Is nuclear energy phase-out possible? Wind turbines installed in Dardesheim, Germany / Korea Times file Korea can learn from Germany’s experience in transition to renewables By Kim Da-ye Energy has become a big headache in Germany since its gradual replacement of nuclear with renewables. But Germans are clear about one thing: nuclear energy is out, and they aren’t looking back. Germany is experiencing a host of problems from the transition, or so-called “Energiewende.” Because consumers and small and medium businesses support renewables investment through extra charges to their electricity bills, German households now face the most expensive prices in the world. Companies in energy-intensive industries have been exempt from those charges under the government’s policy to keep them competitive. But it is now uncertain whether they will continue to be, as the European Commission found that the exemption breaches its competition regulations. Furthermore, the extraction of low-cost, relatively clean shale gas in North America is expected to hurt the competitiveness of the European manufacturing sectors compared to that of the U.S. Although Korea has a much different environment than Germany, the two countries share many similarities — both rely on imports of natural resources and both have a large export-oriented manufacturing sector. The Korean government and energy sectors have been highly pessimistic about investing in renewables and reducing nuclear dependence. Germany’s Energiewende shows that such a transition is very much possible. Korea has much to learn from Germany’s experiences — both from what has worked and what hasn’t — and, most importantly, the determination to work on the long-term goals to make renewables work and cut carbon emissions. The Korea Times’ Business Focus interviewed officials of the World Energy Council who visited Korea last month during the World Energy Congress in Daegu. The German officials gave a candid view of the problems they now face, explained the prejudice against the phase-out of nuclear power and discussed what Korea may learn from their experiences. Real problems Germany faces The reduction of dependence on nuclear energy worries the manufacturing sector the most in Korea. How about Germany? The investment into renewables including wind turbines and solar power panels has come from the pocket of consumers and small and medium enterprises (SMEs) in the form of additional charges to their electricity bills. To keep businesses competitive globally in the energy-intensive industries, including chemicals and steel, the government exempted them from paying a supplementary charge of 5.3 euro cents (77 won) per kilowatt. The charge is scheduled to go up to 6 euro cents or more next year. German consumers and corporations’ large electricity bills were supposed to pay off in the future. Their expectations, however, proved little too optimistic when the U.S. and Canada began extracting shale gas. “We thought fossil fuels would become very expensive and it’s a good alternative to go renewables. The world now looks different from what we thought five years ago. With shale gas, we have a plenty of energy at low costs on the markets globally,” said Carsten Rolle, the executive director of World Energy Council’s German division. The lower energy prices in the U.S. are expected to hit the European manufacturing sector hard, especially the German one, since they need cheap energy to compete. Making the prospect worse, the European Commission is looking into the exemptions from additional charges for renewables granted to energy-intensive companies, which it believes is against EU competition regulations. “Then Germany specifically would be very hard hit,” said Birnbaum, the WEC vice-chair of Europe. Rolle observes that additional new investment is not taking place in energy-intensive sectors. This can eventually hurt the whole value chains of the related sectors, he said. For example, aluminum producers that spend much of their costs on electricity may decide to move to the U.S. Germany is well known for business clusters, geographic concentrations of businesses, suppliers and other associated institutions connected to each other in the same industry or value chain. If a supplier of aluminum moves out of the cluster, automotive makers in that cluster can be affected. “Additional new investment is not taking place in energy-intensive sectors all in all, so it’s a silent and slow decline in these industries,” Rolle said. Apart from the competitiveness issues in the manufacturing sector, energy security has become an important problem to tackle, which is also closely linked to the troubles faced by the energy sector. Wind turbines and solar panels whose productivity wholly depends on the weather do not constantly generate electricity, so Germany needs a substantial back-up capacity. According to Rolle, the domestic demand for electricity ranges between 40 and 80 gigawatt per hour. Renewables alone have the capacity to produce 60 GW, but they rarely generate so much. For the stable supply of electricity, the country runs coal-powered and natural-gas-powered plants. These plants runs from time to time to back up renewables, so end up having poor efficiency for the same investment being made into the fully functioning plants. Prejudice Since Germany received much attention for the phase-out of nuclear power, there has been so much criticism of the policy. Rolle and Birnbaum said that the shutdown of nuclear plants is only a small part of the Energiewende. They also explained that there is some prejudiced criticism. “Prices will increase not mainly because of the nuclear phase-out. That is one of the misunderstandings of what this Energiewende is about. Energiewende is a lot more than the nuclear phase-out — it’s really about increasing the share of renewables in electricity, improving energy efficiency and reducing CO2 emissions,” said Rolle. “Half a year after Germany decided its long-term energy strategy up to 2050, the Fukushima disaster took place and Germany immediately decided to shut down its nuclear plants. But even if the Fukushima didn’t happen, most of the system changes would have happened anyway.” Birnbaum added, The real part of Energiewende is massive addition of renewables, which is the transition of the whole supply side of generation to more decentralized, renewable schemes. This would happen even if there were no nuclear phase-out. Even if we don’t shut down nuclear plants, we will still invest into renewables.” Critics of Germany’s decision to phase out nuclear power by 2022 point to the irony of the policy. “The impact for Germany is a bit strange because they cut down on nuclear and they are using more coal. Coal is the highest emitter by far. They also are importing electricity from nuclear plants in France,” said Joe Oliver, the Canadian Minister of Natural Resources in an interview when he was asked about his view on nuclear energy. Rolle and Birnbaum contend that Germany is not resorting to coal to supplement the energy it generates from nuclear plants. But that has to do with its stated policy on greenhouse emissions. Its target for greenhouse gas emissions was set at the equivalent of 974 million tons of CO2 between 2008 and 2012 and then to 748 by 2020. Since renewable energy accounted for 11.6 percent of its primary energy consumption in 2012, it emitted less and less CO2 and other greenhouse gases. The emissions decreased from 998 in 2005 to 944 in 2010 to 917 in 2011 and increased marginally to 931 in 2012, according to the data provided by WEC Germany. Therefore given this reduction, Germany has some room for burning coal. Furthermore, Rolle and Birnbaum said that with the extraction of shale gas, the U.S. uses less coal, causing coal prices to fall. The cheap coal is then exported to Europe. In short, cheaper coal from the U.S. and Germany’s capacity to burn it within the greenhouse gas emissions limit are the reasons why more coal was consumed last year, according to the experts. “The reality is simple. We actually burn more coal but we emit exactly the same amount of CO2. Germany is emitting more, but on European level, nothing happens,” Birnbaum said. As far as the criticism of Germany importing electricity from France, which generates 75 percent of its electricity from nuclear power, the two experts say that the phase-out of nuclear energy has little to do with the imports. Germany considers neighboring countries, including France and Poland, as part of the grid. On windy and sunny days, Germany will see a surge in electricity generation, so the excess power will be exported to the neighboring countries to prevent overload. The evidence proving their argument is that Germany was a net exporter of electricity in 2012. Lessons Despite difficulties, nuclear power is no longer an option for Germany, Rolle and Birnbaum say. “The phase-out of nuclear energy in Germany is irrevocable. That is a done deal,” said Birnbaum. Rolle added, “The nuclear issue dominated many discussions in energy policy and divided society to some extent. This has now been overcome. It’s expensive. Maybe it’s not clever. But there is a consensus among all political parties. There is no political party that wants to get back to nuclear,” said Rolle. Instead German consumers and businesses want the energy sector to be less government-controlled and more market-oriented. “The manufacturing industry says we need to reform renewable subsidies. WEC and European industries EURELECTRIC and eurogas, they all advocate that we need a market-based reform of the renewable subsidies scheme. The whole industry is completely aligned behind the request to reform the renewable subsidy act and that has to start in Germany,” said Birnbaum. The issue of nuclear energy in Germany is more than a decade old. In 2000, the government, a coalition between the Social Democratic Party and green political party Alliance ‘90/The Greens, announced the policy to phase out nuclear power and persuaded energy companies to gradually shut down the country’s 19 nuclear power plants. The plan faced political opposition in earlier years. In the federal election in 2002, the conservative party pledged to scrap the phase-out plan. German Chancellor Angela Merkel of the Christian Democratic Union initially compromised in favor of a phase-out when her party had to form a coalition with the Social Democratic Party. When she was re-elected, she switched her position, passing a law extending the life-span of the remaining 17 nuclear power plants for up to 14 years. Two nuclear plants were turned off in 2003 and 2005. The Fukushima nuclear disaster in March 2011, however, cemented Germany’s decision to move away from nuclear energy. The government led by Merkel immediately shut down eight out of the 17 plants, which account for about 40 percent of its nuclear generating capacity. A complete phase-out of nuclear power is planned for 2022. A complete phase-out may be impossible for Korea because it is effectively an island. One important factor that made Energiewende possible is that Germany’s grid is connected to the neighboring European countries, so it can export and import electricity when supply goes up and down depending on the weather. “Without being a part of the European system, Germany could not have shut down nuclear,” Birnbaum said. Rolle said that energy is no longer a purely national issue. “Electricity is traded within Europe, and it would make a lot of sense to further integrate our electricity market with the neighboring markets,” he said. Korea may not be able to adopt the German energy transition as it is, but can learn from the country’s long-term vision. Germany is paying very high prices to go renewables, but is not going to overturn its decision. The country is instead looking for ways to improve the current situation to meet the initial goal. “We got here faster than others. We paid the learning curve for others. But we may also gain experiences in running a new highly decentralized energy system earlier than others. So Germany is an interesting future laboratory in energy terms,” said Rolle. “One has to say that German Energiewende is what the society wants. But they have always been told that the transition is free.Now that they see that there is a bill, actually there is an increasing pressure to continue but in a more cost-efficient way,” said Birnbaum. “What Korea should learn from Germany is how you can make it in an efficient way without wasting lots of money. The trick is to do with little money. We have shown the mistakes, so do it in the right way.” [email protected] koreatimes.co.kr/www/news/biz/2013/11/334_145545.html
Posted on: Wed, 06 Nov 2013 18:06:23 +0000
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