Germany

Index rank 11

Balance Score

ABB

Energy Sustainability Index Rankings and Balance Score

 2011  2012  2013  Trend Score
Energy Performance  9  8  10   
Energy Security  23  24  31  B
Energy Equity  14  13  11  A
Environmental Sustainability  32  31  30  B
         
Contextual Performance  14  13  13   
Political Strength  16  16  16   
Societal Strength  19  18  18   
Economic Strength  24  26  24   
         
Overall Rank  10  8  11  ABB
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Fossil Fuel Reserves

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Key Metrics

Industrial sector (% of GDP) 28.1
TPEP / TPEC  (net energy importer) 0.34
Emission intensity (kg CO2 per USD) 0.26
Energy affordability (USD per kWh) 0.34
GDP / capita (PPP, USD); GDP Group 38,077 (I)
Energy intensity (million BTU per USD) 0.11
CO2 emissions (metric tons CO2 per capita) 8.96
Population Access to Electricity (%) 100.0
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Index Commentary

Germany drops three places in this year’s Index as energy security declines slightly. Germany continues to balance the three facets of the energy trilemma well, with a very strong energy equity ranking leading its performance on the other two dimensions. Germany continues to struggle with the ratio of total energy production to consumption and sees an increasing reliance on energy imports. The energy equity dimension remains Germany’s strongest, and the country’s global ranking improves despite increases in the prices of gasoline and electricity. Environmental sustainability performance remains solid, and Germany continues to lower its CO2 emissions from electricity generation even further. Its performance on contextual indicators is strong and stable.

Trends and Outlook

The most recent policy development in Germany, initiated before 2010, is the German Energy Transition. The goal of the policy is a strong increase in power generation from renewable sources, a reduction of primary energy usage and CO2 emissions. Furthermore, following the accident in Fukushima (Japan) in March 2011, the government made the decision to abandon the use of nuclear power completely by 2022. Eight out of 17 facilities were closed immediately, while the remaining nine nuclear power plants will be phased out gradually to ensure system stability. However, the decision to phase-out nuclear by 2022 constitutes a challenge to Germany’s energy mix.

To achieve the increase in power generation from renewable sources, the Renewable Energy Law (EEG) guarantees a fixed price independent of demand and supply for renewable power plants. The law first came into effect in 2000 with revisions in 2006, 2008, and 2012. Even though there are visible successes, the law is disabling free market mechanisms because it allows the sector to rely on subsidies rather than encouraging competition for innovative, efficient and inexpensive technologies. Investors are reluctant to invest in new conventional power plants, which will still be needed to secure future energy demand.

Subsidies for renewable energy and investments in grid infrastructure to integrate the increasing amounts of volatile renewable energy into the system have led and will continue to lead to higher electricity prices. Policymakers must set the right framework towards a free and efficient European electricity market to limit the burden.

Furthermore, the European emission trading systems is an important tool to tackle climate goals. With a European effort in energy politics, particularly when it comes to future market designs, investments in conventional power plants could be enabled to ensure security of energy supply.