An address by Harald Leibrecht, Coordinator for Transatlantic Cooperation at the Federal Foreign Office before the American Council on Germany’s Dallas Warburg Chapter and the Dallas Committee on Foreign Relations, 16 February 2012, Dallas, Texas

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Ladies and gentlemen,

German energy policy has stirred up emotions! Is German energy policy on a risky path – as Ms. Van Der Hoeven, the Executive Director of the International Energy Agency (IEA), said in an interview? Are the Germans crazy? Or has nothing much happened (yet) – as EU Commissioner Oettinger stated at an energy meeting a few months ago?

Well, let me answer those questions for you today.

The Executive Director of the International Energy Agency is worried that our fast phasing out of nuclear energy might have a negative impact on mitigation efforts in Europe and that energy prices might be pushed up. Commissioner Oettinger takes a very different stance. He has argued that although some German nuclear power plants were removed from the grid last spring, plants that account for roughly 8 percent of national electricity production in sum, nothing much has happened – yet.

In Germanywe are well aware that there is a lot of skepticism. There are doubts as to whether a leading economic power with a large industrial base can maintain its standard of living and its economic performance if it focuses heavily on renewable energies with the aim of completely abandoning nuclear power within the next 10 years.

There is a lot of interest, too. If Germanybrings off this marriage of green growth and low-carbon energy consumption, without relying on nuclear power, it will be an important signal for other major economic powers, as well as emerging and developing countries, around the world.

Today, I will argue that we will not only keep the lights on in Germany. In a few years’ time, renewable energy and renewable energy products that have been “made in Germany” will increasingly be an asset to our economy, leading to further export successes and investment opportunities in this future sector abroad. No doubt, we are entering uncharted territory and no one will deny that we are facing big challenges.

Let me first explain to you Germany’s motivation for its shift to renewable energy. I will then talk about our various measures and the responses we have found to existing and upcoming challenges:

I. Present Situation/Motivation

1. Nuclear Power

The costs and risks of nuclear energy have been debated in Germany for more than four decades. A majority of Germans are against the use of nuclear power, not least because of the activities of anti-nuclear campaigners and the Chernobyl accident of 1986. Eventually in 2002 the Federal Government and the energy industry agreed on a flexible phasing-out plan for nuclear power plants. In fall 2010 the milestones for a general switch over to “clean energy” were set. These were embedded in a long-term political strategy, which included an extended lifespan for nuclear power plants as a bridging technology until 2050. Against this background, in the spring of 2011, the Government then took the decision to phase out electricity production from nuclear energy even sooner than originally planned, thereby sparking a heated debate, both at home and abroad.

Why this rethink? After the previously unimaginable disaster at Fukushima, we took a new look at nuclear energy and its residual risks. As a consequence, we decided to stop electricity production from nuclear power plants. Of Germany’s 17 remaining reactors, the oldest eight were disconnected right away; the remaining nine reactors will be phased out gradually until the end of 2022.

Why did we take this decision? Are we trading the potential risks associated with nuclear power for a real risk today, increasing our dependency on fossil fuels and unpredictable suppliers?

Let me explain the German view on this matter. Although I will not claim that this decision was the only one that could have been taken, I can say that it was a choice based on broad societal consensus. We certainly do not expect heavy earthquakes and tsunamis to take place in Germany. All nuclear power plants in Germanyare considered 100 percent safe, even in light of the events in Japan. However, Fukushima has proven that unforeseen risks leading to major catastrophes do exist. The devastating effects of a nuclear disaster reach out far in space and time – human life and the natural environment of a whole region can be severely affected for years, and even decades, to come.

We are not willing to accept this possibility. All major political parties agreed on this. Quite frankly, the politicians would have had a difficult time disagreeing, given the widespread distrust of nuclear energy among the German public, especially after March 11, 2011.

In addition to the risk of an accident, there is the unresolved question of nuclear waste. How and where can we responsibly dispose of nuclear waste, some of it highly toxic and some of it with extremely high radiation levels that will remain high for hundreds of thousands of years? Our civilization has barely existed for 20,000 years, but our current use of nuclear power produces a legacy that has to be secured and secluded from the biosphere for half a million years. Is it ethical to put this burden on many generations to come just to satisfy today’s energy needs?

Some of our neighbors are not too happy with our decision to gradually shut down our nuclear reactors. But maybe we’re not too happy, either, with their continued reliance on nuclear power and the potential expansion of their nuclear capacities. And while we will argue – bilaterally and in multilateral forums – for the highest possible safety standards for nuclear power plants, the basic line is clear: Each and every country is free to decide on its own energy mix. But what we can hopefully do is set a good example of a country’s transition to clean energy.

2. Fossil Fuels

Another important reason for a transition to renewable energies is to promote greater energy independence. With the investments of today, we want to ensure that we are not at the mercy of fossil-fuel-producing countries and possibly subjected to unforeseeable price increases in the future.

As your fellow Texan President Bush put it in his State of the Union speech in 2006: “Keeping America competitive requires affordable energy. And here we have a serious problem: Americais addicted to oil, which is often imported from unstable parts of the world.” (State of the Union speech, January 31, 2006)

This statement is just as true if “Germany” or almost any other industrialized country is substituted for “America.” We are all highly dependent on oil and other fossil fuels. Nonetheless, oil is going to fade away at some point in the future. Even oil companies acknowledge that “peak oil” isn’t far off. On the other side, though, the demand for energy will keep rising. Experts predict that global demand for energy is going to have doubled by 2050. And although companies will go for more deepwater offshore production, oil sands and unconventional oil sources in general, once we pass peak oil production while the demand for energy is still rising, oil prices are going to go sky-high.

In this context, it is our goal to prevent countries from using their position in the energy markets to play power games. Iran’s latest threats clearly demonstrate the risks inherent in our nations’ serious dependency on fossil fuels.

3. Protecting the Climate

Thirdly, the transition is part of our overall climate protection strategy. In 2010, the German Government adopted its “Energy Concept for an Environmentally Sound, Reliable and Affordable Energy Supply.” This concept laid out a long-term strategy for Germanyto become one of the most energy-efficient countries in the world by the year 2050. Reducing greenhouse gas emissions is not only vital for our climate and physical environment, but also for our economy and national security. Numerous studies have shown that investing now to avoid the worst impacts of climate change is affordable, whereas inaction would cost at least four or five times more in the not-so-distant future.

Germany has thus committed itself to reducing its greenhouse gas emissions by 40 percent (compared with 1990 levels) by 2020, and by 80 to 95 percent by 2050. Because energy consumption currently causes 80 percent of emissions, it was obvious that changes are needed in the energy sector.

II. Challenges and Chances/Taking Action

Exploitable oil, gas, and even uranium resources will all be used up one day. There is no way forward but to find and use other, unlimited energy resources. The sooner we start, the smoother and less costly the transition will be.

We have therefore set ambitious targets with regard to renewable energy. According to our concept, 35 percent of electricity produced will come from renewable sources by 2020, rising to 80 percent by 2050.

How do we face the challenge of making such drastic changes in the energy sector? If our industry is to remain competitive in the long run, we need a high level of energy security and affordable energy prices. The key to achieving this lies in the use of renewable energy sources, as well as in increasing energy efficiency.

1. Implementing Renewables

First of all, conventional energy sources will be replaced step by step with renewable ones. From photovoltaic panels on rooftops to wind turbines onshore and offshore – the spread of renewable energy is actually visible when traveling through Germany.

In 2011, renewable energy accounted for 20 percent of Germany’s electricity supply. That means that, for the first time ever in Germany, the amount of electricity supplied from renewable sources surpassed that generated from nuclear power (ca. 15 percent). After brown coal, renewable energy is Germany’s second-largest power source today.

The improvement in the sector has been huge: Wind energy capacity today is five times higher than it was in 2000. Last December, wind power plants produced 8.5 million kilowatt hours, making it the most successful month for wind energy to date. And the growth figures for photovoltaic power are even better.

However, the sun does not always shine, the wind does not always blow. This is, of course, even more true for Germanythan for Texas. We therefore also need to have backup capacity. In view of this, we will, as a safeguard, add up to 10 gigawatts of capacity by 2020 to the fossil plants that are already being built.

Still, further heavy investment in research and development and innovative thinking are required if we are to store renewable energy to smooth out fluctuations in supply. Scientific successes include the breakthrough experiment of converting electricity into conventional natural gas by Austrian and German scientists. This method now makes it possible to use the massive national storage capacities for natural gas to accumulate electric power from renewable sources.

Moreover, we plan to have 1 million electric vehicles on the roads in 2020 and we are optimistic that the target of 6 million in 2030 can be achieved. Batteries in cars could then also have a role in storing electricity and helping to balance supply and demand.

Yet another approach is the use of foreign pumped-storage hydro power stations, as they exist in Austriaand Norway, for example.

Another major challenge will be to expand our energy infrastructure: Renewable energy is often not produced in the geographical area in which it is consumed. Wind energy, in particular, is produced in the north, but many of Germany’s industrial centers are in the south. Consequently the big challenge is how to integrate fluctuating renewable energy supplies into the grid system.

We have taken all kinds of action to speed up planning procedures in order to install “smart grids.” Thanks to new energy laws, the Federal Network Agency is now legally obligated to cooperate with the various companies that run the nationwide supergrids. Once a year, they jointly assess the need for additions to the network infrastructure. After the development of a structure plan, the companies can then apply for permission to construct the necessary new extra-high voltage lines.

The Government has also established a panel for sustainable grids, with various stakeholders from industry and state, to find solutions with respect to grid extension and modernization. The investment in this infrastructure will make a considerable contribution to growth in the coming years.

2. Energy Efficiency

Moving on from renewable energy sources, I would like to turn to the second pillar of our transition – energy efficiency.

Ladies and gentlemen, energy efficiency is the biggest untapped energy resource worldwide! By enhancing energy efficiency in all sectors, overall energy consumption will be cut step by step.

There is, for example, a huge potential in houses and buildings in general. The domestic sector accounts for one-fourth of total energy use in Germany; of this fourth 75 percent is used for heating. With the available passive house technology, energy use in new buildings today can be reduced immensely.

3. Diversification

In the short and medium term it is furthermore important for us to diversify energy sources, routes, and suppliers, both for renewable and nonrenewable energies.

I would like to name just two examples of our efforts in this field: Firstly, the German Government was one of the initiators of the Mediterranean Solar Plan which aims at developing an additional capacity of 20 gigawatts of renewable energy by the year 2020. Secondly, in addition to this political project, the German Government is supporting a large private-sector project, cooperating with partners in North Africa, called Desertec. The Desertec Industrial Initiative is a consortium of major German and international players in the energy sector. It will enable clean electricity from solar, wind, and photovoltaic power to be generated on a large scale, and in an economically viable way, in the desert regions of North Africa. Power will be produced for local markets, for Europe and other countries.

Desertec opens up great opportunities for North African states and, by enabling us to import green energy, could greatly boost the EU’s diversification efforts.

III. Economic Outlook

We believe that a huge potential for innovation, growth, and employment can be tapped by transforming our energy structures. New green technologies and related service sectors have created thousands of new jobs in Germany. Since 2004 the number of jobs related to renewable energies has more than doubled from 160,000 to 370,000 – even outnumbering those in the German automotive industry! Projected onto the U.S. and its size of population and economy this is equivalent to the creation of 1.5 million new jobs!

And the private sector is also responding to the challenge: E.ON will invest 2.6 billion euros in renewable energy over the next two years; they are also investing in this field right here in Texas. Siemens has announced that it will focus on renewables as well, two of its four business fields being “Energy” and “Infrastructure & Cities.” Both companies are participating in the London Array project, the biggest offshore wind park in the world that is supposed to deliver electricity to 750,000 British households.

Our vision is to become a technological leader in “clean energy.” We therefore see a big potential for medium- and long-term export success and investment opportunities abroad in this field.

As regards bilateral cooperation with the U.S., I would like to bring your attention to the Transatlantic Climate Bridge, which we established several years ago. Its mission on both sides of the Atlantic is to strengthen collaboration between Germany and the United States in the field of energy and climate issues. The Transatlantic Climate Bridge was launched in Berlin in September 2008 with an international conference at the Federal Foreign Office. The meeting concluded that cooperation in the energy and climate sector should be stimulated at all levels within industry, politics, and society, at the local, state, and federal level. The Climate Bridge has since successfully served as an important platform for the regular exchange of views on transatlantic energy and climate issues, and for the establishment of a growing network of lawmakers, politicians, businesspeople, scientists, and civil society representatives. The Transatlantic Climate Bridge successfully brought Germany together with individual U.S. cities and states, such as Virginia, Minnesota, and California, to start direct cooperation on energy and climate issues. We would be, of course, very interested to include Texas or Texan cities on this list.

Furthermore, German clean energy and energy efficiency-related foreign direct investments in the U.S. are steadily growing; more and more people on both sides of the Atlantic recognize that energy security can be achieved and new jobs created by building a low-carbon energy future.

Additionally, nine U.S. states have become members of ICAP, the International Carbon Action Partnership, working towards a global network of emission trading systems. And last but not least, the Massachusetts Institute of Technology and the Fraunhofer Institute for Solar Energy Systems have set up a joint Center for Sustainable Energy Systems in Cambridge, Massachusetts.

I cannot overstate the importance of an ongoing dialogue with our European and transatlantic partners on energy policy and strategies. Only by communicating and cooperating with our friends here and in Europe will we be able to make our country’s transition to renewable energies a success.

In the end, each and every country has to find its own path, appropriate to its own situation. In our case, given the developments I have just outlined and their implications, it is still too early to draw any final conclusions.

Despite the immensity of this transformation process, we have so far met most of the challenges and have already refuted many of the doubters. Despite all predictions to the contrary, we have made it through the winter – so far, I might add, considering the current arctic temperatures in Germany – without any shortages or other stability problems in our power supply.

My preliminary assessment is that the need to accelerate the switch over to renewable energies due to the quicker phase-out of nuclear power will actually help induce the change needed.

We are very much aware that we will face more and even bigger challenges on our way. But we firmly believe that, even though the road might be rocky at times, we have the necessary tools and instruments to reach our intended destination.

Thank you very much for your attention.