There is a new interesting paper just published in Environmental & Resource Economics entitled “Does Absolution Promote Sin? A Conservationist’s Dilemma“. The authors are Matthew Harding and David Rapson. What’s my take on this?

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There are so many claims that Germany’s Energiewende is a true failure. For example, Larry Hamlin wrote that “EU climate alarmist champion Germany has its Energiewende program exposed as a catastrophic failure with enormous costs“. Or, a post on notes that ” Germany is expected to fall short on pretty much all its national and EU emission reduction and clean energy targets for 2020. ” These opinions are strangely all over the internet. I just want them to get the facts straight. And what is better than letting the data talk.

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Germany is without doubt one of the green role models that the world is looking at, especially with respect to its energiewende. But how green is Germany really?

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Krughütte, PV park

I just came across a recent report on the state of photovoltaics in Germany, written by Harry Wirth from Fraunhofer ISE. What are the main takeaway points? The points in italics are my own.

By the way: There is this Stanford University report proposing that the world can go 100% renewable by 2050. This stands in contrast to the results in this Fraunhofer ISE report, suggesting that 100% renewables in Germany by 2050 is simply too expensive. The reason for this discrepancy has been taken up by the energiewende blog. Basically, the Stanford Report suggests that the 100% renewable scenario is achievable and requires 1080 GW of installed PV capacity. We will see below whether this is realistic or not.

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  • Will you be part of the new VISIONS 2100 project?
  • Clean Energy Wire is, together with, a great source for news about Germany’s Energiewende. HERE you can read about the components that make up the electricity price in Germany. Taxes make up 3/4 of this price, and the renewable energy surcharge 1/3 of the taxes. Despite this – or maybe because of this (?) – exports roar, Germany grows. Why? Energy makes up only 2.5% of Germany’s GDP, similar to most countries in the world.
  • HERE you can read why all this bogus talk about renewable energy production being too expensive is, simply, bogus. In words:

    Today, even Citibank estimates that transitioning to clean energy will globally save an estimated $1.8 trillion in comparison to a business-as-usual scenario by 2040

  • The effect of Germany’s eco-tax is slowly diminishing. So Mr Klusmann suggests to index eco-taxes. The reason:

    the whole idea of environmental taxes is not to increase the level of taxation, but to focus the existing level on discouraging environmentally damaging consumption.

  • And all this energy transition in Germany is starting to pay off:

    The Fraunhofer Institute has found that Germany made about €1.7 billion, or $1.93 billion, in 2014 by selling surplus electricity. In 2015, that amount could reach €2 billion or $2.2 billion.


  • Responsibility to Act – Sustainable Development Goals 2015, in Rotondes, Luxembourg, from 7th-9th December 2015. For more information go here:
  • Climate Ethics and Climate Economics: Discounting the Future, in Oxford University’s Martin School, Oxford, UK, from 13-14 January 2016. Keynotes by Simon Caney and Partha Dasgupta. More information here:
  • ISDRS 2016 – Rethinking Sustainability Models and Practices: Challenges for the New and Old World Contexts, to be held 13-15 July 2016 in Lisbon, Portugal. For more information follow this LINK.

As always, you can find all the information on conferences, workshops and seminars in my environmental economics calender on the right.

So what are the recent news?

  • Countries are currently putting in pledges for the negociations at COP21 in Paris. At the moment, these INCDs (intended nationally determined contributions) from 150 countries would possibly (given the uncertainty) lead the world onto a 3°C warming path. In general, many scientistics suggest that the objective should be to reach at maximum a 2°C warming, simply because we have very little information as to what is going to happen if the world warms by more than 2°C. So if those INCDs are the maximum that all countries are willing to pledge, then what else should be done at COP21? Jeremy Woods suggests the following:

    Firstly, there needs to be consensus among the world’s largest emitters, both industrial and developing countries, that they can deliver the lifestyles their populations will demand and cut emissions drastically. That pathway will require that global rules around competition are reset and that common ground-rules for competition and innovation are established across the board. Secondly, the INDCs are a very small step along this road and the trajectory from 2030 to 2050 must be clearly signposted in order to allow the necessary private sector investment to be made now and over the coming decades to deliver the innovations needed. Public sector financing alone is totally inadequate for the job ahead.

  • Dan Farber has some neat suggestions how managers may more easily take care of the externalities that they create: simply expose themselves to it:

    For instance, we could require managers of nuclear plants, utility officials, and officials of reactor manufacturers to live within a mile of the plant, along with their families.  That would enhance the incentive to think of safety.   Similarly, we might require oil company executives and their families to live within a mile of a refinery, so they would experience the same risks and the same exposure to air pollution as the surrounding community.

  • It is often claimed that there is not enough space for alternative sources of electricity. So what is the situation in Germany? A recent study finds that there is plenty of space.

    Germany could install 125 gigawatts of wind turbines on only 1.7 percent of the country – on land, not including offshore wind farms. Likewise, 143 gigawatts of PV could be installed on 0.9 percent of the country.To put these numbers into perspective, a recent study by Fraunhofer IWES investigating a 100 percent renewable supply of electricity found the need for only 87 gigawatts of onshore wind along with 40 gigawatts offshore. For PV, IWES estimated that 134 gigawatts would be needed, slightly less than what the BBR found to be feasible.

    Is 0.9 percent of the country for PV a lot? One thing is often overlooked: put solar on a rooftop, and you haven’t taken up any additional space at all. The study found that “even if a third of all suitable roofs are not used for solar because the building owners simply don’t want to, the technically suitable roof potential is enough to install 65 GW by 2032… without any need for new ground-mounted arrays at all.” In other words, Germany could get around 10 percent of its electricity from PV using only two thirds of suitable existing rooftops.

  • On Friday I was at the excellent 62nd Economic Policy Panel Meeting in the Central Bank of Luxembourg and was, together with Timo Goeschl, the discussant of a recent article of John Hassler, Per Krussell and Jonas Nycander. This is a policy-relevant article that is going to be published in the journal Economic Policy, and discusses their 2014 Econometrica paper with Mikhail Golosov and Aleh Tsyvinski, Optimal Taxes on Fossil Fuels in General Equilibrium, as well as provides further points on the green paradox, integrated assessment modelling, etc. Though I can’t give you many details yet (you can get the published version in June), what is interesting to see is that there has been a recent trend away from these large black-box integrated assessment models to smaller, more intuitive approaches that are analytically tractable. My main point is the following: In order to make these reduced-form integrated assessment models analytically tractable one has to resort to some stronger assumptions. Weakening those assumptions requires one to additionally address those other factors that make integrated assessment models so complicated, and one is back at the black box approach. Then again, given that we know very little about the damage functions, etc., one can obviously not claim that the reduced-form models are worse or better than the standard integrated assessment models that also rely on particular assumptions on e.g. damage functions.
    Pindyck is much more negative about integrated assessment models in general. Matthew Kahn discusses a bit about Pindyck’s comments. In case you are interested, you can read his full critiques HERE or in his new working paper HERE.
  • The European Society of Ecolocial Economics presents a new Handbook of Ecological Economics.
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