Nicolas Berghmans, what is your assessment of the German approach to restructuring the energy system?
First of all, I think that Germany’s energy transition is leading to important and significant changes both domestically and beyond the country’s borders. One of Germany’s main successes has been expanding its renewable energy industry, in particular wind and solar PV, and proving that decentralized and variable renewables can be a viable means of decarbonizing the energy mix. In addition, the consensus that has been reached on the phase-out of coal, although its path is today too slow to reach climate targety, involved all the stakeholders in the discussion and recognized the crucial social dimension accompanying the low-carbon transition. This is important because these tough but crucial discussions will need to be repeated in other industries, such as the fossil-fuel car industry and certain types of agriculture, if we want to achieve our decarbonization objectives. That being said, the climate-friendly transformation of the economy is still moving too slowly in Germany, as it is elsewhere in Europe, particularly in the transport and building sectors. The changes need to be accelerated if we are to achieve our collective climate objectives.
What are the particularly good features of the German approach?
If we look at the details, we find that the energy transition appears to be widely accepted and supported by the German people. Having such a broad consensus makes it possible to overcome several political hurdles, such as the initial public cost of supporting an emerging industry. It also mobilizes actors across the whole of society – from energy companies to local authorities, workers and consumers – and gives predictability to investors who can be confident that political swings will not adversely affect their investments. This is also illustrated by the consensus on the phase-out of coal, which determines the direction of travel for an industry that needs to disappear, despite the hardships caused by structural change.
What could have been done better in your view?
We have to take note of the fact that the major milestones on the path to climate neutrality need to be reached more quickly. If it were not for the COVID-19 crisis and its impact on CO2 emissions, Germany would not have met its 2020 climate target and, in fact, we are already seeing emissions rising again this year. This is a concerning trend and, like other countries, Germany needs to take steps to address it. Firstly, the energy renovation of buildings must be accelerated by increasing incentives for landlords. More should be done to support green infrastructures, as their absence can quickly become a bottleneck and their implementation takes time. This includes investment in the electricity grid to link renewable energy production with centers of consumption and charging stations for electric cars. Finally, lead markets for decarbonized materials must be established to encourage investment in the innovative, low-carbon industrial processes that will be needed to replace the current carbon intensive industries. In this regard, this decade will be key, as a large part of Europe’s industrial plants will have to be replaced.
What route is France taking to achieve climate neutrality?
To some extent, France and Germany face similar challenges, but there are significant differences between the two countries. The biggest difference is that there is no consensus in this country on phasing out nuclear energy. On the contrary, nuclear power is seen as an important asset in France that will allow it to maintain its low-carbon electricity generation system in the context of increased electrification. In addition, there is currently a greater push in France to involve the agricultural sector in the new energy system by making greater use of bioenergy, especially by developing biogas production. Doing this can bring additional revenues for farmers and contribute to the development of rural regions, but combining it with biodiversity and the existing structure of the agriculture industry can be tricky, as the German biogas industry example has shown in the past. Finally, the third major difference between France and Germany, in my view, is that today France is focusing much more on the issue of energy autonomy, in other words, producing domestically the energy it consumes, whereas Germany is already considering importing decarbonized fuels in the future, as recent policy initiatives on hydrogen illustrate.
Which opportunities and risks does this transformation present for France?
There are many opportunities in terms of economic activity and job creation brought about by renewable energy, climate-friendly construction and mobility and hydrogen. In addition to the mitigation of climate change, the health benefits of phasing out fossil-fuel combustion should not be understated. It is important to note that France is one of the European countries with the greatest potential for producing renewable energy, both onshore and offshore, and this potential still needs to be exploited. In my view, one of the greatest dangers is to concentrate too much on one solution or technology. Many solutions are already available, but we are still unsure about which areas will ultimately play a significant or a trivial role in a climate-neutral economy. Some of the choices that we make could lead us down a dead-end road in the long run. So we need a diversified approach that allows us to take risks.
How can European countries pool their individual strengths to combat climate change as effectively as possible?
Today, the European Union is at the forefront of climate action and it should work to maintain its leadership role. European countries can firstly pool their resources to spread the risks, set new standards and share the benefits that new low-carbon industries could bring. A good example of this is the European Battery Alliance, an approach that could be replicated in other areas. For this to happen, however, all the member states must work even more closely together and France and Germany, as the two main EU economies, have a key role to play here. Both countries take different approaches to their long-term decarbonization strategies, but the determination to advance climate protection by means of extensive decarbonization by 2050 is based on similar values and opinions among the citizens of both countries.
Nicolas Berghmans is a research fellow for energy and climate policy at the Institute for Sustainable Development and International Relations (IDDRI). His area of expertise is the electricity sector. His work focuses on the integration of renewables into the electricity system and the governance of energy markets in Europe. Berghmans holds a master's degree in international relations with a specialization in economics from Sciences Po University Paris. Previously, he worked as a researcher in climate economics at CDC Climat, a subsidiary of Caisse des Dépôts et Consignations.