EFFECTS OF THE CHANGING ENERGY POLICY ON THE GERMAN ECONOMY

Overview The German government is keen to provide international leadership in climate protection and the establishment of a bio-based economy. In September 2010 the German government approved an energy strategy, the Energy Concept, which required a fundamental restructuring of the German energy supply system during the period until 2050: the main objectives are a comprehensive replacement of fossil by renewable fuels, the development of the grid and increased efficiency in energy use. At the same time affordable energy prices and a high level of economic competitiveness and economic development must be maintained (BMWi, BMU 2010). The Energy Concept envisaged extending the operating lifetime of German nuclear power plants by an average of 12 years. At this time (2011) nuclear power and hard coal provided 17.6 % and 18.3 % respectively of German energy sources (BMWi 2013). In December 2010 the EU Council of Ministers introduced a stepwise reduction of hard coal subsidies until 2018 starting on 1st January 2011. Consequently German hard coal production is expected to end due to a lack competitiveness compared to the international coal production. After the nuclear accident in Fukushima in March 2011, the federal government changed its energy strategy on 6th June 2011, with a commitment to phase out nuclear power by the year 2022, starting with the immediate closure of the eight oldest plants. This decision, combined with the political target to further progress towards a low‐carbon energy sector, had a major impact on the German energy policy. This second Energy Package, commonly known as Energiewende, contains seven legislative measures to support renewable energy and grid expansion, promote energy efficiency, fund the reforms and reverse the previous decisions to extend the lifetime of the nuclear plants. These policy changes require major changes in the structure of German energy supply: 35.9 % of old-established energy sources have to be rep...