Hans-Josef Fell: Financial Disaster in the Energy Sector Is a Stimulus for Renewable Energy

What were the main drivers of renewable energy development in Germany and other countries? Why mainstream media oppose the renewables? You will find the answers in the first part of our interview with Hans-Josef Fell, the architect of the German feed-in tariff.

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What were the main drivers of renewable energy development in Germany and other countries? Why mainstream media oppose the renewables? You will find the answers in the first part of our interview with Hans-Josef Fell, the architect of the German feed-in tariff. 

Hans-Josef Fell was a member of the German Parliament from 1998 until 2013. He was the spokesman for the Green Party on energy policy. Mr. Fell is a globally recognized expert on energy policy and climate change with a visionary view on renewable energy sources. He is the key architect of the German feed-in tariff, which has been copied by more than 60 nations around the world. Hans-Josef Fell has won various international prizes for the promotion of renewable energy and remains active as a member of the World Council for Renewable Energy.

Mr. Fell, what is the history of your relationship with Ukraine?

I’ve been involved in Ukrainian energy issues for more than 10 years, the biggest motivation for this was our fear in Germany of Ukrainian nuclear power stations. I must say that my political commitment to renewable energy started with my civic stance against nuclear energy. Our views in Germany were very influenced by Chernobyl, when hypothetical fear of nuclear power became a reality. This tragedy in Ukraine has given Germany a great incentive for the development of renewable energy sector. In 2007, I visited Chernobyl myself, at that time I also provided a consultancy for  Ukrainian scientists and the team of Yulia Tymoshenko, when she was a Prime Minister, on possible development of a renewable energy sector in Ukraine. Unfortunately, nearly nothing was implemented at that time. Today, taking into account the political tension with Russia, problems with gas imports and the shortage of coal, I’m again very concerned with the danger of possible increase of nuclear energy production in Ukraine.

In Germany a big success with the development of renewable energy sector happened because of political decisions we made 15 years ago. This is the experience that can be adopted in many countries, including Ukraine. And my commitment is to share this experience. In spite of a hard pressure on renewables from the oil, gas, nuclear and coal industries, the sector experiences tremendous growth worldwide. New investment in renewable energy has already become cheaper than conventional energy. No one can stop its worldwide growth anymore. Ukraine still has the chance to jump onto this train and make effective decisions on the governmental level to develop renewable energy sector. Otherwise your country will lose the chance to build a sustainable economy.

Does the rapid increase of the renewable energy mean that conventional energy production comes to an end?

Conventional energy producers continue to defend their interests on the highest political level. Many of them who still believe they can make profit with oil, natural gas, coal and nuclear energy will go bankrupt in 10 years. We have big warnings that the Bank of England and some of the biggest funds like the Norwegian pension fund, Warren Buffett and others begin to go out of fossil shares and investments and switch to renewables.

Now two of the biggest conventional energy companies in Germany – RWE and E.ON – have increasing deficits of several billion euros per year and fear going bankrupt. And the main reason of their deficits is their failed investment in coal power and natural gas during the last ten years, as well as their lobbying against the nuclear power phase-out law. Now these companies have the debts and they cannot refinance their investment of the last years. Such financial disaster in the fossil and nuclear sectors is a stimulus for renewable energy, but a burden for the conventional energy business. These particular companies are not exceptions. USA shale gas industry (Exxon, BHB Billiton and others) also suffers from poor performance. At the moment the debt of the fracking industry is USD 430 bln , and no one knows how to refinance it. We anticipate the new economic crisis in the world, bigger than the one in 2009. There are tremendous changes happening at the moment globally, but many people don’t see them, looking at the world with their eyes closed.

Why do the big energy market players, who are aware of the changes of the market situation and understand that there is a high chance to lose money, still continue lobbying conventional energy interest and investing in conventional energy?

Most of managers believe only in their own business. Conventional energy managers cannot imagine that they can switch their business to renewables or any other business. They work very hard going on with the old business models and with the loser strategy. When 10 years ago me and many other experts told these managers that they were making irrational spending, investing in the coal power, they didn’t believe us, they were not able to see this trend that today is evident to everybody in Germany. The same situation you see now with the energy oligarchs in Ukraine, in Russia and in many other countries.

There are examples of companies, which succeeded in overcoming the old model of business thinking. The companies in China, for example, where renewable energy is growing faster than anywhere else, are not that old-school thinkers. The biggest nuclear power company CNG in China has founded a renewable energy daughter, Meija Power, which went to the stock market and raised so much money that now the parent company is switching its main activity from nuclear power to renewable energy. Another example of good management is the German company E.On, which decided to split its business into two companies declining the conventional energy line business and proceeding with renewable energy. At the moment this is the only big utility in Europe which has decided to go this way. Good managers see the new business and try to catch the wave. Over the next years we will see more and more renewable energy companies and companies switching their fossil/nuclear business to renewables.

What were the main drivers of renewable energy development in those countries which succeeded? Who initiated changes – government, business, civil society?

The drivers are different in different countries. The main driver for renewable energy development in China was energy hunger. Their economic growth has been so fast that they wanted to generate as much energy as possible from all available energy sources. In 2006 on the governmental level they set as a political priority increasing wind power generation, introducing the feed-in tariff law they copied from Germany. 6 years after, in 2012, they introduced the feed-in tariff law also for solar energy. I visited China very often and discussed the renewable energy policy with the members of National People’s Congress as well as with governmental bodies. I was really astonished by the level of their consensus and support for renewable energy and the feed-in tariff. Prior to this there was a period of 6 years, during which there was a big confrontation in the Communist Party between nuclear and coal energy protagonists on the one side and renewable energy supporters on the other. This conflict slowed down renewable energy development in China, but today the country clearly goes in renewable direction. In 2013 the investment in the Chinese renewable industry was already higher than investment in conventional energy. In 2014 the coal use in China declined by 2 percent. And in 2015 they forecast the decline of coal use by 10 percent. Chinese investors still invest in coal and nuclear power, but the rate of this investment is falling. And I personally believe that in 5 years there will be no new investment in coal power there. Several Chinese regions decided to forbid the use of coal completely. In Beijing, starting from 2020, you will not be allowed to use coal. Similar restrictions are introduced in several other Chinese regions, especially industrial ones. The main reason for this is air pollution. Smog, caused by the use of coal and cars, is a big problem for Chinese people. Together with coal restrictions, the Chinese government highly supports the development of electric transportation.

What about Germany? Who was the renewable energy driver there?

In Germany it was driven by civil society. The German renewable energy movement came from the grass-root level 30 years ago. Civil society designed governmental policy supporting renewable energy. I personally came from the grassroots level and then had the chance to implement the ideas we had at a local level in the parliament.

The business thinking shift in Germany has been happening only now, there was no such interest in the past. Those companies which invested into renewables in Germany were new in the market, many of them were found by NGOs and people from the grassroots movement. Today many of those founders have become big bosses in their companies.

So, at the beginning of renewable energy development in Germany the citizens didn’t see the potential for big business in this sector. People were mainly motivated by other ideas and values, right?

Yes, the initial idea in Germany was definitely not becoming a billionaire. The idea was to avoid climate change and environmental danger. The first people buying solar collectors were enthusiasts. Later, when we managed to organize the political framework for supporting renewable energy and introduced the feed-in tariff law in 2000, people could invest in renewable energy without losing money. Now they even earn money with electricity they generated from sun or wind. Consumer demand for wind power and photovoltaic installations created a stimulus for business. Now renewable energy generation in Germany has become the mass production industry.

Why hasn’t the German example been actively replicated by many other countries? Knowing that regular German citizens earn money for generating electricity, people in many other countries for some reason still have high resistance against renewables.

It may sound paradoxical, but high resistance is caused by a tremendous success of renewable energy. The success of renewable energy means the decline of conventional energy. We already mentioned that the old energy business is unhappy with this change, but the reason why many citizens feel reluctant to switch to renewables is the information they get from media. Big companies can easily influence media with big money, manipulating public opinion. Media very actively spreads the message that renewables would be a burden for economies, when in reality renewables are the burden only for conventional energy companies, but not for society. Such manipulations are very widespread everywhere. Two years ago in Germany we had an aggressive media campaign against renewables organized by big utilities. Their main argument was that renewable energy would cause the electricity price increase.

Are there any ways to oppose such harsh media campaigns? Can the supporters of renewables in Germany prevent manipulation with public opinion providing true information?

Media campaigns cost a lot, no one in renewable sector has enough money to compete with big conventional energy companies for media influence. I hope that in the future we will be able to oppose them in the media, because of the crashing of the conventional energy business. It’s hard to help this situation, because there are always journalists who can be attracted by money or interesting (rather than true) stories. And these media campaigns from conventional energy companies are very similar worldwide. The information they give has very little to do with reality. For example, we have a new report from the University in Nurnberg claiming that without growth of renewable energy generation in Germany, the electricity price would be much higher than today. I saw the reference to this report only once in media, and soon even this single publication disappeared. Another example from France: the big research center ADEME made a report for the government, with the conclusion to substitute the French nuclear power with 100% renewable electricity within a few decades in a cheap way. The government decided that this report should not be published, so only few media mentioned it.

It’s also important to differentiate between media. It’s hard to struggle with mainstream media: TV, major newspapers. But we can work successfully with the second level of media: social networking platforms, campaigns on the internet. The pro-renewables voice there is much stronger. And the most effective way to avoid manipulations with public opinion is, of course, personal experience. In spite of discriminating media campaigns, 80% of the German population supports renewable energy, because people see the benefits of renewables with their own eyes. People understand that renewable energy cannot become a financial burden, as many mainstream media sources say, because people earn money with renewable energy generation themselves.

The biggest challenge to deliver true messages to audience, to politicians, to media is the fact that the propaganda message is always very short. It’s one sentence: “Renewables are too expensive”. And when we come and try to prove that this message is wrong, we make 10 sentences with a lot of numbers, and that is the additional intellectual pressure on the audience.

By Ganna Gladkykh

Second part of interview.

Third part of interview.


Disclaimer

The author doesn`t work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations