2013 German Election Energy Party Profiles – Final Part 7: German Energy Politics in a European Context

The federal elections shall take place only two days from today. We conclude our series by checking whether and to what extent the competing parties agendas have clear positions on German energy politics in a European context. This covers in particular how they support the integration of the German energy market into the European market and the alignment of German energy policy with European developments.

Introduction

The European Union has gained a lot of influence on national politics of its member states over the last decades. This influence increased in energy matters as well, starting with the first liberalization directives in 1996 and 1998. The European Union has been a key driver of the liberalization of energy markets in an attempt to create competition beyond national borders for the benefit of European energy consumers. Another important task of the EU is to secure a steady energy supply in all Member States. Despite of common 20/20/20 targets, this task will get harder the more the energy policy approaches of member states regarding their power supply divert, with some heavily focusing on renewable energies, some maintaining old and investing in new nuclear power plants, and some in fossil energy sources. Member States, but also the European energy policy itself, finds themselves more and more stretched between a common market approach and increasing public intervention at a national and European level.

As a consequence of German energy policy, the increasing share of renewable energy sources in German power generation had an impact on wholesale price levels and the load-shape of various types of power plants on a cross-border basis and thereby on the viability of existing power plants, but also the development and construction of new power plants and other forms of back-up capacity, inlcuding storage. It also has an impact on neighbouring transmission system operators within the UCTE system.

Already for quite a while, the European Commission, including German Energy Commissioner Günther Oettinger, has sent stronger and stronger signals to German politicians that German energy policy needs to be better integrated with the European energy policy agenda. Oettinger even recently stated that by exceeding the European renewables targets, Germany would not be necessarily the best in class and a role model for other Member States, but rather that this would be as problematic as if a Member State fails to meet the agreed-upon targets, since such a sharp increase and uncontrolled high level of renewables puts a strain on neighbouring energy markets and the European transmission system and thereby is not in the interest of the development of a common European energy market.

This year, the European Commission also opened state aid proceedings regarding network fee exemptions for large German energy consumers and started to investigate whether the reduced renewable surcharges under the EEG for industrial companies also violate state aid rules, and even the entire EEG could be violating European law. Short after the German elections the European Commission is likely to announce whether or not formal proceedings will start also in this regard.

The European Commission also made it clear that it would not accept national capacity markets, as already introduced by France and the UK and planned in Germany, to support back-up capacity if these create an obstacle to competition on the European market, and announced to issue guidelines in this regard this fall. Part of this Commission package will also be new guidelines on environmental and energy state aid for 2014 to 2020 and Guidelines for the design of renewable energy support schemes and on the use of renewable energy cooperation mechanisms.

Thus, on the one side the European Commission increases the pressure on German energy politics by means of state aid proceedings against key elements which allow Germany to support the sharp increase of renewable generation while protecting those industries which are  competing on a global market. On the other side the Commission apparently wishes to promote concepts on how to align national politics and European objectives. And it is safe to say that one important element will be to implement national energy policy targets also by reaching out beyond national borders.

Disregarding of this, one sometimes has the impression that German politicians have not understood the European – and even less, as regards the competitiveness of German industry, global – dimension of energy politics. In particular on the local and Länder level politicians of all colours advocate local and decentralized concepts, some envisioning emission-free cities by switching off modern local fossil fuel power plants or planning to expand renewables well beyond regional load and transmission system capacity.

Thus, let’s see whether the most important parties at the Federal level do:

CDU/CSU (Christian Democratic Union/Christian Social Union)

CDU/CSU emphasize the importance of the European single market, but do so at the very end of the five-page long energy section in their election program. And the most important reason for this given therein is that different load shapes in power generation can be better be handled at a European level than within Germany only. In that regard the program supports the inclusion of hydro storage in Northern Europe, and also supports the installation of PV in Southern Europe rather than in Germany only.

Their spokesman on energy matters, Thomas Bareiß, underlined that it is of utmost importance to CDU/CSU that the EU sets a framework for capacity markets. According to him, there is no interest in 28 national capacity markets, as that would endanger the European single market. Additionally, the CDU/CSU affirms its demand to create a ministry for energy, among other reasons, to increase German influence on European decisions on energy matters.

In the area of emission trading, CDU/CSU endorse the taken measures and only proposes slight changes to the current emission trading system, in order to solve minor issues and to create greater incentives within the system. However, in the long-term CDU/CSU want to establish a world-wide emission market. The affirmation of emission trading is one way for CDU/CSU to achieve their goals of a carbon dioxide reduction by 30% within the EU  and 40% within Germany until 2020, in comparison to 1990.

SPD (Social Democratic Party of Germany)

The SPD starts the energy section of their election program by stressing that the German Energiewende shall be a global example, including for rapidly growing economies as China and India. The SPD also reproaches the current Government for failing to align its energy policy at a European level. On the matter of emission trading, the SPD considers the current system not efficient. Therefore it wants to reactivate emission trading as a market instrument, creating incentives for investments in energy efficiency. However, besides of this the SPD concept does not put forth any details of their plans on how to align German and European energy policy.

The SPD’s energy spokesman, Rolf Hempelmann, has stressed that to finalize the European single market it is of utmost importance to Europeanize measures to guarantee security of supply. Flexibility markets shall be aligned in the Western European Market Coupling areas as these will result in an optimized operation of existing and signals for the allocation of new power plants, and ascertains security of supply at lowest possible costs for the consumers. In order to realize said strategy, the SPD will focus on the extension of interconnections at border crossing points.

FDP (Free Democratic Party – Liberals)

The FDP program stresses the need to integrate also renewable energy sources within the European single market, and proposes to introduce a statutory minimum of renewable energies within the European single market. Renewable energies from Northern Africa shall be integrated within a European quota model for renewables. Energy taxes shall be reduced to the European lower limits. Besides of this, European energy policy is not addressed in their program in particular.

FDP’s spokesman on energy matters, Klaus Breil, clarifies that the current government, of which FDP is part of, already took measures to connect the German market to the Norwegian and Austrian market to benefit from Norwegian projects like Nord.Link and Austrian pumped storage hydro power stations. As already examined, the FDP opposes a capacity market not only in Germany, but as well on a European scale and warns against the effects of the French capacity market.

The FDP wants to amend the emission trading system in a way that it follows its core principle to put a price on carbon dioxide emissions.

B’90/Die Grünen (The Green Party)

The Greens criticize the current government for not focusing on the introduction of capacity markets. Accordingly, they want to introduce a capacity market on a European scale in order to equalize the European single market. The Greens postulate the goal of a All-European carbon dioxide emission reduction of 45% until 2030. Additionally, the Greens want to introduce a European statutory basis for the withdrawal from coal powered power plants, containing attractive incentives as well as effective sanctions. How these ambitious goals shall be accomplished against the background that various European member states follow a rather different approach is not addressed. It also remains unclear how the grass-root approach of Green energy policy – which stresses the importance of local initiatives – shall fit within the larger European picture.

In terms of emission trading, the Greens suggest to introduce a statutory minimum price for carbon dioxide emission, to create greater incentives for energy-efficiency measures. And, finally, to place of the very top of the German and European political agenda to achieve a global emission reduction agreement to replace the Kyoto protocol.

Die Linke (The Leftist Party)

In the energy section of their election program, the Leftists do not mention a European element at all. The explanation is given by the Leftist’s spokesman on energy matters, Dorothèe Menzner who stated that as the European single market supports nuclear power, as there is no European withdrawal from nuclear power, it contradicts and even jeopardizes the “Energiewende“. Therefore the Leftists oppose any Europeanization at that point. Before the Leftists want to open the German market towards other member states, they demand the pull-out from nuclear and other fossil energy sources with the exception of gas. Additionally, that would make emission trading redundant and therefore the Leftists want to abolish it.

Conclusion

It becomes apparent that all German parties find it challenging to deal with the European dimension and limits of German energy policy and to better communicate this to the German public. While it is common knowledge that the German economy very much benefits from the European single market regarding the production and export of goods, there seems to be considerably less agreement on whether the objective of reliable supply with cheap energy may be better accomplished on a European than on the local level.

It is inevitable that CDU/CSU and FDP, which build the current government, praise themselves for the, as they say, success they had connecting the German energy market to the energy markets of other Member States. Both parties however are sceptical of capacity markets, whereas the FDP opposes them in general and CDU/CSU want to wait to gain experiences and first and foremost to allow the EU to set a framework for a European capacity market, as CDU/CSU fear 28 different capacity markets, which then endanger the European single market.

The SPD and the Greens, as one could have expected, criticizes the current government for not making enough efforts to connect the German market to other European markets. Accordingly, the SPD says it will expand efforts to extend interconnections at border crossing lines.

The Greens focus on the introduction of a European capacity market, as well as on introducing a European statutory basis for a European pull-out from coal power.

The Leftists take a rather extreme standpoint by proposing to close access to the German market for other European countries, as long as Europe does not pull-out from nuclear power.

Some Last Words

This is the last post of our series on the competing parties’ agendas for the upcoming federal elections. We are both very happy about the very positive reception of the series and want to thank you for your interest in the topic.

Now we will have to await the outcome of the elections to know which positions will become reality, and maybe which positions turn out to only have been pre-election positions.

Sources: CDU/CSU, SPD, FDP, B’90/Die Grünen, Die Linke, bne-Kompass 02/2013

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