![]() Germany has also signed an agreement on solidarity-based gas supplies with Austria, assuring one another of strategic support in the event of a gas supply crisis. Otherwise, come the next election, the three-party coalition with the Green Party at the helm of energy and climate policy could be blamed both for the high energy costs and the failure to reach the climate targets.Īpart from helping struggling households (see above: “How does the German government react to rising energy costs for consumers”), the German government is pondering other measures that are meant to ensure a secure supply of natural gas this year and in the future.Īs a precaution, the economy ministry has plans to establish a so-called digital “solidarity platform” on which gas can be made available to those who need it most at times of scarcity. It is therefore vital for the government to show that the energy transition is ultimately a solution for high prices, not an extra burden or the cause of higher bills. Economy and climate minister Habeck acknowledged in January that the transition would “deeply affect social reality” and that onshore wind turbines have an acceptance problem. ![]() Higher bills also pose the risk that citizens become opposed to higher CO2 prices and other energy transition policies. There is also a danger that government relief schemes and transfers to vulnerable households dampen the carbon pricing signals that the government intends to use to achieve its climate targets.Įuropean governments are under increasing pressure to protect households from sky-high heating and power prices under the region’s unfolding gas crisis, but the resulting relief programmes have the potential to dampen carbon pricing signals and put the bloc's climate targets at risk. With prices for both heating and power now skyrocketing, there is a danger that consumers are deterred from clean tech investments, for example by reports that e-car charging prices on motorways have gone up. by introducing a national CO2 price on heating and transport fuels), while starting to make electricity cheaper for consumers by scrapping the renewable energy surcharge on power bills. The energy crunch is hitting Germany at a time when the government is tightening rules to make the use of fossil energy more expensive (e.g. But to deploy heat pumps, e-cars and hydrogen, clean electricity doesn’t only have to be abundant but also cheap. Growth in renewable energy is necessary because all sectors need to be widely electrified to reach the greenhouse gas reduction goal of minus 65 percent by 2030 and climate neutrality by 2045. a slowing onshore and offshore wind expansion very long and often contested approval procedures both for renewable installations and new power grids or a growing lack of skilled labour and raw materials. Even without the gas and electricity price crisis, there are a number of hurdles standing in the way of reaching these targets, e.g. The German government has set itself the ambitious goal of reaching a share of 80 percent renewables in (a rising) power consumption by 2030. ![]() The share of coal power ( lignite and hard coal) in the electricity mix stood at 29 percent in 2019, 24 percent in 2020 and 30 percent in 2021. But despite a considerable rise in the price of CO2 emission allowances under the European Emission Trading Scheme ( EU ETS), up from around 33 euros per tonne CO2 to almost 90 euros at times, this was more than compensated by the increase in natural gas costs in 2021, so that coal-fired power stations were more in use again, the EWI said. ![]() In pre-pandemic times, the rise in the CO2 price meant that a fuel switch from hard coal to natural gas was happening more and more often in Germany, as operating coal plants became more expensive (burning coal emits more CO2, hence coal plant operators have to buy more CO2 emission allowances). renewables are usually followed by nuclear power and then lignite plants because they can all generate electricity cheaper than hard coal and natural gas plants. The rest of the power stations follow according to the merit order, i.e. Because renewables are the cheapest electricity source, they make up as high a share as possible – depending on weather conditions and sometimes grid capacity – in the power mix. The high prices for natural gas make the German power mix more CO2 intensive – as does less windy weather (2021 was a below-average wind year).
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