,5 43,4Others n/a n/a n/a n/a n/a 10,5 21,6 18,2 32,2 35,4 65,0 123,6Total 77,7 88,7 125,8 154,9 201,3 276,8 386,0 547,1 748,4 1.193,5 1.786,1 2.250,8Source | Compiled by Earth Policy Instute from Worldwatch Institue, Signposts 2004, CD-Rom (Washington, DC:2005); Prometheus Institute, "23rd Annual Data Collection - Final," PVNews, vol.26, no. 4 (April 2007), pp. 8-9.Worldwatch - Another Sunny Year for Solar Energy
Table R | Annual Photovoltaic Installations, Select Countries and Regions, 2000-2007 (Megawatts)
HistoryCountry/Region 2000 2001 2002 2003 2004 2005 2006 2007Germany 44,0 78,0 80,0 170,0 500,0 700,0 1.050,0 1.260,0Japan 74,4 91,0 141,0 201,0 256,0 320,0 350,0 402,5United States 16,8 28,4 49,1 71,7 89,9 108,0 141,4 259,0Rest of Europe 1,0 3,0 10,0 11,0 24,0 60,0 118,0 234,0Rest of Asia 13,0 19,0 43,0 33,0 47,0 55,0 81,0 131,9Note: Installations for 2007 are estimates.Source | Travis Bradford and Paul Maycock, "PV Market Update: Demand Grows Quickly and Supply Races to Catch up," Renewable Energy World, July 2007. Worldwatch - Another Sunny Year for Solar Energy
Table S | Photovoltaic Production by Top Ten Producing Companies, 2006 and First Half of 2007 (Megawatts)
First HalfCompany 2006 of 2007
Sharp (Japan) 434 225Q-Cells (Germany) 253 160Suntech (China) 158 145Kyocera (Japan) 180 108Sanyo (Japan) 155 87Motech (Taiwan) 102 85Deutsche Solar/Shell (United States, Germany) 86 66First Solar (United States) 60 61Mitsubischi (Japan) 111 55Sunpower (Philippines) 63 54Source | Prometheus Institute, "Asian Cell Producers Swamping the Boat: A Look at the First Half of 2007,"PVNews, vol. 26, no. 9 (September 2007), pp. 6-8. Worldwatch - Another Sunny Year for Solar Energy
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