Green Energy Booming, but Experts Warn of Cloudy Future | Business| Economy and finance news from a German perspective | DW | 13.01.2008
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Green Energy Booming, but Experts Warn of Cloudy Future

Renewable energy made up more than 14 percent of Germany's electricity consumption in 2007, but further progress may be hindered if government support is cut back, according to new statistics.

A wind mill near a rapeseed field near Germany's Baltic Sea coast

Experts say investment is falling in Germany's wind energy sector

The use of renewable energy reached a record high in 2007, the German Renewable Energy Federation (BEE) said on Tuesday, Jan 8, as it released new figures on the sector. Renewable energy made up more than 14 percent of Germany's electricity consumption, up from almost 12 percent in 2006 with wind playing the biggest role.

Energy drawn from wind, solar, water, biomass and thermal heat accounted for 9 percent of Germany's total primary energy consumption last year, reducing the country's greenhouse gas emissions by 115 million tons, the association said. That's equivalent to CO2 emissions emitted in one year by a city the size of Cologne, which has around a million inhabitants.

"In no other nation has the development of renewable energy been as rapid as in Germany," the BEE said.

Government cut-backs could hamper growth

While the rise of renewable energy was stronger in Germany than anywhere else in the world, the association warned that government plans to cut support for the industry may hobble further growth.

Though wind energy played the biggest role in electricity consumption in Germany last year; largely due to strong winds, experts say investment is actually falling in the sector resulting in fewer wind parks being built.

"The cost of building wind turbines has risen by 15 to 20 percent in the past few years due to spiraling prices of steel and copper," Harald Uphoff, head of BEE's Berlin office, told DW-WORLD.DE. "At the same time, government support has been sinking."

Uphoff said state aid for renewable was higher in countries such as Spain, Britain and the US.

Workers erect a solar power plant near Leipzig

Germany is the world market leader in solar energy

Germany's fast-growing renewable energy sector -- employing some 250,000 people -- is often criticized for relying too heavily on government support.

The sector dates back to a landmark Renewable Energy Law passed in 2000. The legislation, which committed the country to at least doubling the percentage of renewable energy in the overall supply by 2010, sets specific tariffs for each renewable energy technology based on its real cost.

It guarantees that, for a limited time, the nation's electric utilities must buy all wind, solar and other renewable power at a price per kilowatt-hour higher than that of power generated from coal, nuclear or natural gas. The law also set up fixed rates for renewable energy providers who feed into the electricity grid.

Important tool to protect environment

With provisions in the law set to be gradually lowered over the next years, energy experts say investments in the sector are falling. A new tax hike on biofuels, which took effect last year, has worsened the situation by leading to stagnation in the sector and squeezing mid-size renewable energy companies.

"The new tax rise on biofuels has threatened the existence of smaller companies," said Johannes Lackmann, BBE president. "The government's pronouncements aren't enough to boost renewable energy."

The German government wants to raise the share of renewable energy in overall energy consumption to 25 percent to 30 percent by 2020 in order to meet European Union targets of reducing CO2 emissions by 20 percent below 1990 levels.

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A tax hike on biofuels has been criticized by environmental groups

In April this year, Germany's Environment Minister Sigmar Gabriel proposed further ambitious goals which involve slashing Germany's carbon emissions by 40 percent within 13 years.

"None of these environment protection goals can be reached if Germany doesn't expand its renewable energy sector," said Uphoff.

Clean energy cuts import reliance

The BEE wants more money for renewable energy providers feeding into the electricity grid as well as a roll-back of the biofuel tax increase.

It argues that the use of renewable energy saved the country the equivalent of 8.6 billion euros ($12.6 billion) in costs for environmental damages last year.

It pointed out that renewable energy -- worth 6 billion euros last year --also reduced Germany's reliance on imports of oil, gas, coal and uranium last year.

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