Technology as a key issue

Efficiency

A renewable energy economy will only be possible if we lower energy consumption considerably. Policies to improve efficiency are in place, but they consistently fall short of what is not only theoretically possible, but also what is affordable.

When people talk about Germany's energy transition, they often think mostly of the switch from nuclear and coal power to renewables – but in fact, a renewable future will only be possible with significantly lower energy consumption.

As the authors of Factor Four showed about 25 years ago, lower consumption does not entail a lower standard of living – on the contrary, our consumption of fossil energy detrimentally affects our health and is contributing to climate change, which is a threat to civilization. Furthermore, by consuming nuclear power, we create “mines” of nuclear waste that will threaten future generations for millennia.

Over the past two decades, economic growth has generally outstripped the growth in energy consumption and greenhouse gas emissions in most industrialized nations. It has been estimated that energy productivity – economic output per energy consumed – increased by 59 percent from 1990 to 2015.

Perceptions of energy use

What people want is not energy, but energy services – the things we do with energy. In other words, we do not want gallons of gas, but mobility; not electricity and fuel oil, but cold food storage and well lit, comfortable homes. Over the past decade, our computers and handheld devices have become far more high-performance even as they increasingly make do with less power. Such advances are possible in a wide range of fields. In our buildings, for instance, we can provide a comfortable indoor climate not only with energy-intensive air conditioning and heating systems, but also properly filtered air and low concentrations of carbon dioxide. In other words, buildings of the future will provide even greater comfort than the ones today while consuming less energy.

When it comes to efficiency, however, we face a special obstacle: information. Economists who believe that the market takes care of everything most efficiently assume that all market participants are equally and sufficiently informed – and therefore that all efficiency measures that pay for themselves have already been utilized.

In fact, while most consumers may know what their monthly power bill is, they may not know how many kilowatt-hours they consume, nor are they used to assessing how much a particular appliance will cost them per year in terms of power consumption. Yet, without such information, it is impossible to assess the payback on investments in energy efficiency. So even if we believe that the market comes up with the best solutions, the government still needs to ensure that everyone is properly informed.

Raising awareness

The example of standby power consumption is especially illustrative. Unbeknownst to most consumers, household appliances – from coffee machines to toasters, televisions, game consoles, and computers – consume power even when they are "off." Recent estimates show that such "standby consumption" amounted to six percent of a typical electricity demand of a typical European household. Consumers are not always aware that the annual power costs for an inexpensive appliance might even exceed its purchase price.

One example of the government providing market participants with information is the European Union’s Ecodesign directive, also known as the ErP (Energy-related Products) directive. It aims to make products more sustainable over their entire lifecycle (not just in terms of energy) partly by providing labels as guides for consumer purchases and by imposing stricter energy efficiency standards for designs.

The European Union (EU) is also working to reduce energy consumption in buildings, and Germany is at the forefront of that movement as well. In 2002, it adopted the Energy-Conservation Ordinance, which was made stricter in 2009, 2014 and 2016. Some homes built as early as the 1990s demonstrate what the standard of the future will be: passive houses, which become plus-energy homes when solar roofs are added to them. The EU will require that all houses constructed starting in 2020 be "nearly zero-energy homes," essentially making German passive houses the standard within Europe.

While these new laws will help when it comes to new buildings, Germany needs to address the situation with existing buildings. The country's renovation rate, the number of buildings renovated per year, is too low in Germany at just around one percent; the figure needs to be doubled, if not tripled. In addition, renovations often do not go far enough. Frequently, not enough insulation is added, and the building service technologies used do not fulfill the requirements that buildings will have to meet in the future. As of 2016, Germany was not scheduled to meet its targets for efficiency by 2020 because primary energy consumption has not fallen enough, partly due to record high power exports.

Improving efficiency

Another area where there is a lot of room for improvement is efficiency in the electricity sector. Studies have shown that the power consumed each year by electric motors used in industry could be reduced by around 30 TWh up to 2020 – enough to make several central power plants redundant. Similar conservation potential can come from the use of efficient lighting systems and a switch from inefficient electric heaters to more efficient systems.

Germany has set an ambitious goal for itself of a ten percent reduction in power consumption by 2020 and a 25 percent reduction by 2050. As of 2016, however, Germany was not on schedule to meet its targets for efficiency by 2020.

Unfortunately, not enough is being done to promote energy efficiency. While the EU has binding targets for carbon emissions (a 20 percent reduction below the level of 1990 by 2020) and renewables (20 percent by 2020), the target for energy efficiency (a 20 percent reduction in primary energy consumption by 2020) is not binding. For 2030, there is a binding 40 percent reduction of greenhouse gas emissions. The target for renewable energy by that year is 27 percent, but it is only binding for the EU as a whole - there are no specific targets for member states. Finally, the target for efficiency is also 27 percent, and it is nonbinding.

At the end of 2014, this lack of political action in energy efficiency was recognized by the German government, leading to the announcement of the National Energy Efficiency Action Plan (NEEAP) in December 2014. This package contains several dozens of efficiency instruments, including better energy efficiency financing, a new tender scheme for energy efficiency, and better information and audit activities both for companies and private households. While this package is still in the process of being implemented, one major instrument, a tax credit scheme for the renovation of buildings, failed to pass due to strong opposition in one of the German states. We will not be able to get 100 percent of our energy from renewables if we continue to consume at the current rate. Energy efficiency is not a nicety – it is indispensable for the success of the Energiewende.

In 2017, the German goverment adopted its 4th NEEAP incentivizing energy audits. In 2015, that market was already worth nearly 10 billion euros. An estimated 13,000 energy auditors performed approximately 375,000 audits that year. In these audits, building users received advice on what behavioral changes and investments in more efficient divices would lead to greatest energy savings.