This is a guest post by Ella Kay.

Last month, the German government announced a €54b (NZ$96 b) klimaschutz (climate protection) package to address climate change. The plan comes in response to growing pressure on the German government to step up to the climate challenge, as Germany comes closer to 2020 with only a third of CO2 emissions reduced (from a 1990 baseline). The plan was unveiled as a way to get Germany back on track to meet an overall 55% reduction in CO2 emissions by 2030, and to be carbon neutral by 2050. While there is room for improvement, a third isn’t all bad considering that New Zealand’s gross CO2 emissions have actually increased by 23% in that time (from a 1990 baseline).

For background, here’s a map of Germany’s Gross Energy Production in 2014.

  • Red (Kohle) = coal
  • Orange (Erdgas) = natural gas
  • Yellow (Kernenergie) = nuclear energy
  • Blue (Erneuerbare Energien) = renewable energy
  • Grey (Sonstige) = other

The proposed klimaschutz package for the 2030 horizon has four key policies:

  1. Pricing of CO2 emissions
  2. Promoting and incentivising CO2 savings
  3. Using the yield from CO2 pricing to reinvest and relieve citizens
  4. Regulatory provisions

ICE 4 der Deutschen Bahn (Baureihe 412) in Berlin Hauptbahnho

The main areas of focus for these are transport and housing, underpinned by renewable energy, with some high level indications as follows:

Transport: Promotion of EV s and build up of EV infrastructure, subsidised train travel, levies for shorter flights (particularly within Germany), build up of cycleway infrastructure and ÖPNV (public personal transport), vehicle levies will shift to being based on CO2 emissions.

Housing: Upgrading heating systems, using yield from CO2 pricing to promote renovation of buildings so that they are more energy efficient, establishing advisory services for energy. The goal is to reduce household CO2 emissions from 210 m tonne (1990 baseline) to 70 m tonne by 2030.

How do the financials work? This diagram is titled “Relief of citizens and economy”:

Purple circle = revenue from CO2 pricing
Blue circles (top to bottom – paraphrased with transport and housing aspects highlighted, so not a direct translation):
  • reduce power cost
  • increase commuters’ flat rate (subsidy)
  • relieve low income renters
  • swap bonus for old oil and gas heating (in homes)
  • promote energy remedial measures (I think this can be interpreted as funding innovation for energy solutions)

From 2021, a levy of €10 will be applied to every ton of CO2 emitted (increasing to €35 by 2025) through a trading scheme. The accrued levies will be invested into subsidising and offsetting the costs of individual efforts towards klimaschutz and enable a smooth transition to behaviour resulting in lower emissions. Some indicated subsidies include a reduction in the cost of electricity (in hand with bolstering renewable sources), a flat rate subsidy for commuters to offset their travel, relief for lower income renters, a bonus for swapping out older oil and gas heating and the promotion of energy efficient renovation of housing. Overall, beyond the initial investment the package is couched to be revenue neutral and will not impact Germany’s debt borrowing restrictions.

from Taking Bikes on Board the S Bahn

What has the reception been?

A clear theme has been that the package falls short of the ambition needed to make a genuine attempt at a carbon neutral Germany by 2050. To this end, feedback has been that the package is not sufficiently detailed past 2030, and is only focussed on interim individual measures without any clear path to phase out fossil fuels. The strong focus of not burdening individual users has been controversial in terms of disincentivising private vehicle use, with suggestion that a proposed subsidy for private vehicle commuters for every kilometre over 21km travelled effectively offsets the incentive to use alternative modes put in place by the CO2 emissions levy. Finally, there is the view that the proposed CO2 levies are not high enough to actually influence the market economy, rendering the CO2 pricing mechanism as an add on rather than a core basis to effect change. To put context around the €10 figure (increasing to €35), here are some previously conceptualised costs of CO2 emissions:

  • The Umweltbundesamt (Federal Environment Agency) assumed damages of €180 per tonne of emitted CO2 in a November 2018 report (based on Germany’s greenhouse gas emissions in 2016).
  • To reach the targets established at the UN climate conference in Paris (2015), it was estimated that CO2 would need to be priced between US$40 – $80 by 2020, with an increase to US$50 – 100 by 2030.
  • The NZ Productivity Commission estimates that CO2 needs to be priced between NZ$75 – $152 per tonne to reach a ‘low emissions economy’ by 2050, and between NZ$200 – $250 per tonne to achieve ‘net zero’ emissions.

The extent to which CO2 pricing in and of itself should act as a catalyst for behavioural change is a classic example of a ‘carrot or stick’ argument – where should a policy best be struck to incentivise good behaviour or punish bad behaviour. Elements of both are needed to ensure effective outcomes, and striking a good balance involves a mastery of the minefield of politics as well as translating best practice. Overall, the proposed €10 levy and many of the package offerings indicate a strong focus on carrots rather than sticks. Despite this, there were still small voices amongst the feedback suggesting that the proposed changes would be an affront to the German quality of life.

“and from what revenue results, will be given back to the citizens”

What might have caught my attention more than the proposed package was the pragmatism embedded in the way that the package was announced, as though all of this is simply a practical inevitability. In a video released earlier in the week to preempt the announcement of the package, the German Chancellor took a few minutes to connect the dots between why the changes are necessary, what is being proposed, and how this impacts the individual.

The drivers behind the policy were set out as follows:

  1. Germany needs an effective klimaschutz to achieve its commitments and obligations
  2. In establishing this, the government will work with economic sensibility
  3. Any changes must be socially amenable so that individuals can contribute to achieving klimaschutz.

The Chancellor is clear to point out that the government’s aim is not to make money, but rather to reinvest revenue from CO2 pricing back to the citizens’ efforts, in as far as that relates to fostering klimaschutz behaviour at the individual level. There is no talking around the fact that klimaschutz will cost money, but it is clearly stated that the cost will eventually be a lot higher than if effective steps are made now.

It is hard to ignore the focus on the individual within the announcement, and the package itself has a strong theme of relieving or ensuring no adverse effects on the individual. A lot of emphasis in the announcement was on laying a platform to ensure effective buy into the changes, which sidesteps a focus on the politiking of whether the changes will be effective or not, whether the targets are reasonable or not, or what the government’s role has been in not managing to keep the country on track with targets until now. I don’t know if this tone is just inherently part of the practicalities of the German psyche, but the politics of klimaschutz seemed clever – demonstrating some progress in hand with ensuring that Germans buy into it without experiencing any adverse effects.

Incidentally or not, the announcement of the package occurred simultaneously with the worldwide climate strike, in which an estimated 1.4 m Germans (and many millions around the world) protested for real and meaningful responses to climate change. In a poll released on the day of the German strike by public broadcaster ARD, 63% of Germans favoured prioritising climate action at the cost of economic growth. In April, the German Greens achieved 20% of the vote at the European level (compared to 8.9% at federal level). There does seem to be an atmosphere of collective responsibility, or a more direct connection between actions at the individual level with negative climate outcomes here. I wouldn’t be surprised if the klimaschutz bunch of carrots doesn’t manage to appease an increasing appetite for green policies in Germany.

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38 comments

  1. Interesting to use Germany as an example given they are the worst polluter in the Western EU and the poster child on what NOT to do to fight climate change unlike their nuclear neighbours France and Sweden who have effectively decarbonised their powergrids and are moving to decarbonise their transport system.

    I suggest looking at these two nations along with Ontario as examples of successful decarbonisation in one sector and it leading on to another.

      1. Agree. Nuclear is not a solution:

        https://reneweconomy.com.au/nuclear-energy-is-never-profitable-new-study-slams-nuclear-power-business-case-49596/

        “A new study of the economics of nuclear power has found that nuclear power has never been financially viable, finding that most plants have been built while heavily subsidised by governments, and often motivated by military purposes, and is not a good approach to tackling climate change.

        The study has come from DIW Berlin, a leading German economic think-tank, and found that the average 1,000MW nuclear power plant built since 1951 resulted in an average economic loss of 4.8 billion euros ($7.7 billion AUD).”

        1. The problems with that argument are
          (a) You are saying a source of very large quantities of carbon-free electricity should not be used because it would cost more, which I don’t think you mean. And
          (b) There’s a long history of electricity prices not actually being set by the market. Germany has a very long record of subsidising coal, for a start, though I believe they have recently stopped. It’s not clear they’ve stopped commissioning new coal-burning plants.

    1. It’s interesting to use Germany as an example because:
      – they are actually using a carbon tax,
      – they have laid out what that tax will be used for,
      – the public think it’s not ambitious enough, and
      – the public can see that the subsidy will disincentivise modeshift.

      What did you think of those aspects, Ben?

      1. I have had an interest in the breeder reactor at Dounreay in Scotland after working there for a few weeks when it was being built and thinking at the time, seems to be the cheapest quote got the job, what is interesting is the timescale of the clean up operation, with our attitude of she’ll be right and being an earthquake risk I don’t think atomic energy is anything NZ should go anywhere near. I remember them saying within 10 years they would have a safe way of disposing of the waste material that was in 1957, fat chance. It’s an interesting read for anyone that is starry eyed about atomic energy. https://en.wikipedia.org/wiki/Dounreay

  2. I imagine in this country, with such a large percentage of people driving, it would be political suicide to attempt anything like this. It would be much easier if say 50% of the voter base didn’t drive.
    I wonder if a country name and shame type approach would help. A world wide environment agency that spent a lot of money on shame advertising. When a tourist goes to book their flight to NZ an ad pops up showing how environmentally unfriendly we are. That may get the government’s focus…

    1. An alternative might be just adding a $250/tonne carbon tax to all aviation fuel, and diverting that revenue to help the poorest countries develop low-carbon infrastructure and adapt to climate change.

      That would reduce many of the flights. Accompanied by a good economic analysis of the money spent on overseas holidays, it could be very effective. The money NZers spend is at one end of the spectrum, because of our remoteness, a huge part of it lines the pockets of the airlines.

      If all that money that NZers spend on overseas holidays was instead spent on holidaying in NZ, we would have a booming quality local tourism industry here, and wouldn’t need to attract tourists from overseas, who are also wasting lots of their money on the flying.

      We’d make a better country, with our own culture and our own interesting architecture, etc, instead of flying to soak up the places that have kept the vestiges of interesting cultures from the past…

      1. There’s a real question around whether the industry could survive by charging what Kiwis can afford to pay when on holiday vs. what people from other countries who also have foreign exchange movements working in their favour.

        Given that tourism is not renowned for being a well-paying industry at the best of times, I suspect an industry forced to rely on domestic travelers would look quite a bit different to the one we have now.

        1. Interestingly the number of visitors we receive is about the same as the number of New Zealander’s that travel overseas each year.

          I don’t know whether the reasons for travel and average length of trips are the same but it does suggest the impact of cutting back on overseas travel might not be as big as assumed.

      2. What!! You mean Tuakau instead of Tuscany? I can’t see the chatterati taking kindly to that. Seriously though, I think that despite our best efforts, we will lose the race to clean-up. This grave prognosis is made worse by the realization that the social catastrophe will be more terrible than the environmental one.

    2. “Name and shame” might work? Let’s try that shall we:
      “America is the world’s worst polluter and they need to change. Shame on them!”

      There, done. I’m sure that the ultra-green “leader of the free world” Mr D Trump will be mortified at America having been so named and will instantly change his ways (warning: strong degree of sarcasm possible).

      The simple fact is that most people and most countries do not / cannot change. People will still book their holidays to Bali, despite Indonesia killing thousands of people in West Papua.

  3. The biggest difference is that Germany’s population has increased by 5% from 1990 levels while NZ’s has increased by 43%. Deliberate government policies here to encourage mass immigration (both National and Labour as well as Act, and Greens, not to mention it is encouraged by GA) have got us in this situation where it is much harder to reduce our emissions due to the extra population. That is further compounded by the need to build emissions intensive infrastructure to house, transport them etc and by the huge increase in debt (both private and government) the country collectively has taken as a result of this influx. The debt issue does mean that it harder to afford to take measures needed.
    Some will argue that emissions are deducted from the country of origin of those immigrants. So far as individual country targets (and things like the Kyoto protocol etc) they are not. In the overall global emissions page yes that is partly true. Only partly, because a migrant leaving a developing country for a developed country ends up producing far more emissions due to the improved living standards. Furthermore, by them leaving that developing country they free up space and resources there for that local population to increase their emissions (and potentially have more children too).

        1. An immigrant moving from another country to NZ does not change the world’s overpopulation issue (if it is indeed an issue). So basically you are arguing that rich countries like us could pollute as much as we like providing we keep everyone else in poverty so they cant?

    1. “a migrant leaving a developing country for a developed country ends up producing far more emissions due to the improved living standards”

      If people adopt a higher-emissions lifestyle here, that’s our shame, not theirs. Acknowledging our lifestyle is at fault is the first step to accepting change.

    2. Is it actually true that immigrants produce far more emissions after they arrive in NZ? They are likely to have been relatively well off in their home country so would have been a significant energy user anyway and in many of these countries the electricity is generated using fossil fuels.

      Sure they are likely to drive more in NZ, but urban driving is something we need to reduce irrespective of the number of immigrants.

    3. Reduce Emissions
      Your argument that greatly increasing population always leads to emissions growth is not always true. The C40 cities have researched this and as an example Sydney has decreased emissions every year since 2008 despite growing strongly. A major difference between Sydney and Auckland is that Sydney has built a number of public transport projects and we have finished nothing.

  4. Interesting infographic of the ways that New Zealand could transition to 100% renewable for all energy sectors by 2050.

    https://thesolutionsproject.org/wp-content/uploads/2015/11/100_New_Zealand.pdf

    Of note is the proportion of wind power proposed to achieve this – off shore and on land. But also significant utility scale solar plant is suggested.

    The study calculates that a lot of jobs will be created – but think of the savings in oil imports and the change in the trade balance. Much of the value in the transition over and above the climate saving aspect will be from creating assets that provide a return – instead of spending revenue oninputs that are burned.

    For other countries look here: – https://thesolutionsproject.org/resource/139-country-100-infographics/

    Based on a Stanford study – http://stanford.edu/group/efmh/jacobson/Articles/I/WWS-50-USState-plans.html

    1. Yes, that’s interesting. One thing does baffle me though. Given that electric engines are around 3 times as efficient as internal combustion ones, to replace oil used mostly to move cars and trucks around we only need around 1/3 of the equivalent energy, rather than replace the liquid fuels currently used one for one. Add to that is the fact that the transition, to work, will have to involve less driving, as well as cleaner driving the electricity supply required should be more easily obtainable than suggested here.

      Anyway, given the incredible efficiency of new offshore wind turbines, and low cost per kWh, I can see Taranaki retaining its role as the energy province, especially given that it already has an offshore services industry, high number of wind days, shallow seas, and is already connected to the High Voltage Grid… Also I note Vestas the Danish turbine manufacturer has opened a plant in Victoria, just over the Tasman….

        1. With all that wind generation NZ will need more energy storage capacity. The Onslow- Manorburn pumped hydro scheme might be a good option.

        2. In my mind mostly the climate change transition is a big opportunity for NZ. Not having to import oil must be good for the economy.
          Re-engineering our towns and cities to decrease emissions, transport and housing costs is completely doable. This will give multiple benefits wrt inequality, productivity and the environment.
          Tourism/long haul flights is an issue, as is methane production.
          In some ways it might be a good idea if tree planting was used only to offset methane not CO2. This would mean we could initially push harder on transforming transport etc first because that will give us quick wins.

        3. I agree with you, Brendon. And in farming, the options are huge. Quality farming is a carbon sequestering exercise, not a carbon emitting one.

          Transport and urban form and need massive, urgent effort.

          Tree planting – the advantage of doing it now is that the trees will really only start putting on carbon when they’re quite a bit older. The advantage of not doing it now is that we don’t rely on that for the carbon accounting, so we are forced to make the more fundamental behaviour changes now, as you say. Also, delaying a focus on tree planting until we’re mature enough to avoid a pine monoculture is probably wise. Certainly future generations need the opportunity of new sequestration opportunities, though whether that’s best achieved through native plantings now or not I’m not sure.

        4. Brendon yes, a huge opportunity. Remember when a sizeable portion of the nation’s car fleet has a battery, that is in fact one big distributed storage device. Incentivise night charging with attractive prices, and there it is… time shifted power from night generation to day use, without the need for huge storage infrastructure. And of course it scalers with demand. The more EVs there are creating demand, the more batteries there are out there.

          NZ has a lot of garages, EV users do now and likely will continue to mainly (85%) charge at home. Largely done.

        5. One of the real issues for Auckland is to find means of electricity generation up there. It is not unnoticed by residents of te Wai Pounamu that while they generate most of the electricity, and ship it north, they generally have to pay higher electricity prices than those in Auckland do. I’m not interested in having a slanging match against Auckland, but as Auckland grows, it continues to consume more and more resources, including (and particularly) electricity.

          The National Grid will need to change over the coming years as more people nationwide start to generate their own electricity – and especially as our electric car fleet eventually (inevitably) starts to grow – and yet still, Auckland is very much a massive net consumer of electricity. The supply cables overheated and gave out in ’98 but the same issue is systemic.

          One argument could be that all new houses in Auckland should be fitted with extensive PV cells on their identical 27 degree hip roofs, to help generate the load at source – its an interesting challenge, which no NZ Gov has yet stood up to. Far different from Europe – all houses in Crete have solar hot water, nearly all new (and many old) houses in Germany have PV panels – there, the economic imperative drives the PV push. Our system in NZ needs to change. One day we’ll understand.

        6. This old myth again. On average 60 % of the country’s power is generated in the North Island, with around 40 % in the South Island.
          Around 63 % is used in the North and 37 % in the South, only a small amount is transferred from South to North, generally just powering Wellington.

        7. In a great example of ‘swords into ploughshares’ in the climate war, the replacement of one of the Torrens Island power stations is a bank of 12 Wartsila V-18 configuration 50DF multi-fuel reciprocating engines, fuelled on natural gas but capable of running on light fuel oil (a close relative of diesel) or heavy fuel oil (bunker fuel, which runs ships). Link: https://www.business-news-today.com/wartsila-signs-123m-contract-for-agl-energys-barker-inlet-power-station/
          This follows South Australia’s disastrous foray into a high percentage of solar plus wind – neither dispatchable, both variable, and causing much AEMO direction in order to maintain grid stability as to both frequency and voltage. Link: https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard#nem-dispatch-overview

          The Torrens Island station replacement is fast-start (around 5 minutes from pushing GO) so is capable of handling the sort of wind drop-outs that caused SA’s black system: link https://www.aemo.com.au/-/media/Files/Media_Centre/2017/Report_AEMO_Black-System_Incident_Report_Review.pdf

          Unless generation sources are dispatchable (‘sell me 500Mw at Bombay Hills Substation X between 2000 and 2230 on November 24, 2019’) they cannot be factored into the supply/demand equation, and spinning dispatchable reserve – usually thermal – to cover demand estimates has to be – er – spinning, to cover the distinct possibility that the wind is AWOL or that it’s night. Simple grid physics, overlooked by most.

          By all means plug in the EV’s, batteries and time-shift minor domestic loads. But none of that is gonna keep the Airport Trams running. Big iron is needed and domestic-size gear just doesn’t cut it.

          And the elephant in the room is long-haul air, for which zero replacement is possible: so kiss goodbye to tourism, the associated hospo, large chunks of regional economies. Plus, if the torches and pitchforks come out for shipping, kiss goodbye to import/export. This might all sound OTT, but if the zero-carbon restrictions really bite, those are the biggest targets….

        8. @Waymad – You seem to have a reasonable knowledge on how a power network actually works. I have been away from the power generation industry for about 10 years. Back then wind was not viable beyond about 15% of the total grid without creating major instabilities in the grid. Is that number still about right, or has it changed due to improvements in technology?

        1. Brendon, that’s a nice idea that sequestering by tree farming applies only to methane as it puts the source & solution both in farmers’ hands along with their concerns about the green rush. Neat & tidy. Meanwhile for most of the rest of us who don’t create methane (well just some) we can concentrate on transitioning our energy sources to WWS.

        2. I see the roading system being the achilles heal of battery power, maintaining a road is far more difficult that reusing rails, steel can be reprocesses into a new rail but how do you maintain a road with electric power without a fossil fuel industry.

    2. David, when you read this and the C40 city information you wonder why so little is happening in NZ. Where is the plan to replace the electricity generated by Huntly Coal, due to close in 2022? Why, when there is all the talk of building infrastructure is there no mention of power stations?

      As you say there is also the real benefit of reducing our trade balance as we decrease oil imports.

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