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on May 19, 16 • posted by rhoggett •

New Thinking: Germany’s €17bn Energy Efficiency Strategy – Where’s Ours?

Germany’s €17bn Energy Efficiency Strategy: Where’s Ours?

Caroline Kuzemko, IGov Team, 19th May, 2016

At the time of writing the IGov working paper on ‘Governing for Demand Management Innovations in Germany’ earlier this year it was rumoured that there would be a new, comprehensive energy efficiency strategy. Germany has already made considerable gains in demand reduction for energy, and electricity, so much so that there have been claims about a decoupling between GDP growth and electricity demand. However, Germany also has tough demand reduction targets that they are determined to meet – not least a 20% reduction in primary energy by 2020, and of 50% by 2050, both compared to 2008 levels.

Against these targets, and despite the National Action Plan on Energy Efficiency announced only in December 2014, the German government recognises that it still needs to take more action. Hence there are now reports that a comprehensive new strategy, the ‘Effizienzoffensive’, is being launched. Details are sketchy at the moment, but sources say that there will be €17bn invested as part of the strategy, which also includes a broad public awareness campaign called: ‘Deutschland Macht’s Effizient’ (Germany makes it efficiently).

Reports are that there will be 4 programmes launched, including a new tender process to find the most cost-effective energy savings measures; a pilot programme promoting smart metering; an initiative to improve the recovery of waste heat; and an initiative to promote cross-cutting technologies that enhance the efficiency of energy output or its use. This latter initiative marks massive, planned investment in energy efficient technologies over the next 5 years.

What this shows is an overt attempt, at last, to put efficiency first. This is not least because of growing recognition in Germany that the cleanest and cheapest energy is that which is not consumed. Indeed, the public awareness campaign is designed specifically to contribute to a consciousness shift in German society. Further (electricity) demand management is also vital given other recent announcements about the upcoming Mobility Energiewende, tax breaks for electric cars, and the ‘e-car buyers’ premium’.

There are three aspects of this announcement that mark German governance for energy efficiency innovations out from other countries – two of which relate to observations made in the IGov working paper referenced above. The first is that this is another example of ambitious and detailed targets driving energy policy change in Germany. Fear of missing the 2020 target has put a lot of pressure on the Ministry for Economics and Energy, causing them to launch a second large-scale energy strategy in less than a year and a half. The new ‘Effizienzoffensive’ shows an ability to be flexible and to respond politically when policy is not sufficiently delivering on targets.

The second is that the ‘Effizienzoffensive’ highlights an aspect of German efficiency policy not often discussed: green industrial policy. It directly builds on existing green industrial policies by directing more investment into the manufacturing and use of efficiency technologies. Germany has already established a manufacturing (and export) industry in efficiency goods, thereby turning the Energiewende into a positive force for employment, cutting edge knowledge, and tax receipts.

The third is a comparative point around Germany’s ambition and resolve. Germany’s near and long-term primary reduction targets far exceed the EU’s, non-binding 2020 and 2030 efficiency targets. Indeed the EU has committed, as part of the Energy Efficiency Directive, only to reduce consumption versus a ‘business-as-usual’ scenario, whilst what business-as-usual means is not yet clear. Meanwhile, the UK has neither firm targets in place with regard to primary energy reduction nor any clear energy efficiency strategy, the latter point was recognised during a recent review undertaken by the Energy and Climate Change Committee. Without overt, set direction with regard to energy efficiency it becomes all the easier for our Government to pull back on ECO commitments, axe the Green Deal without announcing a replacement, and to back away from zero carbon home commitments. This kind of UK approach frames energy efficiency policy as a ‘cost’ rather than an opportunity – meanwhile Germany races further ahead in this area.