Green Recovery:
The Way out of the Economic Crisis
1. Investments in energy efficiency and renewable
energies create more jobs and sustained growth
than other sectors
2. Green Investment and Economic Growth: The Case
of Germany
3. The world needs to tackle the economic and the
climate crises together
BMU, Berlin, April 2009
Contact:
German Environment Ministry
Climate Protection Unit KI I 1
11055 Berlin
Germany
[email protected]
www.bmu.de/english/climate-change
www.bmu.de/english/renewable_energy
Green Recovery:
The Way out of the Economic Crisis
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1. Investments in energy efficiency and renewable energies
create more jobs and sustained growth than other sectors
The current world economic crisis leads governments globally to introduce economic
stimulus packages. These packages create massive, short-term investment flows,
which will determine the global capital stock for the next decades.
The intention of the stimulus packages is to
• create employment
• strengthen domestic industries and increase domestic demand
• overcome the current economic crisis
• lead economies on a sound and sustainable growth path.
At the same time, production and consumption patterns in all industrialized countries
are heavily depending on the availability of imported fossil fuels, which prices have
proved highly volatile during the past decades and have led to a massive capital
outflow to oil and gas exporters.
Figure 1: Spending in Energy Efficiency and Renewable Energies
create 4-8 times more jobs than spending on oil and gas
Figure 1a: Total job creation through $ 100 billion in
spending (USA); Source: Centre for American Progress
(2008): Green Recovery. A Program to create good jobs
and start building a low carbon society
Figure 1b: Labour intensity levels of different value-added
chains in Germany (cumulative direct and indirect effects);
Source: P.I.K et al (2008): Investments into a ClimateFriendly Germany
Investments in energy efficiency measures and renewable energies are an answer to
both challenges. They
• strengthen domestic and employment-intensive sectors
• reduce oil, gas and coal imports and leave more capital in the country
• develop skills for emerging market and enforces innovation these sectors
• lower carbon emissions and therefore protect the climate and domestic
industries from costs resulting from ongoing climate change or a global carbon
market.
Green Recovery:
The Way out of the Economic Crisis
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2. Green Investment and Economic Growth: The Case of
Germany
Germany has intensified its energy and climate policy since the G8 meeting in
Heiligendamm July 2007. The government decided on an Integrated Energy and
Climate Program which stipulates the following goals by 2020:
• Minus 40% greenhouse gas emissions by 2020 compared to 1990
• at least 30% share of renewables in electricity by 2020
• doubling the renewables share in heat generation to 14% by 2020
• doubling energy productivity by 2020 compared to 1990
• doubling combined heat and power generation (CHP) to 25% of electricity
generation by 2020
To this end, a lot of laws were changed or newly established, e.g. the Renewable
Energy Sources Act, the Renewable Energies Heat Act, the Biofuels Quota Act, the
Combined Head and Power Act, the Energy Savings Ordinance (see Appendix).
Figure 3: Increases in investments (left) and reduction in energy imports (right), 2010 to 2030; Source: PI.K et al (2008):
Investments into a Climate-Friendly Germany
A recent study has investigated into the economic effects of this policy. By triggering
these investments in 2020
• at least 500 000 additional jobs will be created (net)
• annual avoided fossil energy imports will be worth approx. 22 billion Euro
(approx. 38 billion Euro in 2030)
• the national GDP will annually increase by around 20 billion Euro/ year
• in 2030 the national debt would be some 180 billion Euro lower than without
these measures.
A policy focusing on energy efficiency and renewables is therefore beneficial to both
the economy and the climate. This is true for any energy-importing industrial country.
Green Recovery:
The Way out of the Economic Crisis
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3. The world needs to tackle the economic and the climate
crises together
If there are several small problems, it is appropriate to approach them one after the
other. However, if there are several big problems at the same time, they need to be
tackled together. This is the case for the climate and the economic crisis.
The G20 have acknowledged this by agreeing on the summit in London, April 2: “We
agreed to make the best possible use of investment funded by fiscal stimulus
programmes towards the goal of building a resilient, sustainable and green recovery.
(…) We will identify and work together to build sustainable economies.“
Several studies have argued, that at least 20-25% of the fiscal stimuli packages
should therefore be assigned to green measures. Especially building refurbishment,
renewable energies (like wind, solar), smart metering and battery development are
short-term measures with high job intensity and moderate to high long term cost and
CO2 reduction, thus ideal strategies to answer both crisis.
Table 2: Estimated effectiveness of clean energy options in contributing to economic recovery; Source: IEA (2009):
Ensuring Green Growth
Therefore,
• Global Climate Policy should not be seen as an issue of burden sharing,
but rather as an issue of intelligent Economic Policy
• The G20 should work together towards a Green Recovery – both within
their nations but also on a global level.
• At least 25% of fiscal stimulus packages should be directed to green
measures.
Green Recovery:
The Way out of the Economic Crisis
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Annex: Climate policy legislation in Germany
Since 2007 Germany adopted a package of 29 measures for future climate and
energy policies which supplement and extend existing legislation. A selection of
existing and planned climate-related acts and ordinances is listed in the following.
Acts and ordinances
1. Greenhouse Gas Emissions
Trading Act, Project
Mechanisms Act
Regulatory content
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2.
Ecological Tax Act
3.
Renewable Energy Sources
Act
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4.
Combined Heat Power Act
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5.
Renewable Energies Heat Act
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6. Biogas feed-in ordinance
7. Energy Conservation Act and
Energy Saving Ordinance
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8. Income Tax Act
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9. Act on energy-using products
(implementing the EU ecodesign directive)
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Puts a price on CO2
Mandatory participation for all power plants and energy intensive
industries (approx. 2,000 installations)
Covers 50% of Germany's CO2 emissions
Allocation of emission allowances 2008-2012: 15% reduction
compared to allocation for 2005-2007, in addition 10% auctioning
Allocation of emission allowances 2013-2020: At least 1,74%
reduction per year, 100% auctioning for energy industry
Companies may use up to 20% JI/CDM certificates
Increase in taxes on electricity, petrol and gas for private households
Wide exceptions for industry
Goal: At least 30% share of renewable energy sources in electricity
generation by 2020
Priority of renewable energies over other energy sources
Fixed fees for feeding electricity from biomass, wind power,
hydropower, geothermal energy and photovoltaics into the grid
(rates decrease over time)
Goal: 25% share of combined heat and power in electricity
generation by 2020
Priority of combined heat and power over coal, oil and gas power
plants
Feeding electricity from new CHP plants into the grid is rewarded
Goal: 14% share of renewable energies in Germany's heat supply
by 2020
Mandatory use of renewable energies in new buildings (biomass,
solar- and geothermal energy)
Support of retrofitting of existing buildings with heating from
renewable energies with 500 m EUR/a
Goal: 10% share of biogas in natural gas grid by 2030
Regulates priority of biogas in natural gas grid
Regulates payments for biogas
Goal: by 2020 new buildings independent from coal, oil and gas
Regulates energy-related requirements for new buildings and the
modernisation of existing buildings
As of 2010, new buildings may only have a consumption of 3 litres of
heating oil per square metre and year
Bills of craftsmen for the energy-related modernisation of buildings
can be deducted from income tax (tax credit)
Stipulates that products which do not meet the energy efficiency
requirements of the EU may not be sold
EU is currently drawing up energy efficiency standards , e. g. for PCs
and computer monitors, copy machines, scanners, TV sets, standby,
lighting, air conditioners, refrigerators and freezers, dish washers,
washing machines, dryers, vacuum cleaners, engines.
Green Recovery:
The Way out of the Economic Crisis
Acts and ordinances
10. Energy consumption labelling
(in preparation)
Regulatory content
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11. Energy management systems
in industry
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12. Biofuel Quota Act and
Biofuels Sustainability
Ordinance
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13. CO2 caps
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14. Motor Vehicle Tax
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15. HGV Toll
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16. Emissions trading for air traffic
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17. Emissions trading for shipping
(in preparation on EU level)
18. CCS legislative framework
(currently in parliament)
19. Ordinance on the Shipment of
Waste
20. F-Gas Regulation
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All household appliances ("white goods") and lights are labelled
according to their energy efficiency.
All cars labelled according to their energy consumption and CO2
emissions.
All buildings receive an energy certificate providing information on
energy consumption for owners, tenants and buyers.
It is planned to extend labelling to all energy consuming products.
Goal: buyers can tell how high their electricity bill will be when buying
the product.
Energy management systems in industry serve the purpose of
discovering and using the entire energy efficiency potential of a
company.
Introduction of energy management system is supported on both
federal and Länder level
As of 2012 tax concessions for companies within the framework of
the eco-tax are coupled with the introduction of an energy
management system.
Goal: 10 % reduction of greenhouse gas emissions of petrol and
diesel by 2020
Regulates minimum admixture percentages of biofuels to be
blended with petrol or diesel in refineries
Act lays down quotas which rise each year
Biomass has to be produced in a sustainable way (no clearing of
tropical rain forest for cultivation of biofuel crops!)
Lays down emission caps for passenger cars as of 2012, goal: 120g
CO2/km
Passenger cars in the EU may emit a maximum average of 130g
CO2/km, another 10 g/km reduction through biofuels, better tyres
etc.
Progressive taxes for passenger cars according to CO2 emissions of
cars
Owners of low emission cars receive tax concessions, owners of
high emission cars pay higher taxes
Trucks with an overall weight exceeding 12 tonnes have to pay a toll
to use motorways
Progressive toll according to CO2 emissions of trucks
Low emission trucks pay less toll, high emission trucks pay higher
toll
Including all flights within the EU in emissions trading scheme as of
2011
Including shipping in EU emissions trading scheme
Regulations on capture, transport and storage of CO2
Impermeability requirements for CO2 storage and pipelines
Termination of landfilling untreated wastes as of July 2005
Reduction of methane emissions
Provisions for the reduction of fluorinated gases in coolants
Switching air-conditioning in cars from fluorinated gases to a CO2
basis
Reduction of f-gas emissions