Germany Risks Permanent Loss Of Control Of Energiewende, Federal Audit Office Warns

Germany’s Federal Audit Office has accused the government of a catastrophic mis-management of the green energy transition (Energiewende). The wastage of resources is “unprecedented”.

Germany’s Federal Audit Office has accused the federal government of having largely failed to manage the transformation of Germany’s energy systems.

The expenditure for the ecological restructuring of the energy supply is in a “blatant disproportion to the hitherto poor yield”, said President of the Court of Audit Kay Scheller in Berlin: “The Federal Government is at risk to fail with its once in a generation project of the Energiewende”.

A little more than a year before Germany’s climate-policy “milestone 2020”, the auditing body has concluded a catastrophic assessment of the government’s energy policy. Germany would miss its targets for both reducing greenhouse gas emissions and primary energy consumption as well as for increasing energy productivity and the share of renewable energy in transport. At the same time, policy makers had burdened the nation with enormous costs.

“Over the past five years alone, at least 160 billion euros have been spent on the transformation of the energy system,” the report states: “If the costs of energy system transformation continue to rise and its targets continue to be missed, there is a risk of a loss of confidence in the ability of government action.”

As early as 2016, the Federal Audit Office had certified that the federal government had no overview of the costs of the energy system transformation. In the current report, the criticism is even harder because it suggests a general loss of control.

“Unprecedented” wastage of resources

According to Federal Audit Office data, the Energiewende has cost around 34 billion euros in 2017 alone. In addition to the federal government’s expenditure of almost 8 billion euros, this also includes the burdens on end consumers, in particular due to the renewable energy levy (EEG). “The Federal Government, incidentally, does not have an overall grasp of the costs or any transparency in this respect.”

The wastage of resources to implement the Energiewende was “unprecedented”. Last year, the federal ministries and subordinate authorities employed around 675 full-time staff, 300 of them in the Federal Ministry of Economics alone, divided into 34 departments and four divisions. In addition, there are at least 45 committees at federal-state level dealing with the green energy transition. The effort being expended here is in itself almost contradictory to one of the main objectives of the energy system transformation: the economical and efficient use of scarce resources.

“The scope of the legislation is also striking,” Scheller stated: “At national level alone, 26 laws and 33 regulations regulate the generation, storage, transmission, distribution and consumption of energy. There is, however, “no place where everything comes together, no place that assumes overall responsibility”, Scheller criticised.

In short: “A lot of effort does not necessarily mean a lot”. For despite a great frenzy of data collection there is no overall view. “The Federal Ministry of Economics uses 48 different data sources to check the status of the Energiewende on the basis of 72 indicators, and yet “there is a lack of meaningful data that could be relevant for assessment and control”. Many data would have little control value or would be available too late, but often they would “simply draw the wrong conclusions”.

Funding mechanisms “hardly transparent” any more

For example, there are “no quantified targets, no measurable indicators” for the energy policy goals of affordability and security of supply, Scheller criticised: “Here we are poking around in the dark.” For five years now, the Federal Ministry of Economics and Technology has been responsible for the green energy transition, but the ministry is “in no position to determine what it must do to ensure that the goals of the Energiewende are demonstrably and economically achieved”.

The undergrowth of unnecessary and complicated support mechanisms is “hardly transparent any more”, Scheller criticised. For example, the German government had set itself the goal of approving 1000 applications per year under the “StepUp! programme” to improve the electricity efficiency of companies. Exactly ten applications were actually approved in the end. Thus only 1.2 percent of the available funds flowed out in 2017,” Scheller noted. “The BMWi is continuing the programme.”

The same applies to the promotion of electric mobility, which the public hardly accepts. “600 million euros have been largely misdirected,” the Court of Auditors states. There are many examples where “applications are waiting forever or the funds are not being used up: With eight out of 16 funding programmes, the outflow of funds in 2017 was less than 50 percent.”

Instead of the impenetrable jungle of subsidies and rampant laws, CO2 pricing would be a simple and transparent alternative that has long been demanded by expert commissions of the Federal Government. For better coordination of the Energiewende, a staff unit at the level of state secretary, an interministerial committee and a federal-state committee would be conceivable.

Government sees “no need for action”

The federal government rejected the assessment. The Federal Ministry of Economics and Energy, headed by Peter Altmaier (CDU), responded in a rather surprising way: “The government considers the Energiewende to be “effectively and efficiently coordinated” and sees “no need for action”. However, the ministry did not address the fact that the Energiewende has largely missed its targets.

Astonishingly, the Federal Ministry of Economics also stated that the multi-billion levy under the Renewable Energy Sources Act (EEG) should not be counted as a costs of the green energy transition. Until now the EEG levy for subsidising renewable energy was always considered as the actual pillar of the Energiewende. According to the government, even the billions of euros in relief payments for the German industry to compensate for higher energy costs are “measures of industrial policy and not Energiewende measures, which thus cannot be attributed to the Energiewende”.

The Federal Government explained its refusal to conduct a transparent cost-benefit analysis of the Energiewende by saying that these costs could only be compared with a “counterfactual scenario”. Because electricity grids and power plants would have had to be renewed even without the Energiewende, only a comparison of a world with and a world without the Energiewende would be meaningful. However, such a comparison could not be made because of the large number of uncertain basic assumptions.

The Federal Audit Office, however, does not consider these replies to be tenable. “It is conspicuous that the Federal Ministry of Economics and Technology has not commented on the missed targets some of which are quite considerable,” the Federal Audit Office states.

International pioneering role lost

It is also “incomprehensible that the ministry does not include the renewable energy levy (EEG) among the costs of the Energiewende”. A “counterfactual scenario” is also unnecessary in order to evaluate the overall costs. After all, it is “not important what expenses and costs would hypothetically have arisen even without a green energy transition in order to offset these against the actual costs incurred”, the Audit Office says: “The possibility of ‘renouncing the Energiewende’ associated with a counterfactual scenario no longer exists in reality”.

Scheller said it was “regrettable” that Germany had lost its self-propagated international pioneering role: “Germany had made a strong start and is now doing comparatively poorly internationally.” The President of the Court of Audit referred to the ranking of the World Economic Forum: According to the ranking, Germany is no longer represented on the list of the ten most successful energy transition countries in Europe. Internationally, Germany occupies only the 16th place.

Overall, the Federal Ministry of Economics and Technology is trying “to give the impression that the current coordination and control of the energy transition is essentially designed at optimal level,” the auditors conclude. “Failing that, the German and international public could get the impression that Germany is simply incapable of successfully shaping and implementing the Energiewende that is planned society-wide and for the long term.”

Translation GWPF