Germany's Renewable Energy Gamble: Germany Dumps Nuclear and Moves to an Aggressive Clean Energy Future

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Energiewende is a German word en route to joining the English language, like angst and sauerkraut did long ago. It means "energy transition," and refers to Germany's historic plans to shift to a green economy based solely on renewable energies.

The German designation will come in handy, since Germany's trailblazing energy policies and lofty ambitions have no equivalent in tile U.S. or anywhere. The energiewende is a full-scale "industrial revolution," as economist and author Jeremy Rifkin puts it, that will change many things as we know them: transportation, farming, power hierarchies, industrial production, urban architecture, the business world, resource distribution, foreign relations and more. It's an endeavor of colossal proportions, comparable to the U.S. space program or German unification, although even these analogies ultimately fall short.

Germany is not just bolstering its energy arsenal with a hodgepodge of stylish renewables--which just about everybody is doing these days. Rather it is in the process of kicking the nuclear habit and abandoning fossil fuels altogether, while at the same time meeting ambitious EU climate targets. In the next decade, the country aims to supply Germany's homes, offices and factories with an energy mix of which 40% comes from renewables. By 2050 Germany plans to have greened over 80% of its energy supply; environmental groups like Greenpeace think that with a little more chutzpah (in the form of proactive policies) Germany could even run on clean energy alone by then.

What makes Germany so unique is not just the epic mission it has set, but that the country is among the world's foremost industrial heavyweights: its powerful, export-driven economy relies on energy-intensive industry such as automobiles, machinery and chemicals. Indeed, if Germany can make this revolution happen then so can China, the U.S. and the rest of the world.

After Fukushima

It was Germany's current leader, Chancellor Angela Merkel, who coined the term energiewende when her government pulled the plug on nuclear power in the aftermath of the Fukushima disaster last year. In one fell swoop, Berlin closed down eight of 17 nuclear reactors, reversed its earlier (and controversial) lifespan extension of the remaining plants and bumped up existing targets. Only with the tragedy in Japan did Merkel definitively commit her conservative party and the current administration--longtime cohorts of the muscular fossil fuel and nuclear industries--to a future powered by renewables.

Actually, Merkel deserves a lot less credit for Germany's in-progress revolution than she's given. Germany had been on a groundbreaking clean energy track ever since the Social Democrat-Green (or "red-green") government held power from 1998 to 2005, seven crucial years during which the energiewende's groundwork was laid.

The red-green administration committed Germany to pulling out of nuclear energy gradually over several decades. Moreover, it passed inspired legislation, the gem of which was a generous feed-in tariff that created the means for Germany's green energy capacity to expand from a bunch of garage tinkerers to a multibillion dollar industry with 380,000 jobs. The government-set rate allows for homeowners with solar panels on their rooftops or communities that have built their own biogas plants to be paid above-market prices for selling energy to the grid. The guaranteed rate ensures that their investments at least break even. The grid operators must accept the fed-in energy and prioritize it over non-renewables.

Stealing a page from the conservatives, the reds and the greens made profit the prime mover of the energy transition--and it worked better than anyone had imagined. Germany's green electricity generation soared from under 6% in 1998 to over 20% of the total supply today as a result of the guaranteed rates for renewable energy, market incentives for wind farms and solar production, and the de-monopolization of Germany's closed energy market. …