German energy market experiment leads the way

German energy experiment leads the way

A cleaner sustainable future at the centre of a project will promote a healthy economy and environment.

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By Mathias Oberndörfer, KPMG in Germany

The energy market in Germany shows how sustainability, the environment and the economy are mutually beneficial systems. The percentage of power generated from fossil fuel and nuclear is at an all-time low1, as public and private energy suppliers move towards greater use of renewables. This is uncharted territory yet the economy remains strong, with a surplus of energy produced.

The German government published the Energiewende document in 2010 laying out targets to reduce carbon emissions and transition to more sustainable energy by 2050. This transition involves a shift away from major energy companies, with an increased emphasis on local production, which benefits municipalities by creating local value and keeping that within cities. 

Germans have some of the highest electricity bills in Europe but overwhelmingly support the programme of transition to renewables.  A 2014 survey showed 92 percent of respondents were in favour of increased renewable energy generation with two thirds happy to have renewable power plants close to their homes2.

Part of the reason for this widespread acceptance is that the German population see sustainable policies as entirely mainstream. The Green party came to prominence in the early 1980s thanks to the federal political system and sustainability issues have been part of the political landscape for over 30 years. This is one of the reasons why a series of subsidies for renewable energy was set up very early on – a system that is still in place today. 

I think that sustainable behavior is more about attitudes than law-making. Clearly, it is helpful to have laws that operate at a commercial level against pollution for example, but at an individual level education is more productive. Any law requires administration to apply it, which creates a cost to force behavior change. Far better to lead by example and convince people to behave differently.

Cities can actively promote the agenda by including sustainable principles into daily transactions. For example, in Nuremberg and other cities in order to get a building permit you often have to plant some trees and contribute to a sustainable environment for every building constructed. Cities like Stuttgart and Essen, which is set to take over the title of European Green City after Bristol, have also pioneered active travel choices, renovating building stock and as well as promoting their own municipal energy initiatives. Other cities have followed their example. Having control over their own finances allows city leaders to choose which issues they will prioritize and there is an element of competitive civic pride between them – to be the most sustainable. 

It would be naïve to claim that there are no problems with the German energy transformation programme. There is plenty of criticism around the level of subsidies required, as well as the impact on existing energy suppliers. However, the fact remains that Germany is shifting to sustainable energy sources at a faster pace than any other developed nation and is well on target to meet its carbon reduction rates.

I hope that other cities around the world can see that sustainable behavior can help businesses achieve their outcomes, rather than being an unwelcome add on. Making a cleaner, more sustainable future the centre of any project will promote a healthy economy and a cleaner environment. The German energy transformation project shows it can be done. 

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