position
Energy Policy DGB Hypotheses
Sustainable energy against the background of climate policy requirements
National Executive Resolution, March 2009
Published by:
DGB National Executive
Departement of Energy and Environmental Policy Henriette-Herz-Platz 2
10178 Berlin www.dgb.de
Responsible: Dietmar Hexel
Contact: Heike Kauls Fon: (+49) 30 240 60 576 Fax: (+49) 30 240 60 677 e-mail: heike.kauls@dgb.de
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0 Preface...4
1 Sustainable energy: nine hypotheses...6
2 Current challenges ...8
3 Sustainable energy: objectives ...10
4 Controversial areas...14
5 Political demands ...19
A functioning and future-oriented energy supply is a prerequisite for growth, prosperity and employment.
When guided by the principle of sustainability, it is characterised by its ability to guarantee the supply of energy in the long term, to steadily improve climate and environmental compatibility and to supply German industry with energy at internationally competitive prices. In the current economic situation, this gains greatly in importance, as the “greening” of industrial societies is seen as the best answer to the difficult economic situation, fuelling growth, creating jobs and increasing energy security, thereby reducing Germany’s vulnerability.
The latest IPCC reports are once again showing that human beings are the cause of climate change and that the economy needs re-orientating. Together with a rapidly expanding global GDP in a world that is growing closer and closer together, and increasing demand for raw materials and energy probably going hand-in-hand with further increases in prices, industrial societies in particular see themselves faced with major challenges:
• How can mankind be supplied with sufficient energy at reasonable prices? This is a decisive question, especially for the 2 billion inhabitants of our planet who at present have no access to electricity.
• What can we do to stop our energy consumption having such far-reaching effects on climate, society and the working population?
• How can we accomplish the transition from our present ways of generating and distributing electricity to efficient technologies and structures with low CO2 emission levels, in the sense of sustainable development?
• How can we achieve a sustainable development model within industrial societies that can become a template for the whole world?
• What contribution can and must Germany make, as a country with a pro-active industrial policy and as a country better-placed than others to meet up to the challenges of climate policy?
• What special requirements are there for the working population, but also for business, consumers and other parts of society?
To maintain the world as a place worthwhile living in, not just for us but for following generations, specific actions involving all parts of society are needed – from business, via consumers, right up to the working population. The latter in particular are being affected in three different ways by climate change:
• As inhabitants of this world, by its effects on the quality of life and health;
• As consumers, by changes in consumer behaviour and consumer choices;
• As employees with respect to sustainable jobs, a steady income and good work.
0 Preface
As yet, the fight against climate change remains affordable. A major part of the necessary measures for protecting the climate can be achieved with well-tried and ready-for-production technology. As the largest industrial nation in Europe, Germany has the social and technological potential to reconcile climate protection with energy policy requirements. An energy policy strategy based on this potential could serve as a template for other countries.
This is the background against which the DGB unions – as called for at the DGB national conference – have made it their objective to intensify the social debate on an integrated climate, energy, transport and industrial policy and to make a concrete contribution to the socially necessary search for consensus on sustainable energy.
1. The necessary know-how and technology for providing sustainable energy are available.
Moreover, immediate action is cheaper in the long run – the price of the current blockade policy will need to be paid in a few years time, when the resultant supply gap starts sending prices spiralling upwards.
2. Sustainability involves taking into equal account economic, ecological and social criteria. From an objective perspective, climate change can be seen as a sort of natural barrier. This means that sustainable energy requires not just optimal energy efficiency but also the optimal use of renewable energy. In the sense of a realistic balance between supply security, environmental friendliness and cost effectiveness, consensus needs to be reached on the role of fossil energy.
An energy mix containing outdated coal-fired power plants, kept in service due to a lack of new power plants and generating electricity in an inefficient manner detrimental to the environment, would not be sustainable. What we need are new, highly efficient coal- and gas-fired power plants. When CCS technology becomes fully operational, CO2 will need to be captured and stored.
In the light of the resolutions contained in the German energy consensus on the long-term phasing out of nuclear energy, nuclear power has no role to play in a future energy mix.
Nevertheless, research needs to be continued in the area of nuclear safety technology.
Sustainable energy is characterised by a wide-based energy mix and the use of highly efficient technologies enabling non-fossil energy sources to become cost- effective.
3. Rising energy prices will lead to hardships for certain companies and their staff. These will need to be tackled in such a way that the industrial evolution of these companies can continue in Germany hand-in-hand with the country’s ambitious climate policy goals. In the sense of sustainable development, energy prices need to reflect environmental and economic reality.
4. The political framework conditions governing deregulation need to contain provisions allowing a large number of independent players, operating in the public interest (now and in the future).
Companies owned by local authorities and sustainable local energy suppliers have a key role to play here, as they are well-placed to ensure a comprehensive offering of energy-related services for energy efficiency and renewable energy. The provision of energy needs to be seen as a guaranteed public service.
1 Sustainable energy: nine
hypotheses
5. The political goal of network regulation needs to take place with a sense of proportion, so that networks can be maintained and developed into the structures necessary in the future for sustainable energy (“intelligent” networks giving access to renewable energy sources).
Qualitative criteria need to be taken into account when expanding secure networks. Long- term investment in generating capacities and networks is required.
6. For Germany to take the path towards a highly efficient energy supply based, as far as possible, on renewable energy sources, a comprehensive and consistent overall concept, drawn up in accordance with the principles of sustainability – environmental protection, supply security and employment – is needed.
7. An integrated climate, energy, industrial and transport policy is required to lead the way towards transforming current industrial processes into environmental friendly processes and products. Germany is well-placed here to take early advantage of the business opportunities connected with energy-saving. The future of an industrial society will become dependent on how it adopts energy-saving technologies optimising raw material usage, and makes optimal use of the innovation potential of its employees.
8. The burdens associated with rising energy prices need to be distributed fairly. This requires support measures for the needy, placing them in a position to permanently reduce their energy consumption. What we need is a policy aligning sustainability with social justice.
9. In the sense of sustainable development, climate protection is also desirable for social reasons.
The inherent opportunities for employment need to be systematically taken up. The necessary structural change must be understood as a task involving all branches of society - and implemented as such. It is the job of politicians, in conjunction with social organisations, to define the objectives and frameworks and to support their realisation with appropriate
measures. Continual monitoring is required to ensure that objectives are achieved. The effects of climate change on employment must be part of a national policy on adapting to this change.
Our economic system is based on contradictions. On the one hand it has brought us prosperity, opening up opportunities and offering amenities which large parts of the world population have benefited from in the last century. On the other hand it is based on the ever-increasing exploitation of human and fossil resources. The latter are being exploited as sources of seemingly cheap and abundant energy, at the cost of environmental pollution.
Social conflicts are increasing. Unemployment and poverty are no longer the sole factors endangering the just distribution of wealth and thereby the social pillars of democracy. Climate change has become an additional factor. Without a focus on the social consequences of climate change, efficient climate protection is a lot more difficult to achieve, just as it is to have a just policy towards future generations or towards developing countries. The threat of social conflicts grows when one part of society lives at the expense of another part. Not investing in climate protection will lead to even greater economic damage and to conflicts over the distribution of wealth. It is the poor and needy, nationally and internationally, who are hit most of all by the consequences of climate change.
In the debate about Germany as an industrial location, arguments are constantly being tabled about the unsustainable burden and its effect on the competitiveness of German companies. The opinion that sustainable development is a major burden for the economy is however short-sighted and false, as shown by positive examples of companies investing actively in climate protection.
It is much more a question of giving more support to companies. Calculating economic growth solely by means of financial factors, without taking social and environmental quality criteria into consideration, is too short-sighted.
Companies’ competitiveness will increasingly become dependent on how they can (and want to) make use of technologies and strategies related to the efficient use of energy and resources. A combined policy on climate and energy can lead the way towards replacing existing industrial processes by green processes and products. The only long-term perspective Germany has as an industrial location is for it to invest in radical innovation backed up by motivated employees. We cannot wait till tomorrow. We must start investing now in the foundations for a sustainable economy, re-orienting industrial society towards a green future.
2 Current challenges
Ever since the first industrial revolution, industrial nations have been building their prosperity on fossil fuels. It is these nations who are mainly responsible for the present levels of greenhouse gases in the atmosphere, and therefore they carry a special global responsibility for climate protection. They need to change their growth models as soon as possible, together with providing technological and financial support to developing and emerging countries in their transition to a low-CO2 industrial development model. In this respect it must not be forgotten that any increase in GHG emissions in developing and emerging countries, bringing per capita levels there up to those of industrial nations, would serve to nullify all current climate protection efforts.
In its “Green Package”, the EU Commission has not just committed itself to achieving a reduction of 20%
in GHG emissions by 2020, or 30% subject to the conclusion of a comprehensive international climate change agreement. There is a further commitment to increase the share of renewable energy sources in total energy generation to 20% and to decrease total consumption of primary energy by 20%. It should not be forgotten that climate change is merely a symptom of the uninhibited energy consumption associated with our way of life and our production processes.
Climate protection and the finiteness of fossil fuel reserves jointly point to the common long-term solution: making maximum use of the potential for using energy and resources efficiently and switching to renewable energy sources.
The DGB and its member unions explicitly endorsed this target of the EU as a starting point. On a national level, we are in support of the Federal Government’s target of reducing GHG emissions by 40% in Germany by 2020. The concomitant target of doubling energy productivity by 2020 compared with 1990 also goes in the right direction. But, in practice, both energy efficiency and energy saving need more government backing. The CO2 savings potential in buildings alone is put at between 50 and 70 million tonnes p.a.
We want to achieve a worldwide reduction of at least 85% in GHG emissions in the industrial nations by 2050. The target is to limit global warming to 2% compared with its pre-industrial level, as this is seen as the only way of keeping the consequences of climate change manageable. At the 2009 Climate Change
3 Sustainable energy: objectives
for investors. This has led to countries with feed-in systems achieving substantially higher growth rates for renewable energy that countries with other support systems. We need a support system respecting the rules of the market and focusing on location and cost efficiency across the EU in order for consumers to accept the additional cost. The EU’s proposal provides for Member States, in line with the principle of subsidiarity, being free in their choice of support systems.
In return there must be no provisions questioning, either directly or indirectly, the existence and further development of feed-in systems in those Member States which have chosen this promising and forward- looking path.
By the end of 2007, 250,000 new jobs had been created in Germany in the field of renewable energy, with a large number in structurally weak regions. By 2020 the creation of a further 400,000 new jobs is expected, or even 500,000 if all macro-economic effects of climate protection policy are taken into account. In 2007, renewable energy already had a 14.2% share of total electricity consumption, up 20%
on the previous year, and an 8.5% share of total energy consumption.
The implementation of the EU target of a 20% share for renewable energy still means that non-
renewable energy has an 80% share. It follows, in other words, that this target can be nothing but a first step on the path towards sustainable development. Energy efficiency therefore needs to receive a similar focus.
On a global perspective, we will continue to be reliant on fossils fuels, especially coal, for a long time. The degree to which this can be achieved in a sustainable manner is dependent on the modernisation of power plants, increasing their effectiveness and reducing their CO2 emissions. Studies show that there will be no place for nuclear power in the energy mix, neither now nor in the future.
This all means that the following factors have a key role to play in a sustainable energy policy:
• The use of fossil fuels using green technologies.
• The steady expansion of renewable energy, with further technological improvements leading to efficiency gains.
• Higher energy efficiency along the whole energy chain.
• Substitution of oil and gas by renewable fuels in the fields of transport and heating, not least out of consideration for the fact that oil and gas are not to be seen primarily as fuels, but as valuable raw materials for industry. By just burning them, they are removed from the production
chain. It is eminently better to have them used as raw materials in manufacturing where a far greater degree of value creation can be achieved.
• The expansion of combined heat and power (CHP) plants. The cogeneration of electricity and heat can make a decisive contribution to increasing energy productivity and protection the climate. CHP plants achieve a utilisation ratio of up to 90%, saving up to 25% of primary energy compared with the most modern conventional power plants. The use of CHP becomes sustainable when renewable fuels are used.
The DGB criticises the fact that the EU directive on the ETS for the third trading period, adopted by the EU Parliament on 17.12.2008, greatly disadvantages CHP plants in auctions of emission allowances. CHP plants are to be burdened with the costs for allowances not just for generating electricity but also for generating heat. Plants just generating heat on the other hand require no allowances.
• Expansion and adaptation of grids, enabling the integration of new environmental friendly large-scale technologies and decentralised power generation.
• Sustainable restructuring of the transport sector: avoidance, switching to environmentally friendly means of transport, intelligent traffic networks. Rail networks with their positive climate protection effects require a greater focus. Further developments in this segment need to reflect reductions in energy consumption and CO2 emissions, with investment being channelled into R&D and the procurement of new modern locomotives and rolling stock.
To cut consumption of primary energy, we need not just to be focusing on conventional energy-saving.
We must also exploit in a far greater manner the potential offered by higher energy efficiency in the whole energy chain, both on the supply side (the efficient conversion of primary energy into consumer energy) and on the demand side (a more efficient use of consumer energy). The following support instruments top the list: energy efficiency standards (regularly updated in line with developments) with corresponding labelling requirements, “top-runner” programmes, energy saving funds, energy management systems, regulatory and fiscal instruments (for example switching the road tax calculation base from engine size to emission or fuel consumption levels).
Such measures will enable us to make a major step forward towards sustainable energy. But, with the
1. The gap between theory and practice
Sustainable development is a goal readily accepted by all layers of society. It remains a fact however that the discrepancy between awareness and actually taking action is growing day by day. Our current energy utilisation is not sustainable. It needs to be noticeably improved in order to ensure right-quality growth, sustainable mobility and consumption, not just for us but for future generations as well. Action is needed today, to prevent increasingly serious consequences. Ever since the publication of the Nicholas Stern review it has become clear that taking action now to protect the climate is a lot cheaper than not taking any action at all or taking action later. Stern has calculated that the cost of climate change continuing at its present rate could end up consuming between 5% and 20% of gross national product per annum. By contrast, the cost of taking climate protection measures now, put at 1% of GNP, is a lot lower. The 2007 McKinsey-BDI study investigated some 300 levers for cutting or avoiding consumption, all available with current technology and cost-effective. But they are not being used. In other words: the price of the current blockade policy will need to be paid in a few years time, when the resultant supply gap starts sending energy prices spiralling upwards.
2. Sustainable energy
At heart, sustainability implies taking economic, environmental and social factors into equal account. The fight against climate change necessitates measures targeting increased energy efficiency and the use of renewable energy. At the end of the road, these measures must lead to as much as possible of our remaining energy demand being covered. However, the world’s appetite for energy will grow so fast that the increase in the use of renewable energy cannot at present cover much more than the additional global demand. Worldwide energy supply will therefore need to be backed up by coal-fired power plants in the coming decades. In the business-as-usual scenario of its 2007 World Energy Outlook, the
International Energy Agency (IEA) expects the biggest increase of coal demand in absolute terms – 73% – between 2005 and 2030. In Germany as well, domestic coal and lignite will continue to play a major role in energy generation, especially for covering the base load. Due to modernisation requirements and the phasing out of nuclear power (supported by the DGB), half of Germany’s power plants will need to be replaced by 2020. What we need are new high-efficiency coal- and gas-fired power plants.
When CCS technology becomes fully operational, CO2 needs to be captured and stored. From a sustainability perspective, coal-fired power plants need to become environmentally compatible. The IEA’s conclusion states that the focus of state intervention needs to be put on stopping the rapid growth of CO2 emissions from coal-fired power plants. Looking at the antiquated state of power plants across the
4 Areas of controversy
world, major boosts in efficiency can be achieved by modernisation, if all extension and replacement work is done using state-of-the-art fossil fuel power plant technology achieving maximum energy productivity.
Power plant planning and sizing must be tied to CHP requirements. National CHP potential has by no means been fully exploited, without even considering the worldwide potential. Current forecasts see operational CCS technology becoming available in 2020 at the earliest. It is to be expected that developments in technology will, amongst other factors, make renewable energy sources economically competitive in the next few years.
These developments, together with higher prices for emission allowances, will make the conventional use of fossil fuels increasingly unattractive. Both today and tomorrow, sustainable energy must guarantee energy supply at all times without damaging the environment and climate, preserve existing and create new jobs and be cost-effective.
3. Energy prices
Deregulation of the energy industry was conducted with the goal in mind of providing industry and consumers with reasonable-priced energy. The continuing existence of industries with a high energy consumption in Germany is dependent on energy price levels. But energy prices are set to rise, given the steady depletion of fossil fuel reserves and the necessary pricing-in of environmental costs. High energy prices do however provide incentives to save energy and use it more efficiently. This has already led to major energy savings. Yet the burdens of rising energy prices need to spread equitably. Globalisation gives companies with a high energy requirements the opportunity to relocate to countries in a position to offer cheap energy due to low environmental and social standards. But this just involves relocating environmental problems without solving them and it is not the effect desired. Energy prices need to reflect ecological and economic reality.
4. Energy in a social context
In the last few years, a comprehensive deregulation of the energy industry has taken place. This has however not led to any increase in the number of market players and thereby to the politically desired
5. Network regulation
The aim of network regulation is to prevent unjustified profits through monopolies. On the other hand we need networks to be steadily expanded in order to meet the challenges of sustainable energy. These need to be both local, supporting “intelligent” grids, and centralised, enabling for example renewable energy to be transported to consumer centres. But there is a threat of over-regulation of incentive regulations, endangering a number of necessary investment projects and thereby hampering the switch to sustainable energy instead of supporting it. It is also causing job losses. The unbundling of network ownership could, if adopted, lead to problems in supply security, should the networks be sold to new owners with divergent interests. These are all reasons for insisting that electricity grids remain in public ownership and under public control. Supply security and job security must not be threatened by network regulation.
6. The need for a comprehensive and consistent strategy
Current climate and energy policy in Germany is in some areas contradictory. Agreements, such as the 2007 Meseberg climate resolutions, are not being systematically or only partially implemented. There is a wide gap between the statements of intent and actual action. The wide range of support programmes and campaigns of various federal ministries, public authorities and private agencies leads to confusion, coupled with the danger of overlapping. Politicians are called upon to lay down clear terms of reference and set the direction. Attempts to postpone or even cancel the urgent steps needed in energy and climate policy on the grounds of the current economic crisis will at the end of the day be a lot more damaging than the current financial crisis. The goal must be a clearly defined climate and energy policy designed for action.
7. Tapping the innovation potential of employees
Current manufacturing processes need to be transformed into green processes producing green products.
This requires the appropriate technology ensuring the efficient use of energy and raw materials. Germany is well-positioned here to take early advantage of the opportunities offered in this area. At the same time the role of employees in climate protection at work needs to be strengthened. Companies involving their employees and investing in their training will achieve better results in this area, while at the same time taking social and ecological needs into account. Without tapping the innovation potential of employees at their places of work, there will be no change in structures.
8. Environmental equity
High energy prices and the high cost of structural changes hit peoples on low incomes most of all. It would be a great help here to have – government backed – energy services and programmes directed at the long-term reduction of energy consumption. The potential for increased energy efficiency is often quite high in needy households, as they do not have the financial resources to invest in more efficient appliances and heating systems. But there are as yet no suitable programmes available. What we need is a policy giving sustainability a socially fair structure.
9. Jobs and working conditions
Structural change is already leading to the creation of a large number of new jobs in the field of
renewable energy and energy efficiency. But working conditions in these areas often do not meet up with existing standards in the power plant engineering and construction industry. Jobs are often lower paid, without company pension schemes and receive little vocational training. On the other hand, highly- qualified workers in declining industries need an acceptable professional perspective. The
consequences of climate change on employment must be included in a national strategy of adjusting to climate change.
The above-mentioned contradictions and inconsistencies illustrate that politicians, in spite of the many good approaches, have not yet come up with any homogenous strategy on a policy of sustainable energy meeting up to the challenges of globalisation and climate change and the concomitant consequences for work and employment.
We must start developing a different growth model, measurable against qualitative standards and based on renewable energy, increased efficiency in the use of energy and raw materials, green production processes and a pricing-in of external costs, especially those concerning the social and environmental consequences. If we fail to master this challenge, our energy supply will be at risk, as well as the economic and standard-of-living basis of future generations. In such a scenario, the economy would be confronted with global competition for scarce and expensive energy sources, threatening the future of Europe’s industrial base. Increased energy productivity on the other hand plays a major role in guaranteeing industry’s sustainability and competitiveness, bringing competitive advantages as a front- runner and creating new jobs. It is in the interest of industry to react appropriately to the signs of the times.
There are a number of positive examples showing that German industry in particular is well-placed to both re-orientate existing industrial sectors towards sustainability and to become fit for the future via its expanding “green industries”. There is no environmental, economic or social sense in relocating industries with high energy consumption to countries with lower environmental and social standards.
Proof must be furnished here in Germany that industrial society is sustainable in the long-term. This includes cutting our dependency on imports, even though greater cooperation within Europe is meaningful and necessary.
In 2000 the Hans Böckler Foundation, in its “Work and the Environment” (“Arbeit und Ökologie”) study, was already demonstrating the feasibility of combining a green social reform strategy with economic efficiency, lean production (with regard to raw material usage), environmentally compatible consumption and social justice. With regard to its inherent opportunities for economic, social and environmental development, such a strategy can be even more successful than development strategies directed at reducing costs for companies, cutting wages and lean government.
What we need is an integrated climate, energy, transport and industrial policy focusing on radical energy- related innovation, shifting away from the conventional use of fossil and nuclear energy in large-scale power plants with its accompanying downstream environmental protection. Furthermore, it is a question of combining climate protection with an environmentally compatible energy supply guaranteeing sustainable employment and providing long-term supply security. We need to speed up the structural
5 Political demands
change in our energy supply, focusing increasingly on greater efficiency in the use of energy and raw materials and on renewable energy. We need to exploit technologies - that have often been around for a long time - more efficiently. Estimates show that in the coming 20 years, €13 trillion will need to be invested worldwide in new energy infrastructures. The challenge is to have these sums channelled towards sustainability. The investment will take place mainly in Europe, the USA and China, and it is the duty of politicians to set the right (price) signals.
Climate policy is innovation policy. In certain branches, there is no question that Germany is the top exporting nation for green technology. German companies have a 30% share of the world market in the booming energy generation market. By 2020, the green technology sector is expected to generate more turnover than vehicle manufacturing or engineering. Reducing exploitation of natural resources is not just necessary from an environmental point of view. It also makes economic sense. Increasing productivity in the use of energy and resources opens up new opportunities for a higher standard of living and prosperity, and thereby for more high-qualified jobs. At the same time, by worldwide innovation in the areas of renewable energy and energy-efficiency technologies, we are making a significant contribution to stabilising the world economy. To achieve the still pending breakthrough in global climate protection, it is imperative to bring to market clean energy technologies on a wide scale and to provide emerging and developing countries with access to them. With Europe’s industrial competence and the right mix of investment in infrastructure and in the future, the direction needs to be set now for introducing green technologies, creating jobs and saving costs.
Industry is well-advised to give up its reservations, voiced strongly in certain sectors, on measures aimed at protecting the environment, and instead to focus on coming up with pro-active proposals and implementations relating to sustainable energy.
The DGB and its member unions declare their willingness to work together with others on formulating a sustainable energy concept.
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