Germany's current energy situation & its past energy choices

In this episode, German energy analyst Professor Claudia Kemfert discusses the choices that Germany has made on nuclear and gas and how they affect the country’s economic outlook, both short- and long-term.

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David Roberts

Earlier this year, I spent some time in Germany, riding scooters around Berlin and Hamburg. From that vantage point, everything seems delightful, but from a broader point of view, the country is struggling.

The Ukraine war has seen Germany's supply of methane gas from Russia cut off. Energy prices have spiked as Germany scrambles to make up the deficit. Some people have taken this to mean that Germany was wrong to move away from fossil fuels as quickly as it has. Others have said it shows that Germany needs to double down on its transition to renewables.

Prof. Claudia Kemfert

To get a better sense of Germany's current situation and what it says about the choices it has made on energy, I contacted Professor Claudia Kemfert, who teaches energy economics at the Hertie School of Governance in Berlin and heads the energy, transportation, and environment department at the German Institute for Economic Research.

Kemfert, a high-level advisor to the European Commission, is known as one of Germany's top energy analysts. We talked about Germany's choices on nuclear and gas, the situation it faces this coming winter, and the policies that could help it recover and get back on track to hit its emissions goals.

Alright, then. With no further ado, Professor Claudia Kemfert. Welcome to Volts. Thanks so much for coming.

Claudia Kemfert

Thank you very much for having me.

David Roberts

In my experience, Germany plays a kind of symbolic role among people in the US who think about energy. Germany has this kind of, mythic role, and I want to dig in a little bit and find out how that mythos differs from the actual facts so we can get a better sense of where Germany stands and what its current situation is. But first, I want to back up and present to you what I think is the conventional wisdom in the US about Germany and energy, and then we can talk about what that conventional wisdom gets right and wrong.

So, in the US, I would say the sort of conventional wisdom about Germany's Energiewende, the energy transition, is that it's sort of well-meaning, but it has made a series of fateful mistakes. The first is the original decision to phase out nuclear power before coal. The second is delaying and delaying and watering down the coal phaseout itself. And then the third would be more recently, sort of, having decided to phase out nuclear, at least stop expanding coal. That is implicitly a decision to rely on gas. But instead of Germany and sort of Europe developing its own gas resources, it made the decision to basically become dependent on Russia for gas. And now it's paying the price for this series of mistakes. So let's start with at the beginning. Let's start with the history. Let me just ask you sort of straight out: do you think it was a mistake for Germany to decide to phase out nuclear power first as a part of the Energiewende?

Claudia Kemfert

I would say yes, but I would like to explain it a little bit more because in order to bring in it to context, because Germany has started the energy transition over 20 years ago, not only by deciding to do the nuclear phase-out, but also to increase the share of renewables drastically. That has been initiated by a special promotion system for renewables. That was really important to increase the share of renewables over a time of 10 to 15 years, from almost zero to now 50% of electricity production. That was a good thing.

On the other hand, what's about the rest of the energy production? And there, indeed, there has been a decision to phase out nuclear now by 2022, by 2023. And the mistake that has been made is to phase out nuclear before coal. Because, with this, there has been a quite high share of coal over time and increasing emissions and then pay very high price also to phase out coal and also to discussions and have a coal committee that has done debates about how to face our coal and how to do it and not lead it over market signals. Like for example, a CO2 price. And, that was a mistake also from the point of view of carbon emissions and because it would have been much better to run nuclear over the time and decrease the shelf coal drastically and bring the coal phase-out first, or to make the coal phase-out first.

And to the first point, I would agree on that. However, my focus was not to tell the story in that way, not only to talk about nuclear and coal, because there's a broader picture and there's a larger story to tell and that is the energy transition itself, which is based on renewable energy. And that is, I would say, a fourth mistake that wasn't in your list, that there has been a steep increase of renewables over time. Also by first promoting and then delaying the increase of share of renewables with the argument of, we need some kind of bridge technologies, whatever that means, and also delaying the energy transition towards a full supply of renewables over that time.

And that was, I think, the first and most important mistake we did, and we pay now a very high price for it.

David Roberts

Is there a simple explanation for why it proved politically easier to phase out nuclear than to phase out coal? Because it seems like the decision to phase out nuclear has held up, at least in German public opinion, pretty well, even under a lot of criticism, but it seems to be having incredible difficulty phasing out coal. What's the political explanation there?

Claudia Kemfert

Yeah, I think the political explanation came from the fact that there has been a lot of criticisms against nuclear since 50 years in Germany. So since Geneva accident in Ukraine, the terrible nuclear accident which happened in the 80s was the starting point for this skepticism and fear against nuclear power and a lot of criticism against nuclear power, which brought the German decision to phase out nuclear as fast as possible. And the Green Party has been established from this fact. And that was also the reason why, of course, the nuclear was always in the public debate and there has been a lot of demonstrations, there has been a lot of protests against nuclear power and that is in the German DNA, I would say.

But coal, on the other hand, has a strong connection to the history of Germany coming from the Second World War and increasing the share of coal. There was first also in Northern Westphalia, the coal mining was very strong and the cultural identity related to this. So the coal workers had a really strong connection, not only to the allies of working unions and labor unions and also to the politics itself, to the Social Democrats. And that was also the reason why, of course, coal was never that heavily debated and never protested against in the long history.

That was also, to my opinion, wrong. I mean, from the climate perspective and the climate protection point of view, we would have needed to reduce the coal much faster than we did. But there has been a strong connection, I would say, and that was not within the nuclear, that was not related to nuclear.

David Roberts

Is that, sort of, deep cultural connection to coal? Does that still characterize the coal debate? Is that why it's still difficult to this day to get going faster on the coal phase-out?

Claudia Kemfert

Yes, a little bit, I would say, but it has become even important. Yes, but not that important that it has been in the past because we had 20 years of not having a debate about coal actually, because never debated about it. I always try to bring into the public debate, "Why do we talk about nuclear that badly and not about coal?" Because from a climate perspective, coal is much worse, much worse than the nuclear. But right now, I think both the time is over and the public debate, both the time for coal and nuclear is over. So we will not go back to coal and not go back to nuclear at any point in time. So I think that debate is almost over, I would say.

David Roberts

And in terms of Germany sort of hooking up with Russia and kind of becoming dependent on Russian gas, do you agree that that was a big mistake? And, I guess, what were the alternative paths that Germany could have taken?

Claudia Kemfert

Well, that was a huge mistake and I always said that in public over 15 years from now. It was some of the lonely voices in the public all the time and I had to hear a lot of criticism all the time. And I'm saying this, in Russia is a reliant supplier and we love Russia and this is all debate about it. That was a huge mistake. Not only because of the energy dependency we had over that time and also the ... I mean, the mess we are into it right now, it has been foreseeable because if we really look at the last 15 years, we saw that Russia was never that country and also a really serious business partner they said they would be.

There has been always a lot of indicators why it's a mistake and a lot of warnings not only from the US but also from Eastern European countries and others who want us all the time. That's not a good strategy to construct in a pipeline, Nord Stream 1, but also another pipeline, North Stream 2. And all the time, we also did a lot of studies and showing that this is the wrong direction. Yes, gas for a time of 15 years, but we could gas also from other countries, a little bit from Russia, but not that large extent because we need to diversify imports in order to be less dependent on one supplier and also to get the energy transition done.

I mean, we need to increase the share of renewables, but we never talk about it, even now. We should talk about it more. But Russia, the strong tendency, also the strong reliability, and also the strong connection to Russia, that was really a problem. We are now paying a very high price for it.

David Roberts

Speaking of that high price, let's talk about kind of where Germany finds itself now. So first of all, there's been just a lot of talk about sort of the coming winter, because Russia has basically cut off gas flow now and Germany scrambling. How worried are you about this coming year? Do you think there's going to be ... I mean, I've heard, I've actually heard recently that maybe the gas shortage in Germany and Europe is not going to be as severe as predicted. So how worried are you about the short term? Do you think Germany is going to be facing power cut-offs or they're going to be people freezing in their homes? How worried are you about the coming winter and the coming year?

Claudia Kemfert

Well, right now I'm not that worried, that, especially not that there will be power cut-offs or people freezing in their homes, because we did a lot of homework in the last month and the German government did some things good and some bad. But the good things are that they really diversify the gas import. So we are now ... Germany is importing more gas from other nations, not only from Norway, the Netherlands, but also via liquefied natural gas via the existing capacities that exist also in Europe, but also after December and January. We will have in Germany our own LNG terminal capacity, so we will use it as well so the diversification of gas imports is doing quite well.

And the gas storage, the second most important thing is quite full. Right now the gas storage is approximately 95% filled. That's very good because over the summer time it has been filled. And that's ... the second very important thing. The third thing is gas savings. So we are quite good in that right now it seems like that. If the winter is quite mild, we don't know it yet, but if it's quite mild, we will come through it without any power shortages and freezing and all this. If it's becoming very strong, if the temperatures are very low, we will see whether we can make it without any power shortages.

I'm quite optimistic that we can do it because, if we are able to save more gas and reduce the gas demand by 20% or even more, then we are on the safe side. If not, if the people are not saving, enough but the prices are very high — I mean they have to save a lot, especially low income-households — but if the others are not saving enough, and the industry is also reducing their demand, they have to because the prices are too high, at which number we end at the end of the winter.

So what we really need is a gas-saving, a gas demand reduction over 20%. That is a number we really have to reach. And the fourth thing is that we really have to do more to get rid of fossil fuels itself and to insulate the buildings more and also to help the people do more to install alternatives to gas heating systems and insulate their houses renovated and do more for energy saving for the longer for the mid- and longer-term. So we initially planned to do that. This is why I talk all the time about the delayed energy transition that was part of it.

To insulate the buildings better in the last 15 years and it has been delayed. There has not been enough support. That has always been the myth that we have cheap gas forever and the people can use cheap gas in their homes. And that was the PR campaigns. The people were believing it. And that's really a mess we are now into it, and this really brings me up because I always warned that this could happen. It's a really bad thing that happened, and now the people — and especially low-income households — have to pay the price and that's really bad. And now we have to make a U-turn now. So to really get rid of this and do more in order to save gas.

Yes, and also to help people to install other heating systems as soon as possible and to get out gas heating systems out as soon as possible. And this is the thing Germany has to do right now. And this will be a huge task to do. And that's really a hard time now for the next years in order to bring all this through.

David Roberts

Right, well I was going to ask about ... Germany is responding to this. I guess Russia kind of made the decision for Germany to cut off gas supply. So Germany has now been forced to deal with this situation that it was delaying before. So you know, as you say, there's been some mix of diversifying gas supply, building these floating LNG terminals so you can import more natural gas, and then there's accelerating the energy transition, some of that, and then some of trying to reduce demand. Do you think that the German government is getting the balance of those things right? Like what would you like to see more or less of?

And in particular — because this is a concern that the US faces too — it seems to make sense to build more, sort of, gas import capacity at the moment facing this shortage. But then you have that capacity built and that capacity lasts a long time. These are like 30, 40, 50-year investments. So I'm just wondering like in terms of the way Germany is responding to this sudden gas shortage, do you think it's getting the balance right or what would you like to see more or less of?

Claudia Kemfert

There is a right balance, especially with the diversification right now in the short term of bare supply, that the short term is really important here. It's quite good right now and filling the gas storage is also good, and also to look at alternatives is fine. But you are completely right. I mean we are now constructing fossil fuel infrastructures for the next 30 to 40 years, which are not compatible to the Paris Climate Agreement. And that means that the emissions need to go down and that contradicts the goals of installing new fossil infrastructure because if we do that, I mean, and import for the next 30 to 40 years fossil natural gas, also from the US and from other countries, it would bring the emissions up again.

So we are the next wrong fossil emission path and that's where we wanted to get away from it and this is why it's wrong. This is not the right balance that we are doing. So we recommend to use this floating terminals, LNG terminals for the next years, three to four years or five years, and then move away and faster and foster the energy transitions, increase the share of renewables faster, even faster, much faster than now and to do more to bring the demand down. And that is especially for the heating systems to do more for installations and also for the industry because the industry right now uses a third of the gas demand or applying this.

And this is why they also have to shift away from this and use more renewables and industry heat pumps or other alternatives. I mean technologies that do not use fossil energy. And that's a crucial task here to help all the economy to move away from fossil fuels. Otherwise, we would not be in line with the Paris Agreements, the climate goals.

David Roberts

Do you think that building these terminals and building this capacity to import more gas is going to make it more difficult, more politically difficult? Because that's the worry in the US, is once you've built these things then they kind of justify themselves. Then it becomes that much harder ... becomes that much harder to shift. Do you think the short-term response is making the long-term shift more difficult?

Claudia Kemfert

Yeah, clearly yes. Because, we should have learned it better because we see with the pipelines, where we are in. The pipeline investments are investments for 40 to 50 years, I mean. And Russia knew it better than Germany what they can make out of it. And, of course, LNG terminals are a different story because we have it more in our hand from where to import and deconstruct it and also use it for green hydrogen or green gases or whatever. So there's more flexibility in it. But you're completely right, in constructing these pipelines brings us into the new fossil path dependencies, and politically it's clearly harder if these investments are there and companies have invested and they want to get paid and they want to get some compensation, financial compensation if they have to shut it down.

We know it from the coal phase-out, we know it from the nuclear phase-out. We all compensated them and now we are compensating the Nord Stream pipeline so we are full of compensations and we now have to pay for the next compensation. So you hear a little bit my ironic tone here that I wanted to make is, let's do it better and let's move away from it and move towards renewables and energy transition, towards less fossil fuels. And it seems that Germany is not really learning enough and cannot really learn enough from the past. But we should do better.

David Roberts

Let me ask, on that score, about industry because Germany is very proud of its heavy industry, proud of its manufacturing, and its facility. But right now, industry is in a real tough situation with very high energy prices. So kind of two questions on that. One is, you say industry, in particular, needs to get off of gas and move towards more renewables, and I'm just wondering in its current situation where it's sort of being battered by high energy prices, is industry in a position to be able to do that right now? And then I also just wonder with such high energy prices facing industry, is Germany in danger right now of tipping into a recession, which would also seem to make the transition more difficult. Sort of like, what can industry do right now given the, sort of, high energy prices it is struggling with?

Claudia Kemfert

Right. You're completely right. I mean, the heavy industry is now in a tough situation because they have to deal with this high fossil energy prices. I want to strengthen that because they always complain that the energy transition will bring them high energy prices renewables. If they would have done an energy transition towards energy saving, towards renewables, they would not have to pay these high prices. So the non-energy transition brings them in this tough situation, they have to face now very high fossil energy prices, high fossil gas prices, and oil prices, but especially gas. And there was always a myth, I mean always a dream that there will be a forever cheap gas prices.

It's only cheap if Russia allows it to be cheap. The geostrategical dangers related to this have never been priced in, and that was a big mistake, but also dream, and they are now waking up, "Okay that was a nightmare." They are now waking up, and they have to do it much better, and they have to ... of course, they have to now invest, but the German government is helping a lot with financial support. Our recommendations is now, as always, not to spend the money again for fossil infrastructure, but to spend it for the energy transition and to spend it into green hydrogen into industrial heat pumps and all this and make, to help them, to move away from fossil gas.

If it can be done. I'm quite skeptical if I hear their voices right now because they still believe that Russia is a reliant energy supplier, and they still say, "We have to stick to Russia, We have to stick to cheap gas prices. Let's move on with the second gas pipeline Nord Stream 2. Open that, please because, then we are safe." So I'm not quite sure whether they really understood what the situation we are in right now, whether they are really facing it, if they have a realistic view on it of some, I really have my doubts. On the other hand, they learn and a lot of companies do learn they are facing a really tough situation.

You're completely right, we are in the middle ... or we are in the beginning, let's say that, of a recession and the German industry is suffering a lot and will suffer a lot, at least those who stick to and are relying on fossil energy prices. And that is the largest majority and those who have invested into renewables and to the energy transition they have no problems at the moment and the certificate is not. But those who have to pay this high fossil energy prices they have to do a lot and to move away.

And the companies need to get financial support. And if they get some financial support, this should be really stick to the condition that they have to invest into the energy transition. Otherwise, it would not make sense.

David Roberts

Similarly, in terms of sort of whether to kind of double down on gas or whether to accelerate the transition, the German government, it sounds like, is about to implement a natural gas price cap and then a bunch of sort of subsidies, kind of, consumer subsidies to offset these high prices. And that makes sense in terms of ... people are out there struggling, people are out there struggling with high gas prices and the threat of winter coming. You can see this, sort of, need for kind of an emergency response. But at the same time, those policies have the effect of blunting the high price of natural gas and sort of blunting the incentive to shift away from it. So kind of where do you stand on those policies and the German government's help that it's giving consumers? Do you think that's good policy?

Claudia Kemfert

Well no, I'm quite skeptical against this "gas price cap" because I'm not a fan of gas price caps. I'm a fan of gas costs cap because to bring the cost down, it means to bring also the demand down, but also to help the people to pay their bills. And I'm fine with that, if the government is spending money to support companies heavily affected with conditions to do it better, but also to help low-income households to help paying their bills and getting rid of fossil natural gas and do everything they can do to support here. I'm a fan of that.

I'm not a fan of gas price caps because that's the danger because the gas price increases are coming from the fact that we have scarcities, that we have gas scarcities, supply scarcities because of Russia, because Russia is not delivering any gas to Europe anymore and this brings the gas price up. And this is a reason, it comes with a reason, not with speculation or with gas power, and also some speculation or companies who have multipower, and increase the prices, and that should not happen, but it happens with the market effect. And this is why I think it's dangerous to cap prices and to support the demand because we really get, as I said already, to get the demand down. And that can only work if we are not subsidizing the price but subsidizing financial support to help the people to pay their bills, and we should subsidizing the gas saving and to give people money to get their gas demand down so they might get a premium if they save gas or companies as well.

With an auctioning system we could do it, and to "ask where could you save gas? And if you do that you get money." That would be the right solution. And I've heard from the gas committee, there has been a commission, they have recently published a report showing "Okay, we want to do everything." We recommend that the gas supplier should not get money but the gas demand needs to get down. So they have understood that this is really a problem. I also support that and I recommend also not to subsidize indirectly the demand because it brings more difficulties to the market than solutions.

David Roberts

Speaking of the, sort of, argument over gas, I've noticed this in US energy debates. No matter what happens, everybody seems to believe that it proves they were right all along.

Claudia Kemfert

That's always the case.

David Roberts

Yes. So gas, your gas defenders, kind of gas enthusiasts, will point at the current situation in Germany and say, "Look, this proves that the mess we're having when gas gets cut off just proves how much Germany needs gas. And it proves that Germany ought to, or that Germany and Europe ought to start fracking, and ought to start developing their own gas, and ought to open up more channels to import." You probably think that's wrong. So one of the arguments for gas, one of the big arguments for gas is that renewable energy is variable. Comes and goes with the weather.

You need something to balance it, some sort of firm resource that you can turn on and off at will to balance the fluctuations in renewable energy. This is sort of the main role gas is playing now and the main argument for gas. So my question is: if we do what you recommend and phase out gas, if Germany phases out gas, does Germany have other resources to play that balancing role, that sort of firm, balancing role to compensate for renewables? What else does it have that could play that role?

Claudia Kemfert

Yeah. So we did studies on a 100% renewable energy system — not only we but also many other researchers in the world as well — in showing how a system will look like if you have more renewables in the system. And it's always a combination of different components. It's solar, wind, hydro, biomass, the geothermal that needs to be combined. So renewables our team player. We need all of them, and we need plenty of them and all over the country, not only in Germany, but all over Europe, but also all over US. That would be the first thing.

And the other thing you're right, I mean renewables are variable, at varieties, if the sun is not shining and the wind is not blowing, what do we do? So on the first time, we have the others, we have the other components which I just mentioned. On the other hand, what we need is also storage. More storage that could be batteries, that could be also green hydrogen, so hydrogen that is produced by renewables, that could also be pumped-title storage and flexibility options. That means demand-side management. So flexibility is key, digitalization is key, and the future system of a full supply of renewables looks much different than the conventional system.

So it's more flexible, you need more renewables, you need more flexibility, you need digitalization, you need a load management system, and you need storage. And all this needs to be initiated now. And with a fossil natural gas story narrative that has been good for the last 15 years, but it's not good now because we need to reduce emissions slowly, but regularly. So the emission path on the fossil energy needs to be reduced drastically right now because we are very late, and this cannot be in line with natural gas in the future. So yes, right now we still have natural gas in the system, but the share needs to be declined.

At the same time, all the options that I just mentioned, all the renewable parts of it, all the storage, and what I just mentioned, needs to be increased. And that's the crucial part of it. That we are losing time again if we tell the story and the narratives again and again that we need fossil fuels for some kind of bridge technology. Natural gas is not a bridge technology anymore. It has been 20 years ago, but not now. We are too far with the emission increase and we are too far now with the energy transition path. And this is why it's so important to do much more and do it better in the past.

And that's why I know all the debates also in the US and everywhere that people talk about nuclear and natural gas and all this, but they should talk about renewables all the time and this is what I miss.

David Roberts

It's interesting. One option I didn't hear you mention, in terms of stabilizing a renewable-heavy grid, is transmission. And I wonder — in the US, this is becoming conventional wisdom — that one, that we need lots more long-distance transmission than we have, but two, that it's just very, very, very politically difficult, it turns out, to build it. There's a lot of ways to block it. So that's a vexing problem in the US right now. And I wonder.

Claudia Kemfert

Oh, really? Why?

David Roberts

It comes down to state authority, basically. There's very little federal authority over it. So it's a state problem. And so you get almost any landowner or county or state can veto a long-distance transmission line. So it's just hard to build them. So I wonder what role you think ... I've heard that Germany needs more transmission from north to south. How big a role do you think transmission plays in the kind of renewable grid of the future? And is it as difficult to build in Germany as it is in the US?

Claudia Kemfert

I didn't mention it because it's not that big problem. From the problems, I wanted to highlight what we needed in order to bring this whole transition of the energy system, and transmission is only one part of it, which does not have the highest priority. Yes, it's important, but it's not a bottleneck. Because in Germany, we have enough transmission lines and if we are phasing out nuclear and coal, we will have a lot of free capacity of transmission lines we will use. And what is even more important than transmission lines from the north to the south is decentralized, intelligent grids, smart grids that is heavily needed in Germany.

We need smart meters, we need digitalization, we need the decentralized system working. And this is why it's important because we will need in the future, we'll have much more electric mobility. And we need the decentralized transmission grid, and the decentralized level is much more important to include all the individual electric mobility cars. Electric cars and all the storage, the flexibility options, solar is decentralized, wind as well. We will not have these huge capacities you have in the US, where you have a lot of land, and you can put the windmills there and put it in the south, in the north and the west and the east.

So you have much more larger distances. We have in Germany — Germany is quite small. We have a full grid, we have a transmission grid that can be applied. Yes, we need a little bit more, but that's not the first priority. Let's do it. Of course. Yes, we can do it. But what is even more important is a decentralized transmission line, including the digitalization and including all the flexibility options we really need right now.

David Roberts

You're setting me up perfectly for my segue here, because I've noticed a lot of your research and lectures and whatnot is about decentralized distributed energy. So let's talk about that a little bit. Germany, of course, pioneered solar. I think this is — even among US people who are grumpy about Germany's position on nuclear — even those people acknowledge Germany was a pioneer in solar rooftop solar distributed.

Claudia Kemfert

Yeah, we did one thing right.

David Roberts

Yes, you did that with the feed-in tariffs. And so it had a huge role in driving down the cost of distributed solar. But it sounds like the German government scrapped those feed-in tariffs for something else, which you don't think is working. So give us a sense of sort of where are we on rooftop solar in Germany? How big of the penetration is it and what sort of policies are needed to kind of boost it?

Claudia Kemfert

Yeah, you're completely right. I mean, we started, well, 20 years ago by promoting it. And solar rooftop has been pioneered, has been, because we lost over 100,000 jobs and lost a lot of companies, especially to China. And that was a big mistake, because we need these jobs right now for the transformation. And we could have been much faster if we want to have not done it in that way. But right now, the share ... and it has been slowed down, let's say that way, because we started from almost zero with the solar rooftop decentralized energy transition to approximately 13% now of electricity production in the system, and it has been increased quite fast.

But in the last years, the last ten years slowed down massively. So we have changed the feed and tariff system, moved away from a feed and tariff system towards an auctioning system with fixed amount that has been auctioned. And this amount of solar auctions has been declined drastically and that brought bad conditions to the market, and also with the fact that a lot of companies left and a lot of jobs are lost or moved away. And now we want to bring it back a little bit. We have new government since last autumn and they have changed the circumstances, they have changed the framework conditions, they have changed a little bit and improved it a little bit and moved away. Also, the barriers that has been initiated in the last ten years.

And it seems that there will be a steeper increase right now. But we face a lack of manufacturers, we face a lack of companies, we face a lack of jobs. I mean, there are not enough jobs, there are not enough people. And a lot of people now want to buy a solar system on their rooftops. But we don't have the solar cells, we don't have enough solar systems, we don't have enough workers who could install it. And right now, also it's not financially so attractive, but now with a very high electricity prices coming from fossil fuel, it's becoming more attractive and a lot of people want to do it right now, but there's not enough supply. And that's really the next big problem we have right now. And that's a big shame that we are in that situation right now.

David Roberts

It's interesting, the US just passed a bill, the Inflation Reduction Act, which among other things, makes a really large, concerted effort to bring the supply chain back to the US. Mining and processing and manufacturing and all of it. There's been a real effort to kind of onshore that whole process. Is Germany doing that? Is Germany interested in doing that? Do you think that Germany also needs to do that? Bring more of the supply chain inside Germany?

Claudia Kemfert

I definitely recommend to do so. Not inside Germany, but also inside Europe, because Europe is an open house and everybody could buy here everything. China is buying everything they could do. They are buying haybales. They are buying everything they could do. They are buying all the solar. Everybody could buy everything. But, on the other hand, the Germans are protected in China but also in the US. Now, if I hear that correctly. But it's your right to do so.

So I would recommend also to do it in the same way in Europe and to bring back the supply chain. We have that here. That's really which makes us a little bit angry, I would say, because now because looking back and also commenting on this whole situation since 15 years now really face, okay, it could have been so much better if we would have done it in a way that you also initially recommending by also starting to phase out more coal in the very early beginning, but also to increase the share of renewables. But we had all the jobs. We had over 180,000 jobs in the renewable sector and lost over 100,000. We are missing the companies right now.

We are missing all the products. We have supply chain difficulties and delivery problems with China. So a huge list of problems related to it. And it could have been so much better if we would have done it not in that way. And this really makes me mad.

David Roberts

Well, China, very deliberately, made its solar very cheap. They did it right. I mean, they subsidized their producers up one side and down the other, and they pulled it off too. They basically pulled manufacturing, pulled the supply chain into China.

Claudia Kemfert

Of course. But they, on the other hand, also protected their own market. And we did not that, in the same way. Of course, they are cheap. That's good. We will benefit from cheap system. But right now, with the problems of delivery and supply chain difficulties, we need to become more resilient. And we could have been a little bit more resilient if we would have protected our market in the same way. And that's of course, we want to be a global market and we want to have global systems. But what we are facing right now, that if we would benefit more, if we would have our own resilient system, not only economic terms, but also in the energy supply terms, and this brings a lot of benefits and makes us less vulnerable from countries which are not only doing good with us.

And that's Russia. That's China. And we say in Germany, we are not on the pony, on a farm where everybody is loving each other, so we are in a global market. We have a special German word for it, so we are not in a free world that everybody is loving each other. We are in a market which really brings a lot of tensions and that needs to be faced at least. And we prepare. And I understand that the US is doing it, and that's why I would recommend Germany and Europe to do it in the same way.

David Roberts

Aside from rebooting the rooftop solar market, or accelerating rooftop solar, what else do you think the German government should be doing to support, specifically, distributed decentralized energy? What sorts of policies would you like to see there that you're not seeing?

Claudia Kemfert

Yeah, right now, of course, the marketplace for itself, because there are very high electricity prices. A lot of people, companies have the right incentive to install solar rooftop systems. And as I already said, we need the companies, we need the workers. There's really a gap of workers right now in Germany. We need to deal with that. We need some kind of schooling systems and helping to get the workers skilled to do that. And, on the other hand, also to have the companies here in Germany, in Europe, and to produce the solar systems and bring that on the rooftop.

A lot of barriers have been removed already by the current government. That's good to have not so many regulation difficulties that was heavily overregulated in Germany. If you want to install a solar system on your roof, you have to do a year regulation and filling out forms and all this, this really makes you mad. And this has been much more improved right now by the current government, and I would say they are on the right track. But right now the bottleneck is really the workers, it's the companies and solar material itself, and the supply chain which really brings us a lot of trouble and this needs to be improved.

David Roberts

And on the nuclear front, I've read now that the German government is considering or is going to keep some of the plants that haven't been closed yet open. I wonder what the sort of political valence of that is. Is public opinion going to support the idea of keeping nuclear open as a kind of like, I guess, emergency response you'd call it at this point? Is that going to happen?

Claudia Kemfert

Yeah, it seems like that as a public opinion is very positive about it. The reason is not because in Germany we have electricity supply scarcity because we have enough electricity also from renewables. We still have coal. I mean for the next one or two years we have to replace more gas by coal because the gas is used primarily, not only for the electricity production but for combined power systems and that means also the heating system is based on natural gas and here we need more coal for it. But nuclear is used now and needs to be applied at least for several months because France has a nuclear problem.

France, there's a nuclear problem and half of their power plants are not in place at the moment. On the one hand, because they are old and needs to be maintained and there has to be more maintenance on it, but on the other hand also because of weather conditions in the summer and not enough cooling water has been there and it's now been improved a little bit. But of course, only a quarter of this, half of the power plants will be in place by winter and this is a crucial part of it because in Germany we are now exporting a lot electricity to France.

We are a net exporter and help — I mean that's good that we're doing it because we are all in Europe and we are in Germany need also the helping hand of the neighbors related to gas and France is helping here as well. But, on the other hand, this is to do some kind of emergency plan because we need to get enough electricity also over wintertime and this is why the nuclear plants are now not shut down by the end of the year but shut down by April latest. And I think the public opinion seems to be quite optimistic.

I do not support it, personally, because I don't think that's the right solution. I would have seen much more faster increase of renewables and faster debate about how to get rid of more gas. But, on the other hand, it does not help us a lot. It creates a lot of political costs, it creates a lot of difficulties. The power plants are not maintained since 13 years now. We have a nuclear phase-out law which needs to be changed. So a lot of costs, I don't see that really that the benefits out of it are so high that these costs are really justified.

David Roberts

So you think keeping the nuclear plants open basically is more trouble than it's worth?

Claudia Kemfert

Yeah, I think it's more trouble than it's worth, and we have enough trouble and we should not have another trouble. But it's politically driven. If we would really are talking about the serious energy crisis we are in, we would even heavily debate about the alternatives we just discussed about, about renewables, about energy saving options, about all this. We are not talking about it in the public, we are just talking about nuclear, we are just talking about fracking, we are talking about energy. But we never talk about long, or mid- to long-term solutions, how to increase the share of renewables. And this is what I really miss.

David Roberts

Speaking of how the short-term crisis seems to be blocking out discussion of the long-term, how does this all complicate the coal phase-out? Because as you say, the coal phase-out should have happened a long time ago, should happened now, should be accelerated. But at the same time, coal is playing a bigger role in Germany in the short term, compensating for this lost gas. So do you think this short-term crisis is also going to complicate the coal phase-out?

Claudia Kemfert

Yeah, it will complicate the coal phase-out from the political debate again, as we see it with a nuclear debate, because we can do it with a coal phase-out. Our modeling studies showed that we can do the coal phase-out by 2030, even without gas from Russia, even without nuclear, if we would increase the share of renewables drastically.

David Roberts

That's very fast.

Claudia Kemfert

Yeah.

David Roberts

That's very fast.

Claudia Kemfert

Yeah, of course. But I mean, it could have been much faster if we would have not slowed down the increased share of renewables, if we would really be that fundamentally energy transition driven as the US seems us to, we are doing. We are not. That's a myth, but of course, we need to do better. But we could have done it much faster. But by 2030, it's feasible. However, again, we need to do much more in order to get rid of natural gas, to faster insulate the buildings, to help the industry, to move away from fossil fuels, and also to move away from coal, but not into gas, but more into industrial heat pumps, into renewables, into energy saving.

That's feasible. Green hydrogen, all this. But we need to do the investments right now. And it's feasible. But I would agree it complicates the debate about nuclear phase-out, again. But from the technical point of view, it would be feasible to do it fast.

David Roberts

Right. So you have good modeling that shows that Germany could phase out coal and nuclear and have a secure reliable grid still.

Claudia Kemfert

Yeah, if we are doing those components, I already explained, it's decentralized smart grids, it's digitalization, it's flexibility options, more, more solar, more wind, more hydro, more geothermal, more biom — sustainable biomass — do all this. It's feasible, we can do that in several years. We could increase the share with the speed we did 20 years ago, started 20 years ago. We could do it in the same speed up. Because of this fossil energy war, we are into it. We should have learned how to do it better and hopefully, we will learn it.

David Roberts

When you step back and look at the big picture, you would think that you couldn't have a clearer, sort of, object lesson in the dangers of being dependent on fossil fuels. Like the whole world situation right now, but especially the Russia-Ukraine situation just seems to be screaming out that lesson and it's a little crazy that that's not what seems to be being heard in a lot of quarters.

Claudia Kemfert

Yeah, well I completely agree, but Germany at that point of decision making is really crazy because they seem not to learn. Germany seems not to learn out of this, and they are still in some kind of dream, although we would have needed to be wake up in the nightmare.

David Roberts

Well, I've kept you for a long time. So just as a kind of final question: are there policy turning points coming up in Germany? So what's the next big policy turning point? What's the next big fight where you'd like to see things shift? Are there bills in the works or policies in the works?

Claudia Kemfert

Well, of course, the government is doing a lot now. They have moved really or brought into the government system a lot and new builds on increasing the share of renewables into helping now the households and also the companies with some kind of gas cost break, however you will call it, and to financially support companies also to move away or to get their bills paid. I think that's really important. On the other hand, what I'm really missing is really a turning point towards more full transition into a full supply of renewables and more energy saving. That's really missing, and hopefully, we will see a little bit more when we are moving more in time and the fossil energy war is hopefully at a certain point in time over.

Or at least we are in a phase where we can not only have to deal with emergency situations but in a clear way in moving away from fossil fuels. It should be the learning that should come out of this. However, we see the debate about nuclear fracking, LNG, and all this that, obviously, we rely very much on the past but hopefully, we will also move to the future.

David Roberts

And this new German government you think is open to that, is capable of that?

Claudia Kemfert

Yeah, well, they are open. Capable, they are all now. I mean, I could imagine how much work they have right now in this emergency phase. And they are sleepless and doing whatever they can do in order to get out of this. And every day they have to do, to bring in a new bill and to decide of how to get a diversification of imports and construct LNG terminals and where to get the gas from and how to compensate companies, how to compensate the house. They're really busy and sleepless with all the emergency they have to deal with. But on the other hand, I hope there will be a time that is much calmer and we can decide on really future decisions which helps us not to bring us in such a situation again, would be really helpful.

David Roberts

Right. Well, thank you so much. This is all very illuminating, very interesting. Thanks for coming on and taking the time.

Claudia Kemfert

Thank you for having me.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time.