Few countries can have as great an impact on energy policy in Europe as Germany. Its large size and strategic location make it a critical component of the region’s energy markets – as a result, sound energy policies and strong energy market design are a necessity. In these respects, Germany continues to make notable progress. The country has continued to reform its electricity and natural gas markets, set a timetable to phase out coal subsidies, is meeting key climate and environmental targets and is bringing energy, efficiency and environment to the top of the world agenda with its presidencies of both the G8 and European Union. The International Energy Agency (IEA) praises these efforts.
Nevertheless, work remains to be done to further improve German energy policies and markets. The planned phase-out of nuclear power over the coming years would have major impacts on the country’s energy mix, raising concerns about energy security, economic efficiency and environmental sustainability for the country and for Europe as a whole. Furthermore, though progress has been made, more needs to be done to set a truly level playing field for competition to develop in gas and electricity markets, which means effective unbundling of transport activities and a strongly empowered regulatory authority. Finally, the country’s environmental policies, though helping meet ambitious goals, are expensive – and sometimes various policies work at cross-purposes.
This book takes an in-depth look at the energy challenges facing Germany, and through comparisons with good examples in other IEA countries, provides critiques and recommendations for policy improvements. The review guides the country towards a sustainable energy future.