On Thursday April 18th, Germany reached a new maximum level of electricity production made from renewable energy of 35.9 GW. An increase in usage of electricity produced by wind power and photovoltaic energy helped surpass last year’s production level of electricity of 31.8 GW by more than 10%.
Germany, called “the world’s first major renewable energy economy” by the online news magazine Renewable energy world and its renewable energy sector hailed as “the most innovative and successful worldwide” by the United Press International, is at the forefront of the environmental movement. Germany, for example, has doubled the renewable share of its total electricity consumption in the past six years to 23% in 2012. It forecasts nearly a redoubling by the year 2025. Some areas of the country are progressive even more rapidly. In 2012,Brandenburg, Bayern, Sachsen-Anhalt and Baden-Wüttenberg were praised in the study Bundesländervergleich Erneuerbare Energien 2012, for their quick adaptability at using an array of technologies to include in their energy mix and their increasing investment in renewable energy.
Although this data proves worthy of celebration, it comes with negative consequences. An increasing amount of electricity produced by renewable energy makes the prices of emission allowances of the ETS crash. This in turn supports a revival of cheaper coal and weighs heavy against renewable energy. Although it is not affecting Germany’s impressive push towards a low carbon economy, it will prove difficult for other European countries to follow Germany’s footsteps.
The ETS must be fixed to impulse renewable energy production.
- Caps should be given at a specific value, but should not be absolute, e.g 300g/kWh for electricity. Hence, the ETS would not be undermined by low electricity demand due to external factors such as the financial crisis in 2008.
- The ETS should be self-adapting. If a certain value of, for example, 290g7kWh were reached in a certain year, then the cap should be automatically reduced.
These policy measures would enable a self-corrective behavior of the ETS and solve the over allocation problem, that lead to recent price crashes.
In the mean time, since no major reforms will be made until the next reviewing of the ETS in 2015, TheCompensators*, suggest renewable energy companies to create their own level playing field by taking very cheap emission allowances out of the market.
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