Hope is Rational - Germany's Radical Shift to Renewables and Efficiency

While fossil fuels lobbyists might deny it, the political landscape has totally changed over the last three years.

The world is now heading towards a complete decarbonization of the energy system. It might seem daunting, or potentially impossible, to change our systems fast enough to limit climate change to well-below 2 degrees.

However, recent innovations and megatrends make this target achievable. Despite the many crises that we face, an optimistic view of the future is justified.

Community concern about climate change has played a key role in driving the change in our energy systems, but it is only one of a number of factors.

The shift to clean energy will require considerable investment, but if we combine the shift to renewables with investment in energy efficiency it will deliver huge savings on energy bills.

It will also save millions of lives – over 350,000 people die each year in China due to a specific type of air pollution called PM 2.5, which is largely created by burning fossil fuels. These preventable deaths are not just personal tragedies – they cost China an estimated 11% of its GDP. English-speaking countries aren’t immune to these issues – air pollution deaths are estimated to cost the US 4% of its GDP.

I have been closely involved in the energy transition in Germany (we call it the “Energiewende”), but I see similar transitions around the world. This rapid transition in the German energy system has been possible due to two major factors.

The first is well-known – the spectacular falling costs in wind and PV generation. The second is often overlooked – the huge potential to improve our lives with energy efficiency and energy conservation.

But if we are about to be inundated with clean, cheap renewable energy, why should we worry about energy efficiency? The answer is simple – we need an efficiency revolution to make a 100% renewable system technically feasible, cheaper, resource efficient and attractive to the public.

Firstly, despite the rapid drop in the cost of renewable energy, energy efficiency can often provide services, such as warm homes, for half the costs of new power supply.

Germany has put a lot of focus on improving the energy efficiency of homes and cars, which saved the average German household 30 per cent off their energy bills in 2017 – that’s a saving of $520 every year.

Despite the gains that we’ve already achieved, we estimated that if we invest a further 9 billion euros in improving the efficiency German industry, it would save 65 billion euros in energy costs. As a result, 90% of the German citizens support the “Energiewende”.

Secondly, while renewable energy is much cleaner than fossil fuels, it still has an impact on the land and on resources. We must roll out renewable energy, but we shouldn’t roll out more than we need. Combining energy efficiency and renewables will deliver the best outcome for homes and businesses and the lowest impact on the environment.

Third, investing in energy efficiency not only speeds up the transition away from fossil fuels, it also creates jobs. Europe is already a world leader in energy efficiency, but if we raise the

European Union’s energy efficiency target from a 30 per cent energy saving by 2030 only to a 35 per cent saving, it would create 270,000 new jobs and save 17,000 lives.

This means that German businesses are now strong supporters of the Energiewende. With the global market for key climate technologies growing from  $1 trillion to $2 trillion per year, the Energiewende helps keep German companies at the forefront of this global market.

However, while the move to renewable energy and energy efficiency are both highly attractive, they are radical deviations from business as usual.

Germany needed to set ambitious targets and courageous policies to ensure the Energiewende was as rapid and affordable as possible. When we realized that we needed to add energy efficiency into the mix we adopted the ‘Efficiency First’ paradigm. This means that we examine opportunities to save energy to meet our needs before we make investments in energy infrastructure.

The German Energiewende demonstrates that the shift to clean energy can be an economic and social acceptance if we include energy efficiency and a pro-active ‘just transition’ – policies that foster new businesses and jobs in regions that are affected by this shift.

In the past, Australia’s fossil energy resources have helped to build its prosperity. However, rapid changes in global energy markets mean that this blessing can turn into a curse. Australia’s future as an ‘Energy Superpower’ depends on switching from tapping fossil fuel reserves to your super-abundant reserves of renewable energy and energy efficiency.