Germany Suing the EU Commission over Feed-In Tariffs

Feb 17 2015

According to SPIEGEL (in German), the German government has sued the EU Commission over their decision to treat the German feed-in tariff as “State aid”, with the consequence of requiring approval by the EU Commission for all German legislation in this area. Thanks to this Tweet by Energiewende Germany for the link.

I applaud this move. How Germany legislates on renewable energy is none of the business of the EU Commission. They have been engaged in an illegal power grab that is incompatible with basic democratic values and the German Constitution.

I hope the German government wins this case, like they won the PreussenElektra case on the same question in 2001.

But for the very least, even if the Court says that there are some elements to the present feed-in tariff that make it qualify as “State aid”, the consequence of that should be to abolish those elements, not to continue taking the orders of the EU Commission elected by nobody in Germany on this point.

Also, even if a feed-in tariff was “State aid”, Article 3 Paragraph 3 of the Renewable Energy Directive 2009/28 already says that Member States may implement “support schemes” for renewable energy, which includes feed-in tariffs under the definition of the term in Article 2 k).

Since this Directive already allows feed-in tariffs unconditionally, there is no room for the EU Commission to attach any conditions to that permission. For example, if the Commission thinks that it is a great idea to restrict feed-in tariffs to a system where the tariffs are determined by auctions, they are free to introduce legislation changing Directive 2009/28. If they find a supporting majority in Parliament and in the Council for this useless and harmful idea, then the support schemes for renewable energy in the EU will reflect their opinion.

But they obviously don’t have the power to unilaterally change the Directive without any legislation procedure. Their position is incompatible with EU law as well as with the German Constitution.

What interest exactly is the EU Commission’s position supposed to protect?

They are correct in their assessment that support schemes for renewable energy come at a cost to competition. Selling electricity from coal power plants in Poland is more difficult with a feed-in tariff system in place in Germany.

But that interest (coal power plants from Poland) is not worthy of any protection whatsoever. The EU has made multiple policy decisions to phase out fossil fuel and to support renewable energy. Abusing general competition law to try to help coal power plants is in clear contradiction to this basic policy.

To sum this up: The Commission’s position is incompatible with basic values of democracy, incompatible with the German Constitution, and incompatible with Directive 2009/28. And they take this extreme position to help coal stay longer in business, which is incompatible with basic EU policy decisions.

I really hope the German government wins this case.

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New Record for Wind Installations in Germany

Jan 31 2015

As Spiegel and many others report, the German Wind Energy Association BWE has announced figures for 2014. They are a new record 4.75 GW, breaking the 12 year old record of 2002 (3.2 GW).

That sounds like good news, and it is.

The bad news is that much of that is built by people who think that the 2014 reform of the Renewable Energy Law will make projects harder to build. They have finished their projects early to avoid being hit by these changes.

I have just written a paper (in Japanese) on the 2014 reform and agree with the sentiment that it may be a good idea for a developer to try avoiding these changes. Most of them are intended to prolong the life of coal electricity generation in Germany by delaying the transition to renewable, under the pretext of saving costs (actually, the transition to an auction model will work to increase cost).

It will take a couple of years to see how much renewable energy in Germany is slowed down by this reform. But one good thing has already happened, and it is irreversible. In anticipation of these unfortunate changes, Germany has set a new record for new wind installations last year.

That will come in handy when the time for evaluation of the transition to an auction model comes. Obviously, the drop in speed will look even more impressive when it is compared to a record year like 2014.

 

 

 

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Oil Price Crash

Jan 30 2015

Thanks to J.L. Morin for writing about the oil price at Huffington Post. That’s a good occasion for me to break my recent silence on this blog.

Morin explains the recent downward trend in oil prices with the fact that fossil fuel will be phased out because of global warming policy concerns.

All things equal, less demand for fossil fuel means lower prices. Therefore a scenario where fossil fuel prices go down because of global warming concerns is quite possible.

But the opposite may happen as well. Prices may go up because of global warming concerns.

Obviously, the oil companies should be interested in having this happen, instead of seeing the price crash like in recent months.

The way to make it happen is simple. Just reduce production faster than demand is going down anyway. Never mind antitrust concerns. These have to stand back behind the noble goal of avoiding global warming.

If the oil companies understand this, they will be able to boost the value of their oil reserves (which is tied to the price of oil sold now). And they will be able to make large extra profits.

J.L. Morin has written a global warming novel. I have reviewed it on this blog (I didn’t like the book).

So have I. The basic idea of this post is developed in a novel format in my book “Last Week”. It shows that our little global warming problem is easily solved in a week with time to spare once the fossil fuel companies get the basic idea of “phaseout profit”.

 

 

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Japanese Translation of German Constitutional Court Decision on European Stability Mechanism II

Nov 16 2014

I recall my Japanese translation of the 2012 decision of the German Constitutional Court on the European Stability Mechanism, which I published last year on this blog.

That decision was about the plaintiffs’ request for a temporary injunction.

Now I will be talking again at the Japanese Association for the Study of German Constitutional Cases on the final decision in this case next month. I have prepared a complete Japanese translation of that decision as well for the occasion.

Here is a free PDF file:

ESMII6x9

A printed version can be ordered for $9.98 (the lowest price I could set) at this Createspace page.

Here is a small version of the cover:

coverII

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Regional Variations in Feed-In Tariffs

Nov 06 2014

Craig Morris at Renewables International discusses some interesting numbers on the regional differences in the cost of wind and solar energy in Germany.

The big picture is that wind is cheaper in the north, and solar is cheaper in the south.

For solar, that makes sense. Solar resources are better in the south.

For wind, it makes sense in the big picture. There are more good wind sites in the north, but that doesn’t mean there are no windy places in southern Germany.

Morris also goes ahead and compares these different costs per kWh to the feed-in tariffs for wind and solar. And he finds that the feed-in tariffs are insufficient for some sites, but way too high for others.

To remedy this problem, one might want to change the feed-in tariff so as to reflect these differences.

That would seem to be a good idea. So good actually, that this is already the way things are done right now for wind power.

Article 49 Paragraph 2 of the Law on Deployment of Renewable Energy has a very fine-tuned granular approach, under which the amount of feed-in tariff payments already depend on whether the site in question is above or below average.

With the large differences for solar reported by Morris it would probably make sense to have a similar approach for solar as well. Costs are about 2 cents (Euro) lower per kWh in the most southern part of Germany compared to the most northern parts. It doesn’t make much sense to have the same feed-in tariff for these very different conditions.

That in turn means that if, like the EU Commission wants, Germany moves to a system based on auctions, that most of solar under such a system would be built in the south. Projects in northern parts of the country would be unable to compete. That in turn would mean that whatever costs are saved by concentrating solar where the sun shines more would probably be offset by the need to have more power lines coming from such concentration.

 

 

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European Council Climate Decision Powers

Oct 26 2014

Green Member of the European Parliament Claude Turmes says last week’s conclusions of the European Council amount to a “coup”, taking over powers from the Parliament.

He is worried about this passage in the first paragraph of the conclusions:

The European Council will keep all the elements of the framework under review and will continue to give strategic orientations as appropriate, notably with respect to consensus on ETS, non-ETS, interconnections and energy efficiency.

He seems to think that this might mean a change in decision powers. Where formerly the European Parliament and the Council could decide on these matters with majority votes, this passage means that now all these powers are transferred to the European Council. In that case, all decisions would need an unanimous vote, which would slow down speed to whatever the dirtiest Member State (*ahem* Poland *ahem*) wants.

For this to be true, there are two conditions.

For one, the passage above would need to mean that the European Council wished to transfer legislation powers. Another possible reading is that it just means that the European Council will keep these items on its agenda. Obviously, the European Council has the power to set its own agenda.

Also, even if the European Council wished to transfer all decisions on climate change and energy away from the Parliament and Council, the only way to actually do that would be to change the Treaties. You can’t just change the distribution of power by unilateral declaration in a European Council conclusion document.

Therefore, I don’t agree with Turmes. I think this is just the European Council stating that these are important matters that will remain on the agenda of the Heads of State. And I agree with that assessment. The European Council should keep all of the elements of the framework under review.

Actually from the position of Turmes, who thinks the decision lacks in ambition, keeping it under review is a good thing, since that means it may be changed to something more in line with his ideas as a result of such review.

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40% Percent Reduction Domestically Until 2030

Oct 25 2014

The decision to reduce CO2 emissions in the EU by 40% until 2030 comes with a nice qualification:

The European Council endorsed a binding EU target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990.

“Domestic reduction.”

As EU Climate Change Commissioner Connie Hedegaard pointed out in talking to the dpa news agency, that means that in contrast to the 20% goal of 2020 the EU can’t rely on buying carbon credits from countries outside of the EU to achieve this goal.

That in turn means that 40% is not only the double of the previous goal. It is even more ambitious.

Of course the European Council could have decided on even more ambitious goals. But I for one would be quite happy with adding 20 percent every ten years from now on.

For the next fifty years, counting fr0m 2030.

Which would leave us at 60% for 2040, 80% in 2050, 100% in 2060, 120% in 2070, and 140% in 2080.

That of course means cleaning up 20% of 1990 EU emissions in 2060, while having zero new emissions, and increase that to 40% in 2080.

The cheapest option to do so may be using olivine.

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Munich Re Continues to Back Desert Based Solar

Oct 18 2014

Says this article at PV-Tech. They cite Munich Re renewable energy spokesman Stefan Straub like this:

“The concept phase is closed and something new needs to be developed. The three main companies that remain in Dii will continue this development as they are industrial companies and project leading companies, which we are not.”

But he added that Munich RE was not done with projects in the region, as it just reinsured Noor 1, one of the biggest solar projects in North Africa, which also happens to be run by ACWA Power, one of the remaining shareholders in Dii. “Of course we still support the idea to have solar power developed in the desert regions,” said Straub.

In other words, it made sense to distribute the cost for writing reports in the “concept phase” widely among interested companies. It makes less sense to do so once the concept is clear and you move on into developing actual projects.

And, as far as Munich Re is concerned, they will still help renewable energy in Northern Africa as part of their business, like with the Noor 1 project.

That’s welcome news. I have Munich Re in my list of global warming stocks (and own some stock of the company) because I like their approach to renewable energy. I might have wanted to change that opinion if I thought their move out of the Dii means that they are suddenly opposed to solar in the Sahara.

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Desertec Setback

Oct 16 2014

Most of the participating companies in the “Desertec industrial initiative (Dii)” have decided not to extend their membership over the end of this year.

After this decision, Dii is left only with the World’s largest electric utility company (SGCC), one of the largest German utilities (RWE), and ACWA from Saudi Arabia. These are still some serious players. Especially the Chinese grid company SGCC has experience with energy from the desert. There is already quite a lot of wind power in Inner Mongolia, and the Chinese are not shy about building the necessary power lines to distribute that power over the whole country.

A large majority of the stakeholders is out. See for example this Guardian article.

Many people don’t understand that the “industrial initiative” was scheduled to run only for three years in the first place, that it has been running already longer than originally planned, that its mission was not to actually build desert power plants, but publish reports on how to best go ahead.

Having the Dii scale back strongly because most of the member companies are leaving does certainly not mean that suddenly it makes no sense to generate solar and wind power in Northern Africa. Of course it does.

It remains to be seen if it makes sense to export much of the desert electricity to Europe a couple of decades from now, once Desertec scales up. The fact that a couple of companies decided that they want to pull out of the Dii does not much to influence that decision in either direction.

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10,000 Generations

Oct 08 2014

The Wikipedia article “Human” says that it’s been 200,000 years since anatomically modern humans developed in Africa.

Taking an average of 20 years for one generation, that leaves us with about 10,000 human generations in our history until now. The last 200 years in which most of the fossil fuel burned until now has been used account for only 10 of those, or only about 0.1 percent.

It is quite obvious that if humans want to survive another 10,000 generations, we need to phase out fossil fuels sooner or later. There is not enough left for even another 10 generations at present consumption rates.

It is an interesting question what percentage of the fossil fuel treasure these 10 generations already burned through. I am quite sure that is is substantially more than 0.1 percent, but I am not able to give an exact figure right now. I may want to come back to that question in a later post.

Anyway, once you look at the big picture (10,000 generations), it becomes super evident that humanity needs to phaseout fossil fuel anyway, even without our little global warming problem.

The only question is how fast that will happen. And, from my point of view (phaseout profit theory), if the fossil fuel companies will deal with the phaseout in a way that makes them money.

Which is to reduce production faster than necessary anyway, so as to increase prices early on in the transition.

 

 

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