The energy transition is not the problem, but the solution

The sharp rise in the price of oil and gas has rekindled the discussion about the energy transition.

However, the future federal government should not be deterred by this and should even increase the pace of the expansion of renewable energies, writes Prof. Claudia Kemfert from DIW in the guest article.

Berlin - And the groundhog greets forever: The prices for gas, oil and coal are rising, the word “energy price crisis” quickly circulates and the twisted logics and attributions of guilt are back immediately: the energy transition as a scapegoat.

That is because it is priceless, you have to finally stop and postpone the unpopular climate protection or call it off altogether.

Those with a love of detail proclaim that nuclear power is better than renewable energies anyway, or declare the price of CO2 to be the root of all evil.

It is exactly the other way round: Renewable energies have a price-reducing effect, both on the electricity exchange and on the part of industry and consumers. 

Voice of economists

Climate change, delivery bottlenecks, corona pandemic: seldom before has the interest in business been as great as it is now.

This applies to the latest news, but also to very basic questions: How do the billions in Corona aid and the debt brake fit together?

What can we do about the climate crisis without jeopardizing our competitiveness?

How do we secure our pension?

And how do we generate the prosperity of tomorrow?

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Fossil fuel prices are exploding

The fact is: The prices for fossil fuels are exploding.

It has a lot to do with markets and a lot with politics, but especially with the market power of individual players.

Anyone who believes that one can free oneself from this dependency by continuing as before is just as mistaken as the smoker who thinks that he can fight his cough not with fresh air but with the next cigarette.

The energy transition is not the problem, it is the solution.

No price increases are currently experienced by those who live in an insulated house, generate electricity and heat with solar energy, use renewable local or district heating or drive an electric vehicle.

All of them even save money.

This makes it clear: NO energy transition costs money.

Various factors currently play a role in fossil energy prices.

The world economy comes from the Corona * crisis.

This leads to increasing energy demand and basically drives up the price.

Due to climate change and stricter environmental regulations, China has recently been able to produce less coal in its own country and has to switch to other suppliers due to the trade embargo with the important coal supplier Australia.

That drives up the price of coal.

Russia is cutting gas supplies

And the gas price is currently rising massively because Russia has cut gas deliveries.

In this way the country wants to secure its market power.

The aim is to stimulate the gas business in the short term by forcing the new Nord Stream 2 natural gas pipeline to be completed more quickly.

It's about securing Russia's business model in the long term.

The EU's “Fit for 55” program presented in July envisages a move away from fossil fuels.

That is of course a thorn in the side of the Kremlin.

The EU climate protection policy is to be massively slowed down by means of cause-and-effect logic errors, which are cleverly scattered into the public discussion.

Nuclear renaissance is not the answer

But we no longer need fossil natural gas, we need less.

The only correct answer to fossil energy crises is the accelerated energy transition.

Because even the flight reflex of newly mobilized nuclear power fans is no way out.

Atomic energy causes enormous costs, in the construction of new plants, in the subsequent dismantling and above all because of the thousands of years of storage of radioactive waste.

Renewable energies are available at a fraction of this cost.

They avoid geopolitical conflicts and they strengthen the resilience of the energy supply and the economy as a whole.

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The three major challenges of the new federal government

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Beware of budget holes: Depreciation relief must also be financed

In the struggle for a possible coalition, the SPD, FDP and the Greens could agree on significantly faster depreciation options for companies.

However, states and municipalities would be hit hard by such a regulation, warns the economist Prof. Achim Truger in the guest article.

Beware of budget holes: Depreciation relief must also be financed

Climate bonus for people with low incomes

The CO2 prices reflect the "ancillary costs" of fossil energies due to the effects of climate change and are an important instrument for achieving climate goals. However, in order to relieve people with low incomes in particular, the income should be reimbursed through a per capita climate premium. A “fuel price cap” through falling taxes, on the other hand, is a mere wishful thinking. It is by no means certain that the taxes will also reduce gasoline prices, since energy companies will maximize their margins in such high price periods. In other words: the prices go up anyway; the corporations benefit.

For this, the state lacks the tax revenue that would have to flow into the financing of rail traffic, public transport and the expansion of the charging infrastructure.

This also applies to all energy prices: Low taxes are no guarantee of low prices, especially in such volatile and tense times.

Smart climate protection policy and energy policy builds on these measures: Massive and significantly faster expansion of renewable energies.

Increased energy saving also in the industrial sector.

Greater promotion of energy-efficient building renovation and rail traffic.

Expansion of the charging infrastructure.

And efficient use of green electricity.

Traffic light plans are going in the right direction

The exploratory paper of the current coalition negotiations rightly provides for a significantly faster expansion of renewable energies, even if the transport sector still needs to be significantly increased.

Nevertheless: It is going in the right direction, the only thing missing is the necessary level of ambition and implementation.

Especially to avoid future energy price wars.

That is the good thing about the fossil energy price crisis: It brings tailwind not only for Germany and Europe, but also for the whole world, which will soon meet in Glasgow and negotiate the next climate protection efforts.

The coming months will be important.

About the author: Prof. Claudia Kemfert is head of the Energy, Transport and Environment department at the German Institute for Economic Research (DIW) in Berlin and Professor of Energy Economics and Energy Policy at the Leuphana University of Lüneburg.

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