The gulf between energy promises and policy 

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ccording to a new study conducted by the German Institute for Advanced Sustainability Studies, parties across the political spectrum in Germany, France, Spain, and Italy show a similar level of clean energy and climate ambition: decarbonisation of up to 100% by 2050, driven by a diffusion of fluctuating renewable power from solar PV and wind.

However, the researchers have also identified a major impediment to the energy transition: none of the investigated parties suggest a concrete plan for a technology mix that would ensure grid stability in the presence of weather-related fluctuations of wind and solar resources.

The study shows strong support for ambitious actions regardless of ideological self-description. However, while political positions on phasing out fossil fuel power are clear across the policy space, positions on introducing new flexibility options to balance intermittent renewables have been found unclear or non-existent and thus need far more attention.

Richard Thonig: Political parties are free to take a normative stance and propose anything: to change the law on how power-markets operate, support a specific technology or phase out another. We set out to understand what parties want to do. How do they want the energy transition done and how fast do they want to do this?

We thought that there would be a very big diversity in positions, but it turns out that, after we've done our analysis, there are not many different propositions out there. In the four countries investigated, there is a cross-party agreement to strongly expand solar photovoltaics and wind since these two technologies are really cheap now and thus the options that everybody focuses on.

This is another interesting point that we found, and we think this could become problematic at some point. When you look at the research on energy modelling it tells us that we can take those fluctuating renewables and diffuse them to 60%, 70%, maybe 80% of our power systems’ annual generation.

And this takes us on a nice emission reductions trajectory to phase out coal and replace it with renewables. Every year we can check and say: “the emissions went down by X%, so in order to meet our goal for 2030, we now need or don’t need to step up the pace of diffusion to reach it."

To be clear, we do need to diffuse more renewables to get the decarbonisation done, but energy models tell us it is not sufficient. The fluctuating nature of these resources means that sometimes there is little solar irradiance or there's some times when there's little wind resources or little of both.

We come into situations where we have more demand than supply from PV and wind, and we need to come up with something else. In these times, we need other technologies and there are very different possible technological options to help tackle this. But they also include different trade-offs.

I'd say you would expect that political parties that say that by 2050 we need to be carbon neutral, would now also take the next step and say "this is exactly how we are going to do it". The problem for them too is that there is not a singular correct answer on, for example, how much grid would we need. This is of course because the whole system is too complex.

Nobody really knows how many electric vehicles are going to be on the road in 2040 and how much additional electricity demand this means. The same goes for heat pumps and additional electricity demand from the decarbonisation of other sectors like steel production. But we know that when we aspire and build the needed infrastructure, we can stir the direction of these complex interactions.

Well, there are two reasons. One is that the political goal of deep decarbonisation is fairly new. The European Commission has only recently agreed that Europe needs to be the first carbon neutral continent by 2050 and the member states should go in this direction, too. Only a couple of years ago, our shared European goal was to go to 80% carbon reduction in Europe by 2050 and the member state political parties still reflect this goal in their strategies.

But it makes a big difference as the logic for full decarbonisation is very different from the one for only 80%. So the political reality was that parties didn't need to have a position on flexibility. Rather they discussed different options for decarbonisation in the power sector.

There was a debate on whether we should use carbon capture and storage and fossil fuel plants, maybe build new nuclear plants, or use renewables.

The second difference today is: there is an emerging global consensus now that fluctuating renewables are the cheapest option going forward and they will carry a large share of the burden. This is also fairly new and political parties have not fully understood the implications yet.

In Germany, 40%-50% of our generation already comes from fluctuating renewables and soon enough we will have built 80% fluctuating renewables. But we have no debate yet [as to] how we are going to do the last 20%. How much will we trade electricity with our neighbours or is everything going to be based on hydrogen; if yes: where will all the renewables be built? There are no right answers to these questions, but normative decisions on directions need to be taken.

It's clear that if you want to significantly extend the power grid by 2040, or 2050, you need to start soon because getting a power line built can take 10-20 years and 2050 is only 30 years away. You better start working on cross-border projects that take even longer. But if you don't even know that you want to build a lot more of this infrastructure, then you need to get thinking.

The same applies to technologies that are still maturing or still not at the cost level that we need them to be. An important lesson from the success of PV and wind is that we can induce technological learning by supporting a technology. Both technologies improved as policy makers decided to get them built. We know much more now about which policies work to make other still maturing technologies cheaper but the political decisions to do it still need to be taken.

There is one incentive we can leverage, which is tax exemptions. In Germany, if energy traders are within close proximity, under 4.5km in distance, then consumers can save €0.02 per kilowatt hour on their energy.

However, because this is a research project and we need to show there are more incentives from a macroeconomic point of view, we also do simulations with flexible grid fees. So, if energy is used within a certain time frame where there is low utilisation of the cost of the grid, then grid fees are reduced.

This is not currently within the regulatory framework in Germany but it is something we propose to the regulators for the future, to make use of a trading platform and a mechanism that will increase the overall efficiency of the energy system.

I think there is a big room for policy reform on the site of getting those renewables targets built on the ground. But there is also a need for additional spaces where not only political parties, but also the society at large, could work on clarifying which solutions are desirable in the carbon-neutral future.

There is also a big need for more action on engaging with regions that will be put off worse by the energy transition. Germany is one of the first countries that had major coal infrastructure that is voluntarily going to give it up. This was a huge debate in society. Climate scientists tell us that 2038 is the current date that would be too late for the 1.5°C target, but it is the societal process that makes the phase-out decision so hard.

Going forward, there needs to be a consensus on transitioning flexibility options too and much more engagement with the public is needed. Some people are going to be unhappy that certain assets must go, risking a political push-back. This is another danger of not having the visionary clarity of saying "look, gas will also need to go by 2050 and maybe even before that". We will not get the rapid decarbonisation transition that we need to check global warming.

Main image: Richard Thonig, research associate at the Institute for Advanced Sustainability Studies. Credit: IASS