Germany's Energy Turnaround - Challenging for Municipalities and Municipal Utilities

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Current Issues
Natural resources

Germany’s energy turnaround
September 17, 2012

Challenging for municipalities and municipal utilities

Authors
Josef Auer
+49 69 910-31878
josef.auer@db.com

Germany's energy turnaround targets objectives that far exceed its legislated, accelerated exit from nuclear power generation. In order for the many energy and climate policy objectives to be met at least EUR 30 bn will have to be invested in Germany annually in areas such as renewable energies, conventional power plant, grids, storage facilities, energy-efficient buildings and alternative propulsion technologies – no small challenge.

Eric Heymann
+49 69 910-31730
eric.heymann@db.com
Editor
Antje Stobbe
Deutsche Bank AG
DB Research
Frankfurt am Main
Germany
E-mail: marketing.dbr@db.com
Fax: +49 69 910-31877
www.dbresearch.com
DB Research Management
Ralf Hoffmann | Bernhard Speyer

The turnaround will pave the way for municipalities and municipal utilities to enter new spheres of activity in terms of energy provision, the heating market and the transport sector. Municipalities and municipal utilities will probably make their presence felt most heavily in the area of power supply; they have appropriate instruments for the heating segment, too. In the transport sector, by contrast, overarching levels of government are better placed to implement environmental policy measures for boosting energy efficiency. Considering the immense investment required it becomes obvious that the municipalities' and utilities' budget constraints are the biggest bottlene ck for the regionally essential energy turnaround. This applies in particular to investments in projects that are not subsidised by higher levels of government and/or have long amortisation periods.

Therefore, when decisions are made on resource allocation the crucial issue should be which measures do the most to implement the revised energy policy as a whole. In this context it has to be borne in mind that ecological, economic and social objectives are not compatible with one another per se. Permanent prioritisation of the sustainability triad's ecology component and double subsidisation of certain technologies are two positions that cannot be tolerated. German municipalities consider climate and energy issues very important

DX

Major issues for municipalities in the medium term*
Climate/energy
Infrastructure maintenance
Budget consolidation
Demographic challenge
Economic promotion/jobs
Mobility/transport
Urban planning/development
Education
Nature conservation
Social transfers
Integration of immigrants
0

10

* Survey of 118 major municipalities; multiple resposnes possible. Source: Institut für den öffentlichen Sektor

20

30

40

50

60

Germany's energy turnaround

Energy turnaround and climate protection: The key objectives Reduce emissions

1

Greenhouse gas emissions in Germany,
1990=100
110
100
90
80
70
60
50
90 93 96 99 02 05 08 11 14 17 20*
* Target for 2020: -40% versus 1990
Source: Federal Environment Ministry

Renewables growing in importance

2

Renewable energies in final energy consumption in
Germany (%)
20
15
10
5
0
90

95

00

05

10

15

20*

In Germany, the concept of the energy turnaround is occasionally limited in the public's perception to last year's decision to stage an accelerated exit from nuclear power generation following the disaster at the Fukushima reactor complex in Japan. Yet the turnaround is very much more comprehensive and goes back to a much earlier date. The topics of energy efficiency and dependence on fossil fuels (especially petroleum) became focal points as early as the 1970s in the course of the first oil crisis. And in 2000 it was agreed in Germany to phase out nuclear power. As things stand today, the "exit from the exit" provided for in the Energy Concept put forward in autumn 2010 by the political parties now in power was only a short...
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