Climate Change – A Law Of Nature E-Book

Fabian Brunner

• Herausgeber: epubli
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2022

Seitenzahl: 222

Beschreibung

Instead of adapting to the changing climate, all the relevant groups in German society have joined forces to combat climate change. No attempt has been made to avoid technical efforts or costly measures. The energy transition and the Green Deal have tremendous consequences for the state, society and individuals. Public debate has tended to ignore these consequences and has failed to consider the cost. Dr. Fabian Brunner analyses the mode of operation of the energy transition and comes to the conclusion that it has set in motion a spiral that will fundamentally transform the German economic system rather than the global climate. Not only the climate has "points of no return" after which interventions will no longer be possible. This also applies to the economy – when these points have been passed, it will no longer be possible to prevent an ext- reme loss of prosperity for future generations.

Leseprobe

FABIAN BRUNNER

CLIMATE

CHANGE

A Law Of Nature

The promise of the energy transition

and its failure in practice

1. edition 2022

Copyright © 2022 Dr. Fabian Brunner

Set, design & layout Markus Vahlefeld

Cover: stock-illustration-ID:498571115

sepio

Brünner Str. 8

04209 Leipzig

CONTENTS

Preface

I. Energy policy: the energy law framework

· Categories of energy policy measures

· The significance of regulation

· Excursion: carbon dioxide

· Regulatory tools

· International climate diplomacy

II. Energy markets: the energy policy framework

· Tools of European climate protection policy

· Concentration on carbon dioxide emissions and its

consequences for the German automobile industry

· Green finance and sustainability taxonomy

III. The energy industry: implementation

· Power grids and blackouts – the Achilles heel

· Europe wants to become sustainable

· The price of decarbonization

· The illusion of clean energy

· Affordable energy is essential for economic prosperity

IV. Alternative approaches

V. Conclusion

VI. End notes and bibliography

Preface

There is scarcely a topic that unites people as closely as the development of the climate in which we live. However, this is where the complexity of the topic already starts. Is there really ONE global climate or do we have several different climate zones throughout the world? What is the difference between weather and climate? How much change in the basic situation of the global climate can be considered to be a natural process? Currently, the phenomenon of global warming, frequently referred to as climate change, is among the top items on the political agenda in many countries of the Western world. Global climate change was a central topic for the first time at the G8 summit held in Heiligendamm, Germany in 2007.1 The high degree of sensitivity with which average global temperature reacts to the smallest changes in atmospheric greenhouse gas concentrations is now defined as a central challenge in public discussions.

Anthropogenic emissions (i.e. emissions caused by human beings) are regarded as the cause of the increase in the atmospheric carbon dioxide concentration. In public discussion, the increase in the average global temperature of about one degree Celsius since the advent of industrialization and the perceptible rise in the atmospheric carbon dioxide concentration observed over the same period when comparing the pre-industrial age and the present day has become the key parameter in public discussions. In this context, the loss of the polar ice caps, the melting of glaciers, rising sea levels and an increase in the frequency of extreme weather events are often seen as visible signs of climate change. Many people in the Western world believe that temperature change must be limited to 2 degrees Celsius (or 1.5 degrees Celsius)2 as the essential response of humanity to this situation. Frequently, the introduction of restrictive political measures is seen as indispensable in this context.

However, although there is widely accepted global agreement among the nations that excessive global warming would entail severe negative consequences for humanity and that appropriate action must be taken to prevent it, there is generally no clear international consensus3 on the questions arising directly in this context, for example questions as to the correct, appropriate reaction to climate change, responsible action or the handling of the resulting costs. On one hand, the various international climate protection agreements have created global awareness; on the other hand, the specific measures taken by individual nation states are very different from each other and range from the use of so-called renewable energies (it would be more appropriate to call them volatile energies) via research and development programs to directives and laws or even, in some cases, no reaction at all.4

Furthermore, even though the international treaties on climate change (such as the Kyoto Protocol or the Paris Accord) have been ratified by many countries, a large number of the signatories did not derive any consequences from ratification. In many cases, emissions were not effectively limited; infringements have rarely been punished. Furthermore, some countries with high anthropogenic emissions do not share the basic hypotheses of the climate accords and have therefore not adopted the limits stated in them. Even in countries which act in the spirit of the climate accords, the efforts undertaken are often scarcely sufficient to meet their voluntary undertakings. As a result, the trend of increasing global carbon dioxide emissions has continued unabated.

Nowadays, the climate protection efforts of politicians in the Western world often face conflicts that simply cannot be resolved. On one hand, we have the wishes of the general public, encouraged by politicians, for comprehensive climate protection and indeed protection of the basis of their existence. On the other hand, there are problems with acceptance among the general public as regards the affordability of energy and the security of energy supplies (the social and economic component). These aspects, which are mutually interdependent, cannot be optimized at the expense of the other aspect in each case and also offer little prospect of political credit. What politician can score with the topic of security of supply? The conflict between these two objectives always calls for decisions and the assignment of priorities to the primary objective to be pursued in each case.

The situation is exacerbated by the fact that questions concerning the climate call for interdisciplinary answers which are highly complex in some cases. Despite this complexity, the media and politicians nevertheless often react with highly simplified answers which do not do justice to the topic. It is therefore time for worldwide climate protection efforts to be revisited. This is the objective of this book. Germany can be considered a blueprint and is the ideal point of reference of this book. The country is embedded in the European context and has shown itself to be particularly committed to climate protection. No other country has embarked – under the heading of “energy transition” (Energiewende in German) – with such enthusiasm on such a comprehensive energy industry experiment with an open outcome for its own economy. Scarcely any other country is so convinced that its own approach is right as to use their exemplary character and the encouragement of imitation by other countries as a justification for its national climate protection measures.5

In 2021, climate protection, which can really only be effective at the global level 6 even came to be considered as a human right in Germany. In future, German citizens therefore have a constitutional right to climate protection. In the spring of 2021, Germany’s highest court issued a judgment complaining that the German government’s Climate Protection Act only stated targets for the reduction of emissions up to 2030 and did not state any requirements for the subsequent period. The failure to continue emission reduction targets from 2031 onwards was considered to be a violation of constitutional rights. In contrast, as regards the extremely far-reaching climate protection measures resulting from its judgment, which would impinge on the freedoms of German citizens, the court did not see any violation of constitutional rights.7 The Federal Constitutional Court has therefore adopted a political position on climate protection and has also shown the high priority of this topic for German society.

Moreover, the very broadly formulated judgment of the Federal Constitutional Court has given the German state comprehensive justification to initiate, or even the duty to initiate in the name of climate protection appropriate energy industry measures to achieve the temperature target stated in the Paris climate agreement (limiting global warming to less than 2 degrees Celsius). This judgment will therefore fundamentally restrict the leeway available to future German governments for shaping legislation, a new development in German history which has remained unique throughout the world to date. It is true that the judgment also refers to the leeway available for shaping legislation but it also basically creates a duty under the German constitution which can be enforced by litigation. The consequences for the country are currently unforeseeable. From a present-day perspective, it is both inefficient and ineffective to wish to lay down binding national annual carbon dioxide emission limits for future generations. The next few years will simply bring too many economic and technical changes and innovations for it to be possible to lay down binding limits of this type. There is even a risk that the judgment of the Federal Constitutional Court will prevent reached or at least seriously impede certain innovative development paths.

Quite apart from these considerations, the judgment by Germany’s highest court ignores the global character of global warming. In 2021, the German share in worldwide carbon dioxide emissions is less than 2 percent. China, the USA and India together reached about 50 percent. If Germany achieves the goals of the Paris climate agreement, this will therefore be of secondary importance for the global climate. However, if the development potential of future generations is to be determined to this extent and the freedoms enjoyed by citizens are to be restricted so severely, it will be essential for the citizens of a democracy or their elected representatives to be able to revisit objectives and to reach other conclusions on the measures to be taken and the priorities to be assigned in the light of new findings.

Furthermore, public discussions in Germany have largely ignored the price to be paid for this focus on climate protection. For example, it must be mentioned that electric power and the affordability of electric power are among the key competition factors for an industrial country and that the total cost of supplying electricity from renewable sources is especially high (at least in the present situation). Similarly, the rejection by an entire nation of conventional power generation using fossil fuels (coal, gas, nuclear fuel) of the type practiced throughout the world is an experiment which still has an open outcome, at least as regards security of supply. Furthermore, the changeover to energy supplies based solely on renewable energy sources for covering power demand will call for many times more generating capacity compared with conventional technology; land use for power generation will therefore also be considerably higher. Another factor to be considered is the possibility that the production, construction, operation, dismantling and disposal of wind turbines and solar panels will or at least may also have a negative impact on plants and animals.

It is certainly legitimate for a country to pursue the ideal of a decarbonized society but it should be made transparent that this goal is more than “just” climate protection and will cost considerably more than the famous ice cream cone mentioned by Jürgen Trittin, then German Environment Minister, on July 30, 2004: “Supporting renewable energies will still cost an average household just 1 euro a month - the price of an ice-cream cone.“8 This will be all the more important if the German energy transition becomes a European climate protection program, the “Green Deal”, especially as a result of German efforts. It is at least disingenuous to present the energy transition and the Green Deal as a highly promising way for the German economy or the European continent to achieve climate neutrality without sacrificing prosperity to any significant extent.9

The real stress test for the energy transition will be to meet the electric power demand of Germany or Europe reliably and in a cost-optimized way primarily from renewable sources, which has not been the case to date. The fossil power plants are still in operation. And the price tickets that have been announced are already beyond imagination, or at least the imagination of the author. For example, the EU Commission has announced, with reference to the European green deal, that one trillion euros will need to be invested to combat the climate crisis by 2030, corresponding to 100 billion euros per year.10 This is an amount that , a) will need to be earned, b) will not be available for other socially relevant tasks and c) is so large that it would definitely have called for a consensus within society. Considering the fact that affordable, reliable energy supplies are critical success factors for an industrial nation and that energy-intensive industries will be forced by high electricity costs to relocate to countries outside Europe with lower costs and lower environmental standards, the complexity of the decision in favor of the energy transition and the Green Deal becomes clear.

The framework defined for the energy industry plays a part in shaping the structure of an economy and the social context of a country. At least in Germany, it has become increasingly clear over the past few years that the connection between high electricity prices (for consumers) and energy policy is gaining importance on the political agenda and that political and social pressure is being created. For example, especially for low-income households, German energy policy increasingly represents a significant cost burden and entails a perceptible loss of purchasing power. “We need a brake on inflation that operates and is effective at many points. For example… In the case of energy costs, where the state is often a price driver. We finally need an electricity price cut of the type that has been promised. … Politicians can and must revoke the price increases for example for heating energy and replace them by a climate policy that is effective and affordable,” said Dr. Dietmar Bartsch, Chairman of the Left Party Fraction in the German Bundestag during the Bundestag election campaign in 2021.11

It is normal practice for politicians to adopt balanced regulatory policies with a view to leveling out such distorting effects. However, as we will see in the course of the book, the standards set by German energy policy are to a very large extent responsible for this distortion. At this point, it should be emphasized that climate change is definitely a key, essential challenge to the human race. It is also undisputed that there can be no quick and easy answers to such a complex, multifaceted topic. It will therefore be necessary to define measures to effectively combat climate change. However, the measures chosen will largely determine how effectively and efficiently politicians deal with this problem.

In order to gain an overview of the many questions arising, this book offers a clear view of what “energy transition” and “Green Deal” specifically mean, what consequences can probably be derived and how German climate protection efforts can be considered in the international context as well as how other economies or their energy industries have adapted to the universal challenge that is climate change. It is worth considering these matters as the measures taken in the name of climate protection will affect society and the economy for many years and shape the lives of future generations.12/13

In order to ensure a clear structure, this book operates with cascades of questions – questions arising from the internal logic of the individual topics, for example with respect to the key role of carbon dioxide with respect to the climate. In this context, the author refers extensively to information available on the Internet and has quoted such information to the best of his knowledge and belief. To ensure greater readability, some quotations have been made which also include preceding sentences – in contravention of normal academic practice –, if there is a connection between the sense of the sentences. At this point, I would like to thank the authors of the many Internet contributions which I have quoted which I could not name in person as these contributions were published anonymously.

I Energy policy: the energy law framework1

In order to understand how political interventions in what is basically a free market economy function – for example with a view to protecting the climate – it is necessary to take a look at energy industry regulation. In economic theory, state interventions in functioning markets are considered to be distorting and detrimental as they generally lead to misallocations, which means that limited resources cannot be used in the optimum way. However, there are exceptions. These include the energy industry. Most countries in the world regulate their own energy industry as it is assumed that energy markets cannot be fully functional markets as a result of a number of special factors.

Politicians justify state interventions in energy markets by referring to the partial failure of markets; the reasons given include the following:

a)Energy plays a key role in the functioning of an economy; it is a basic prerequisite for economic activity and therefore deserves protection;

b) Energy generation calls for the utilization of quantity and size effects and therefore becomes a question relevant to the overall economy;

c)Fossil fuels lead to economic interdependencies between countries which have far-reaching geopolitical consequences;

d) Energy generation and consumption have effects on the environment which concern society as a whole.

From the economic perspective, the failure of national energy markets is used to justify state intervention. Frequently, the intervention of the state is explained in terms of externalities2, however, there is a tendency for politicians to use the market failure that has been identified as a justification for all types of state intervention. At least on the German energy market, politicians tend to give priority to corrective interventions by the state when considering alternatives.

In turn, this entails a risk that partial market failure may develop into a failure of the state and that the state will overinterpret its regulatory function with respect to the energy market. In view of the billions of Euros that taxpayers will need to pay for the energy transition and the Green Deal, financing energy policy measures and special, competition rules which are in some cases disputed, this question should at least be discussed with an open outcome. It is certainly possible to be of the opinion that it was only state intervention that laid the foundations for the market failure often identified in the German energy market and its sub-markets.

What is the conclusion to be drawn? After politicians have identified partial market failure in the energy market, political intervention becomes possible. However, political intervention calls for specific (energy) policy goals. In Germany, these are represented by the “target triangle” of energy policy3, which aims for economic viability (affordability), environmental compatibility and security of supply. The energy policy goals of Germany – which focus mainly on reducing national greenhouse gas emissions – are subordinated to this target triangle and cannot be considered independently of it.

The specific (energy) policy goals of the German government are currently presented in a target architecture consisting of four layers4:

·The top layer of the German government’s target hierarchy consists of the general (energy) policy objectives,: a) climate (= reduction of greenhouse gas emissions), b) phase-out of nuclear power by 2022, and c) competitiveness and reliable power supply.

·The next layer indicates the approach adopted for implementing these political targets. The German government has defined two basic strategies (core objectives): a) increasing the share of renewable energy sources in overall energy consumption and b) reduction of primary energy consumption and improved energy efficiency.

·From these two core objectives, steering goals for the individual sectors are derived; these flesh out the core objectives for the individual sectors (power, heating, transport) and define them more precisely.

·Finally, these steering goals must be achieved by suitable, specific measures such as legislation and incentive programs in the individual sectors.

These goals are embedded in extremely ambitious quantitative conceptions of what can be achieved by the German or European economy as a contribution to the decarbonization aimed for by energy policy. At the same time, the energy policy of the German government wanders off into abstract statements: “With the energy transition the German government proposes to embark on the path towards a reliable, economical and environmentally-compatible energy supply system of the future.”5 This is also “only” energy policy, but a sufficiently non-specific energy policy statement allows all types of measures to be grouped together, including those which do not actually serve the real energy policy goal. Some of the goals are stated extremely vaguely: “Economically sensible transformation of the energy supply system is a major factor in sustaining public acceptance and making the country more competitive.”6 On this basis, a precise analysis of target achievement is not possible.

Without specific targets, it is not possible to develop a specific energy policy. A more specific policy could, for example, involve the setting of quantitative development targets for renewable energies – at the same time as balancing conflicting interests7 – or introducing a general limit to the share of taxes and state levies in average energy costs. Without such a limit, it will hardly be possible to halt the dramatic rise in costs which has already been observed. Quite apart from these considerations, the diffuse, small-scale energy policy of Germany down to the level of individual measures calls for enormous supervisory effort with far-reaching interventions of the administration in society and the economy. The consequences include disturbance of the economic balance and the high cost of bureaucracy.

Heterogeneous political ambitions restrict the opportunities for holistic energy policy in Germany. German energy policy commitments currently range from political decisions, such as the phase-out of nuclear power, to declarations of intent such as the reduction of primary energy consumption to concrete ambitions for specific sectors such as transport. In this context, the effective assignment of priorities becomes a challenge especially as the voluntary undertaking given by the German government diverges from reality in some aspects. In view of the dimensions of the task involved, the aspiration of Germans to achieve the most cost-effective solution combined with optimum system integration through energy policy measures is simply unrealistic.

Categories of energy policy measures

National energy policy and the resulting measures aim to operate on a complex system that is affected by a large number of external and internal factors. Although these factors may vary from country to country and over the course of time, the basic underlying logic is the same throughout the world. As diverse as the energy policy goals of national governments may be, the intended steering effect is determined by specific energy policy measures which are similar throughout the world in systematic terms. In order to gain a better overview of the energy policy “toolkit” that is available, the relevant classifications of measures are outlined below.

When classifying energy policies, it is normal practice to distinguish regulatory, market economy and other measures. Especially regulatory measures and market economy (price) solutions are regarded as effective tools. In this context, regulatory measures mean restrictions on behavior with punishment for non-compliance. However, in economic terms, every restriction on behavior has one thing in common with all the other measures – desired behavior is regulated in terms of quantity. Typically, maximum values are stated for pollutant emissions or certain product characteristics. For example, the ban on fracking for natural gas production in Germany can be considered in this category.8 The same applies to the privilege given to wind energy in the energy industry and to the expansion of the transmission grid, which is also a regulatory tool.

On the other hand, market economy (price) solutions are based on impulses which aim to influence behavior via pecuniary incentives including (energy) taxes, levies, fees or permits. For example, the introduction of so-called CO₂ permits, which will be dealt with in a later chapter, simply makes the basic product (as the origin of the CO₂ emissions) more expensive, with a view to having a steering effect. Subsidies are also among the (market economy) price solutions. These aim to make a product or a technology competitive or more competitive through financial support. However, subsidies are always taken from tax revenue and are therefore always connected with the moral question of their opportunity cost. For example, German politicians have provided subsidies for photovoltaic systems while the operation of these generating systems is scarcely economically viable, at least in Germany, as we will later see.9

The other measures are mainly based on voluntary commitments. This is a very elegant solution as it normally involves little work and low cost at the same time as being highly compatible with the market and flexible. However, setting a target value which is appropriate for achieving the steering effect desired represents a real challenge. Once this target has been set by politicians, implementation and achievement are a matter for the companies who have entered into the commitment. However, the consequences if the desired result is not obtained represent a political problem. Legislative bodies would really be under an obligation to achieve the desired target by other regulatory means, which would then need to be especially stringent.

A special form of other measures is the provision of information. This approach is based on the assumption of information asymmetry between the better-informed state on the one hand AND the less-well-informed public on the other hand. Classical asymmetry effects include information concerning the environmental compatibility of a product The state develops large-scale education and information campaigns, for example the use of stickers to indicate the energy consumption of an appliance such as a refrigerator. Recently, in connection with this approach, the concepts of “nudging” 10, i.e. giving people a nudge in the right direction and “framing” (the recipient’s behavior can be influenced in different ways by the same content depending on the formulation of the message) has become increasingly popular. In both cases, these approaches represent the manipulation of people’s behavior with a view to eliminating the cause of behavior not desired by the state. However, this approach is subject to criticism; the evident problem is connected with the close relationship between care for citizens and ideology, the fact that the state can never know better and that efforts to steer behavior must always be limited by the concept of the responsible citizen.

The significance of regulation

In most of Europe’s national electricity and gas markets, the prevailing trend for about 20 years from 1990 was away from organization by the state towards organization on the basis of competition. In connection with this trend, markets within the European energy industry were fundamentally reorganized. However, at the beginning of the new millennium, public expectations and the tone of public discourse changed. The energy industry has increasingly been interpreted as a task for the state. Despite the liberalization of markets, the energy industry is still not fully organized on the basis of competition, especially as a result of its connection with networks. However, this does not apply equally to all the stages in the value stream. While upstream stages such as power generation and gas exploration and downstream stages such as wholesale and retail gas and power sales are characterized by tough competition, competition can, as a general principle, only be established to a limited extent with respect to power and gas networks.