Wednesday, December 16, 2009

Germany’s Huge Green Tech Advantage

By Richard Wottrich, Blog Editor

The implications of the Copenhagen global summit on climate change (COP-15) are significant. Despite the intrigue, wrangling and external protestations, it is clear that no country will leave Copenhagen without being sensitized to the goal of slowing global warming. The targeted goal of a 2 degrees Celsius reduction is generally accepted and almost all attending countries have announced plans to reduce emissions in some manner.

The notable exceptions to this are of course the major oil producing nations. They would be the main beneficiaries if Copenhagen’s initiatives were to fail.

This is not to say that there is not a great deal of trickery and sleight-of-hand going on in Copenhagen. The US is pledging a 17 percent cut in emissions using 2005 as a baseline; a target that turns into a 2 percent decline if the 1990 European base line were used.

China’s figures are seemingly impressive: a 40 percent reduction, but they are based on a fictional gross national product assumption in 2020. The Chinese are really masking a massive increase in emissions that is inevitable given its 10 percent annual growth rates.

Russia’s impressive promised reductions of 30 percent are misleading as well, because they have saved that much and more during the course of economic restructuring following the collapse of the Soviet Union.

The overriding significance here is that states feel the pressure to establish minimum reduction targets. Germany is a leader in this with announced reductions in CO2 emissions of 40 percent by 2020 relative to 1990. Germany is also one of the few countries that have adhered to the Kyoto climate agreement, albeit it did so by dismantling heavy industries in the former communist east.

Germany leads by example, as it makes no difference whether or not Germany produces 100 million tons less of CO2 in 2020, because China alone will be producing four BILLION tons by then. China will overtake Germany in per capita CO2 emissions by 2020, which is amazing given China’s 1.1 billion population versus Germany's 82 million.

Rather Germany’s huge green tech asset is in its ability to innovate and design technologies, systems and machinery that lead the way in consuming less energy – including carbon capture systems, efficient wind turbines and in energy storage techniques. Other than Denmark for example, Germany is the only country capable of building systems for large offshore wind farms.

Competitive pricing for alternative energies is of course crucial. Some claim that this competitive threshold is still far off, however historically it takes about 30 years for a new power system changeover. In the last 15 years solar and wind power have progressed to the point where it will soon compete without subsidies with coal, gas and nuclear power. When new energy storage techniques are added into the mix this threshold will be crossed.

Biomass is also closing in on this competitive threshold, with the decisive trip point being a relative cost of oil at $150 per barrel. In Germany fuel, electricity and biogas from its fields will account for 15 to 10 percent of its energy output in the coming decade.

This technology advantage for Germany will mean little until a global emissions trading system is in place. There must be a market for reducing CO2 emissions, or the major economies of the world will continue to expand with minimal lip service to emission restrictions.

Government subsidies alone will not accomplish targeted reductions, as politics always plays a role as shown at COP-15. Rather in this bloggers view, products could be assessed a value added emissions tax (VAET) based upon the emissions footprint of the country they originate in.

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