Germany Targets Renewable Energy Market to Counter Economic Slowdown

The German parliament (Bundestag) is determined that the country's industry should not lose the global lead it has established in the renewable-energy investment market. New laws, part of the German "climate package," are aimed at strengthening investment opportunities in the renewable-energy sector and are part of the climate goals set by the country. Industrial Info Resources (Sugar Land, TX) reports that these goals include eliminating up to 250 million tons of carbon-dioxide emissions by 2020 and increasing the contribution of renewable-energy sources to 30 percent of electricity production by 2020 and to as much as 50 percent by 2050.

Germany's renewable sources energy act will be amended to increase the compensation, known as the "feed-in" tariff, paid to owners of renewable energy systems when surplus energy is fed back into the national power grid. The new law raises the feed-in tariff for wind-energy producers to between $0.11 and $0.19 per kilowatt-hour (kWh), while the tariff for biomass-produced power is set at $0.05 to $0.09 per kWh. In an attempt to convince investors that the German photovoltaic electrical generation industry is making significant progress, the feed-in tariff for these industries is set at $0.42 to $0.54 cents per kWh but will be reduced between 8 percent and 10 percent in 2010 and at an annual rate of 9 percent after 2011.

Ernst & Young (New York, New York), a professional services firm, has recognized these initiatives in the company's latest Renewable Energy Country-Attractiveness Indices report. The report lists Germany at number one, mainly because of the feed-in tariff changes and the commitment to build 33 offshore windfarms to provide 25 gigawatts of wind power by 2030. Germany is committed to holding on to its position as the number one country for renewable energy investment, with investments in all forms of renewable energy expected to reach $250 billion by 2030. Employment in the renewable energy sector in Germany has grown continually in recent years and is expected to rise from the current level of 170,000 jobs to between 300,000 and 350,000 by 2020 and to between 330,000 and 415,000 people by 2030.

Another initiative aimed at reducing greenhouse gas emissions and providing a boost to the faltering car-manufacturing industry is the new incentive scheme announced as part of a $63 million stimulus package passed by the German coalition government in January of this year. In addition to significant investments in new road and rail infrastructures, the package offers Germans a $3,250 bonus if they scrap an existing car, provided it is more than nine years old, and buy a new or slightly used car. Interest in the proposed scheme has been overwhelming. Nearly 270,000 citizens telephoned the Federal Office of Economics, which will oversee the scheme, on the first day following the announcement. The government is now apprehensive that the $1.9 billion fund allocated to the scheme may prove to be inadequate.

Critics of the new scheme are skeptical of the purported environmental benefits and claim that the bonus should rather be paid to those who scrap their cars and use public transport. However, car manufacturers, which witnessed a 17-year low in car sales in 2008, have welcomed the scheme.