Renewable Energy in Germany - Government Policy

Government Policy

The renewable energy sector benefited when the Alliance '90/The Greens party joined the Federal Government between 1998 and 2005. The renewable energy sector was aided especially by the Renewable Energy Sources Act that promotes renewable energy mainly by stipulating feed-in tariffs that grid operators must pay for renewable energy fed into the power grid. People who produce renewable energy can sell their 'product' at fixed prices for a period of 20 or 15 years. This has created a surge in the production of renewable energy. In 2012, Siemens estimated the total cost of renewable energy would come to at least €1.4 trillion (US$1.8 trillion) by 2030.

For the 2005–2010 period the Federal Government set aside nearly 800 million euros for scientific research in the country. That research will be earmarked for policies of long-term development. Additionally, in 2001 a law was passed requiring the closing of all nuclear power plants within a period of 32 years. The shutdown time was extended to 2040 by a new government in 2010. After the Fukushima incident, the law was abrogated and the end of nuclear energy was set to 2022.

The cost of replacing Germany's nuclear power generation with renewable energy has been officially estimated by the German Ministry of Economics at about €0.01/(kW·h) (about €55 billion for the next decade), on top of the €13 billion per year already devoted to subsidizing renewables. However, unofficial estimates of the ministry, and of the Rhenish-Westphalian Institute for Economic Research (RWI), German Energy Agency (DENA), Federation of German Consumer Organizations (VZBV), and the government-owned development bank (KfW), put the cost several times higher, at about €250 billion ($340 B) over the next decade.

The German energy policy is framed within the European Union, and the March 2007 European Council in Brussels approved a mandatory energy plan that requires a 20% reduction of carbon dioxide emissions before the year 2020 and the consumption of renewable energies to be 20% of total EU consumption (compared to 7% in 2006). The accord indirectly acknowledged the role of nuclear energy — which is not commonly regarded as renewable, but emissions-free — in the reduction of the emission of greenhouse gasses, allowing each member state to decide whether or not to use nuclear generated electricity.

Also a compromise was reached to achieve a minimum quota of 10% Biofuels in the total consumption of gasoline and diesel in transport in 2020.