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Europe’s Energy Transformation, and Why We’re Being Left in the Dust

The powerful story we don’t know: Europe’s energy transformation.

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Americans’ greatest challenge in energy generation is appreciating what is possible because too many of us don’t know what is already happening in other parts of the world – for example, the powerful story of Europe’s energy transformation.

When residents of the small city of Freiburg, Germany, go to school or work in the morning, they pass dozens of solar installations. There are solar panels on homes, on churches, on the facade of the main train station, on the soccer stadium, throughout a “solar housing development” and a “solar business park” and on the roofs of schools. All told, Freiburg’s solar photovoltaic (PV) installations produce enough electricity to meet the needs of tens of thousands of homes.

Additionally, five large wind turbines are situated on hilltops within the city’s boundaries and contribute to the town’s energy supply. Small hydroelectric plants sit on the river, as well as combined heat and power plants and biomass plants that burn biogas and rapeseed oil, along with other facilities that burn wood chips and pellets.

Freiburg is known as a “Green City,” but it is not atypical for the region or the nation. In May 2012, solar PV supplied 10 percent of Germany’s electricity. During the first nine months of 2012, Germany produced enough electricity from renewable energy sources including wind, solar, biomass and hydroelectric plants to supply 26 percent of its demand.

This capacity has been growing rapidly from year to year, and renewables already represent roughly double the share of Germany’s electricity production as compared to the United States.

Energy transformation

A high percentage of renewable energy production is not unique to Germany. Spain has been averaging 30-31 percent renewable electricity in recent months, and Italy reached 24 percent renewables in its electricity production over the first 10 months of 2012. The Czech Republic also has installed enough solar to achieve nearly the same per-capita amount of solar electric generating capacity as Germany. In many other European nations, renewable energy capacities continue to grow rapidly.

In Germany, the shift toward renewable energy is called the Energiewende, roughly translated as the energy transformation. It includes not only a transition away from fossil fuels, but also away from nuclear power, particularly after the Fukushima Disaster of March 2011.

Few Americans know that this process is happening. And among those who do are those who would like to delay it happening here as long as possible.

The US debate

The experiences of Europe have never been more relevant to our circumstances in the United States than now. Following Hurricane Sandy – the second most devastating storm to hit New York and the Northeast in as many years – the issue of global warming and climate change has taken on a new urgency. With the re-election of President Barack Obama, many environmentalists see the potential for national political action.

You would think that at this moment both activists and policymakers in the United States would be clamoring to follow Germany’s lead. They aren’t.

There are multiple probable explanations for why this is not happening. Regulatory barriers exist to establishing German-style policies here, but a larger problem is the ongoing political deadlock in Washington. This has narrowed our ideas of what is possible and reinforced an American exceptionalism, where we don’t look to successful solutions from other nations.

Another central problem is that the US media has done a poor job of telling the story of the energy transformation, and misinformation abounds. While much of this confusion can be traced to the fossil fuel industries and right-wing think tanks, there is plenty of blame to spread around for the distortion.

The carbon tax and artificially limited options

A good example would be Economist Dieter Helm’s November 11 New York Times opinion piece calling for a carbon tax. Helm dismisses renewable energy and argues that the American move to natural gas has done more to lower emissions than Europe’s adoption of renewables. He also suggests that moving to renewables has hastened the departure of industry to more carbon-intensive regions. These claims join a number of other inaccuracies and unsupported assertions.

Helm offers no evidence that the shift to renewable energy impacts the rate of relocation of industry, referencing Britain, which has shown relatively unimpressive renewable adoption. In contrast, Germany remains an industrial powerhouse, offering cheap subsidized electricity to its industry.

Contrary to Helm’s rhetoric, the EU has made real progress. Carbon reductions have fallen 16.5 percent to 17.5 percent in the EU from 1990 to 2011. In contrast, emissions increased 10.5 percent in the United States from 1990 to 2010, during a period where the US saw imported goods surge far above exports.

All of this is in support of the disingenuous argument that a carbon tax is the only way to tackle the problem of greenhouse gas emissions. It isn’t.

The feed-in tariff

While circumstances differ somewhat from nation to nation, Europe’s Energiewende is largely due to one policy that has been replicated in dozens of nations, not only in Europe but around the world – the feed-in tariff.

Feed-in tariffs are modeled after Germany’s landmark Renewable Energy Sources Act (EEG in German), passed in 2000. The law gives priority to renewable energy generation on the electric grid and determines payments to producers, differentiated according to both technology and scale, set above the cost of generation. The law also fixes these payments through 20-year contracts. These measures constitute the essential features of advanced feed-in tariffs.

Policies based more or less on the German model have been implemented in China, the Czech Republic, France, Italy, Japan, Korea, Malaysia, Ontario, Spain, Taiwan, the UK and a host of other nations and provinces. The feed-in tariff has been the most successful policy to build renewable energy capacities in the world, and is responsible for an estimated 75 percent of installed solar capacity and 45 percent of wind capacity globally.

Feed-in tariffs are being studied and copied successfully everywhere in the developed world. Everywhere, that is, except the United States.

The road not taken

Most of the successful renewable energy policies implemented in the United States have been at the state level. The result is myriad oft-overlapping renewable energy policies, including a combination of tax credits and state-level renewable energy mandates.

Policies called feed-in tariffs have been implemented in a number of states, municipalities and through some utilities; however, with few exceptions, these policies have not followed the German model.

While US policies have resulted in dramatic growth in recent years, our progress is far short of both the market transformation that is happening in Europe and what is needed to achieve meaningful greenhouse gas reductions. For instance, while solar electric capacities have grown more than fourfold since President Obama took office, in 2011, solar met less than 1 percent of US electricity demand, with wind meeting another 3 percent.

We can do better.

A positive message

Carbon tax proponents say that a price on carbon will spur renewable energy development by making carbon-based forms of energy reflect some of their environmental costs, thus making them comparatively more expensive and renewables more competitive. However, there is more than one way to transition from fossil fuels to renewable energy.

The beauty of the feed-in tariff is that it is a positive, forward-looking policy. By creating a system where society invests in renewables and rewards renewable energy generators, it helps spur the creation of the system that will replace carbon and nuclear power in the electricity sector.

By comparison, a carbon tax punishes that which we do not want – carbon emissions – but does not, on its own, build an alternative. Also, as a negative policy and a tax, it is simply less inspiring. The resulting lack of enthusiasm from much of the public has undoubtedly added to the considerable difficulties that proponents of a carbon tax have had in generating and mobilizing the kind of powerful base of mass support that is needed.

This is not to say that policies to support renewable energy and to price carbon are mutually exclusive. In the long run, we need both. However, it is important to recognize the inherent message advantages of policies that support renewables, which have garnered support from Republican politicians and constituencies in the United States that staunchly oppose carbon pricing.

These advantages are not only rhetorical. We need to do more than to stop huge fossil fuel infrastructure projects. We need to build a viable alternative. Europe has done just that, using the feed-in tariff.

Can we learn?

A national feed-in tariff will attract political opposition from private utilities, fossil fuel interests, and the nuclear lobby. But let’s not kid ourselves. Every potentially effective proposal to move the United States away from fossil fuels has and will meet strong political opposition.

However, as the reality of global warming becomes increasingly obvious and impacts the daily lives of Americans more and more, the realm of what is possible politically will change.

The regulatory challenges to passing a national feed-in tariff in the United States are not insurmountable. A recent article by Chris Nelder in Smart Planet lays out very clearly how Obama could use his authority to require federal regulators to create such a system. Other approaches may also be possible.

But perhaps our greatest challenge is that we Americans do not see what is possible because too many of us don’t know that this is already happening in other parts of the world. In this way, the story of Europe’s energy transformation is itself powerful.

As a society, we must begin planning constructively for the future. We need to consider all viable options to reduce carbon emissions, starting with those that have a track record of success. We are very fortunate to have real-world examples that show that we can move off of fossil fuels and nuclear power.

Americans have shown that we can take bold action when needed. The question is whether we can overcome both our political dysfunction and exceptionalism to learn from other nations.

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