The International Energy Agency has praised Germany’s push for wind and solar power but urged the country to increase LNG imports in order to reach its 65% renewable energy target for 2030. EURACTIV Germany reports.
German Economy Minister Peter Altmaier (CDU) received praise from IEA director Fatih Birol as the agency presented its country report for Germany on Wednesday (19 February).
Considering that the country recently missed its climate targets for 2020, this was by no means self-evident.
Germany could set an “example for other countries” in the energy transition, Birol said in Berlin as he presented the IEA report on Germany, the first since 2013.
In his presentation, Birol positioned Germany in a global context: According to the report, the ones able to claim the lion’s share of global CO2 reductions last year were mainly the EU and the US.
Within Europe, Germany had a “remarkable reduction” with 8% less CO2 emissions than in the previous year, “the largest reduction since the 1950s”.
According to Birol, it is remarkable that German energy consumption has remained stable over the past ten years, while economic output has increased by 12%, a trend which is likely due to the improvements in energy efficiency.
“This shows that energy reduction can also take place in advanced economic areas,” he added.
In spite of this, Germany still missed its CO2 emissions targets for 2020. According to Agora Energiewende, a think tank, Germany achieved a CO2 reduction of around 35% at the end of last year compared to 1990. This is below the country’s target of achieving a 40% reduction.
Network expansion a “number one priority”
The IEA rates the expansion of renewable energies in Germany as “very good”, given that its share now accounts for 38% of German electricity consumption.
This means that the 35% target for 2020 has already been exceeded, Altmaier pointed out. Moreover, new record figures are expected for the expansion of green electricity, the price of which is expected to fall further in the coming years.
In its climate protection package presented in September, the German government agreed to introduce a national emissions trading scheme for heating oil, natural gas, diesel and petrol as of 2021. Part of the revenue will be used to reduce the levy under the German Renewable Energy Law (EEG).
Although renewable energies are on the rise, the German wind industry – and its onshore component in particular – is in a deep crisis.
EEG-subsidies, which many wind turbines benefit from, will expire this year amid a shortage of new project approvals and barriers to the construction of new power lines. In this context, expanding the grid has become a “number one priority”, Birol stressed.
The north-south transmission grid must urgently be expanded in order not to jeopardise Germany’s goal of achieving a 65% share of renewable electricity by 2030.
Boosting hydrogen production
In addition, further efforts are needed to decarbonise the transport and building sectors. Germany must create strong incentives for e-mobility and public transport, the report states. And the heating sector continues to be primarily based on fossil fuels, with 25% of homes are still running on oil heating systems, and 44% relying on natural gas.
According to Birol, hydrogen will play an indispensable role to decarbonise both sectors.
“The main problem with green hydrogen so far is the cost. These can only be reduced by significantly increasing the capacity for electrolysis,” the IEA chief added.
The IEA chief, therefore, hopes that the German government will soon agree on and implement the hydrogen strategy presented by Altmaier on 1 February.
Germany plans the construction of three LNG terminals
But for now, the use of hydrogen on an industrial scale remains in its infancy.
Natural gas is “temporarily the best solution” to bridge the gap left by the phase-out of coal and nuclear power, which together account for about 40% of electricity generation, Birol said.
And according to the IEA, liquefied natural gas (LNG) is the best option. By 2040, up to 60% of the natural gas traded worldwide could be distributed in the form of LNG, the agency estimates.
LNG is also increasingly being used in Germany.
In the coalition agreement, the ruling CDU, the Christian Social Union (CSU) and the Social Democratic Party (SPD) have committed to developing LNG infrastructure. There are currently 28 LNG terminals in Europe, and Germany is planning to build its first three facilities.
According to the IEA, Germany must urgently diversify its gas supplies. The country currently obtains about half of its natural gas from Russia, while the rest is share between Norway (31%) and the Netherlands (22%).
But with Dutch production expected to come to a halt by 2030, Germany is planning more imports from Russia, with the construction of the Nord Stream 2 pipeline bringing gas directly from Russia. The pipeline is fiercely resisted by Poland and the US administration, which has threatened sanctions on Western companies involved in its construction.
“But Russia is only one of the options. We want to avoid monopolies,” Altmaier said on Wednesday.
Birol, for his part, tried remaining neutral in the controversy, saying the German government makes its own decisions about where it gets its gas from.
Because of the current abundance of gas on the market, and the corresponding low prices, the time is indeed ripe to conclude new supply contracts.
[Edited by Frédéric Simon]