Germans Debate Best Energy Mix for the Future
January 22, 2006
German consumers have been holding their breath when opening their heating bills. Within two years, prices for natural gas alone have risen by 30 percent. The same is true for heating oil, diesel and gas.
Electricity prices are also climbing, a fact that has especially hit companies that use up a lot of energy for production. Fuel has become an expensive commodity and the row between Ukraine and Russia over natural gas has pushed the topic of supply security to the forefront again.
German Economics Minister Michael Glos, a Christian Democrat, has been drawing his own conclusions.
"We need a broad and balanced energy mix of oil, natural gas, coal, nuclear energy and renewable energies," he said. "We also need to think about the role of nuclear energy. Thinking should not be prohibited. But it's public knowledge that we haven't been able to tackle that problem during coalition talks."
Promoting nuclear energy
Glos was referring to the fact that the government's junior coalition partner, the Social Democrats, have been unwilling to revise a previous decision to phase out nuclear energy. He backs extending the lifetime of existing nuclear energy plants, saying that people should think -- without emotion or ideology -- about ways to make Germany attractive and competitive internationally.
People should also keep in mind that the global energy demand will double by 2030, according to experts at the International Energy Agency. This will lead to a rise in prices.
"We must not overlook the fact that fossil fuel prices will not remain at this level," said energy expert Mohsseen Massarrat, adding that an advisor to US President George W. Bush had recently estimated prices to clime way above $100 (83 euros) per barrel.
"This can happen relatively quickly," Massarrat said.
A look at European neighbors
When calling for longer lifetimes for Germany's nuclear energy plants, Glos is also looking toward European neighbors. In France, 78 percent of energy supplies come from nuclear plants. Sweden is no longer pursuing a plan to phase out nuclear energy and is refitting its existing plants. Finland is currently building the world's most modern nuclear plant -- with the help of France and Germany.
Currently there are 440 nuclear plants around the globe and 25 are under construction. Germany's energy suppliers are listening carefully to Glos, as Klaus Rauscher, the CEO of Vattenfall Europe, is ready to admit.
"Today we have a law that phases out nuclear energy, that defines remaining energy production levels for each plant and prohibits the construction of new ones," he said. "This consensus was a political decision in line with the wishes of a majority of voters. The matter of the fact is that we, as companies that operate nuclear energy plants, would like to see the remaining lifetime of these plants extended."
Social Democrats stick to plan
It will remain a wish if Social Democrats have it their way.
"I'm certain that the agreement to phase out nuclear energy will remain in place," said Environment Minister Sigmar Gabriel, adding that he is equally certain that conservatives will disagree with the agreement for years to come.
"I'm not ruling out that this viewpoint will change in a few years," Gabriel said.
Social Democrats meanwhile are focusing on the expansion of renewable energy sources. By 2020, they are meant to supply 25 percent of Germany's energy needs.
Glos on the other hand has questioned the feasibility of this ambitious goal. He also wonders how the remaining 75 percent will be covered.
Companies want guarantees
It's an issue that will likely be addressed during an energy summit that has been scheduled for April. The summit will discuss energy policies for the coming years and look at plans of energy companies.
"We're ready to name concrete investment projects, but we'll also make clear what kind of conditions will have to be attached to them," Rauscher said. "If I want to build a new coal energy plant, I have to know about NAP 2 -- otherwise I cannot run the numbers."
NAP is short for National Allocation Plan, which regulates the emissions trade in line with the Kyoto Protocol. Every plant that produces CO2 is given a reduction goal in the plan. The first NAP will soon expire, with NAP 2 replacing it. But the contents of the latter aren't known yet.
Modern plants emit 30 percent less CO2 on average. But energy producers are also under pressure because of the price policy. They're accused of keeping supplies low in order to secure artificially high prices.
While some are calling for more state control, the energy sector is denying any such price fixing schemes. As long as prices for fossil fuel keep rising, however, no one's likely to see their energy bills drop any time soon.