Frank Possmeier, the new German government has ambitious plans for combating climate change. What is your opinion of the coalition’s intentions? What stands out in particular?
It’s true that the new government’s climate action plans are highly ambitious. But to be fair, it is important to mention that the previous government also set itself ambitious targets, even if the process of achieving them left something to be desired. Now everyone naturally expects the new government to do more. The words now need to be followed by action. I am genuinely optimistic, because the new German Chancellor Olaf Scholz has put together a highly competent and well-balanced team of ministers. The key considerations for me and my team are, of course, all the issues relating to renewable energies, which fall within the remit of Robert Habeck, the Minister for Economic Affairs. In particular in the case of wind energy, he will have to make a lot of changes and remove blockages in the system to bring a new dynamism to the industry. And we must not fool ourselves; there will be a lot of conflicts with nature and wildlife conservation. That is why it is so important that the Greens are now in the federal government, because they are the ones who are most likely to be able to resolve these conflicts and find the necessary compromises.
What is Uniper’s response to the government’s plans?
For the moment we are optimistic. In the last few years, the Greens have made a lot of interesting proposals while they were in opposition about how the energy markets in general and renewable energy in particular could be given new momentum. For example, I’m thinking about making the demand for electricity more flexible by using time-variable tariffs and smart meters. Another interesting question is whether we can reduce the need for more power lines by converting electricity locally into hydrogen and feeding it into the gas network. We’re very interested to see what happens!
Can Germany meet its climate targets for 2030? What improvements do we need to make?
We can meet the targets if the German people become involved. Just think: Who has made the greatest contribution to combating climate change in the past? It has been industry and the electricity sector. Now it is the turn of other sectors of the economy to make a significant contribution, including transport, households, and agriculture. If a large number of people support the energy transition, it will be successful. But conversely that also means we need to move away from the mentality that everything has to be subsidized and financed by the state. The major steps forward that we take in the energy transition must be regulated by the market. We cannot have everything funded by the taxpayers. There also needs to be a change to the “not in my backyard” attitude, otherwise we will not achieve our ambitious goals in the field of renewable energy.
What does more responsibility for the market mean for your Renewable Energies division?
I can give you one simple example. Anyone who wins a contract for photovoltaics will receive guaranteed payments for their facility for 20 years. But the condition is that it must not produce more than 20 megawatts, which means that from 20.01 megawatts upward you will get nothing. This explains why there are no large photovoltaic power stations on a utility scale in Germany. I believe that this is blocking the energy transition rather than supporting it. To make it quite clear, I do not want big solar farms to receive subsidies for 20 years. On the contrary, as I have said, we need greater expansion with less state funding. This means that we have to reduce the subsidy period and focus more heavily on start-up finance.
But isn’t the 20-megawatt limit there to reduce what is spent on subsidies?
In the early years of the German Renewable Energy Act that was definitely the case, but now tenders are the method of choice. If the Federal Network Agency invites tenders for the generation of 100 megawatts of electricity, it makes no difference at all whether this comes from five 20-megawatt solar farms or one 100-megawatt facility. The best tender should win the contract. The current subsidy system is based on the idea that large power stations do not require any support. And I agree that they do not need subsidies for 20 years, but they do still need start-up finance. And by large power stations, I mean all solar farms.
A discussion is underway in the EU about the classification of nuclear energy and gas as green. What is your view on this?
It is a highly complex discussion and you could definitely write any number of scientific papers on the subject. So I will just mention a few things that seem important to me personally. Firstly, you need to understand that nuclear power and gas are not being categorized as green, but as transitional green energy sources. There is a distinction here and I expect this to be reflected on the financial markets in the form of different product categories. A transition period is essential to allow Europe to achieve its climate targets. Germany wants to replace coal with gas in order to reduce its greenhouse gas emissions, while France wants to run its electric cars and heat pumps using electricity from nuclear power stations. Both of these things are positive from the perspective of the climate and that is why I believe the EU Commission’s proposal is pragmatic. It represents the realities in the member states. But the critical aspect of the taxonomy is whether the EU Commission attempts to regulate everything down to the tiniest detail, as it does in many other areas. That will tie up a lot of resources for everyone involved, which we would be much better off investing in a sustainable future for Europe.