From the economist’s point of view—a review of the “The German energy transition: Design, implementation, cost and lessons” by Thomas Unnerstall

Book details

Unnerstall, T.

The German Energy Transition: Design, Implementation, Cost and Lessons

Berlin, Heidelberg: Springer; 2017

156 pages, ISBN 978-3-662-54328-3

The German energy transition has attracted a lot of general and scholarly interest. It is looked upon as a challenging experiment for the transformation of an entrenched large technical system. Some observers are interpreting it primarily as a policy experiment, while others are interested in the bottom up character of the developments, or the sectoral transformation of an industrial sector is analyzed. The question is discussed, whether the general public is a force propelling developments forward or whether the social acceptance will become an important issue. This short list does not mean to be exhaustive. It hints at the impression that the transition is a major social and political issue that at least in Germany is hotly debated.

For a rational debate and discussion, it is of course worthwhile to be aware of some basic facts and figures. Thomas Unnerstall’s book intends to provide this solid basis for a more rational discussion. He writes, “The central purpose of this book is to give a systematic, impartial account” of the German energy transition (p. 141). This account is divided into four big parts. Following an introduction, the motivating forces of the German “Energiewende” are discussed. Part two discusses the present state of affairs and part three deals with issues of cost. The concluding part addresses lessons learnt and looks at future developments.

The book in fact provides a lot of valuable information and arguments and can therefore be recommended for someone who wants to get accustomed with some of the main issues discussed at the moment. The presentation of the “facts” comes from the point of view of an economist, and this is not the only reason why an “impartial” analysis is not to be expected and most probably is not possible at all. One of the issues the author clearly recognizes is that “The Energiewende is a political project.” (p. 11). This project is connected with costs, and the author gathers that he can talk about costs as a stable and neutral item without regard for the political side of the project. This makes some of the arguments not really convincing. As an economist, he regularly talks about a market, as if the market would be something like a neutral thing with its own laws. But the “Energiewende” has clearly shown that constantly new markets arise and market frameworks continuously change the valuation of what is of what “worth” also develops. Insofar, it is difficult to do some consistent calculating. The author is right in assuming that if we would start the “Energiewende” only now (in 2017) it would be much cheaper. However, the situation of 2017 is not conceivable without the technological development, cost degression, and the international developments connected to and dependent on the early German start.

In spite of the fact that we tend to talk about the energy transition (Energiewende), most of the time we refer only to electricity. Unnerstall is very clear with pointing this out. He is also only concerned with electricity, which is usually considered to be a German success story. Many other elements of an energy transition (e.g., mobility, CO₂ reductions, heat) in which Germany does not do fare very well, are neglected. In spite of the author’s aim to concentrate on electricity, he gives some figures and interpretations about other forms of energy as well (e.g., oil), which are nice to have, but would not be needed in the framework of the book.

When it comes to identifying “policy mistakes” at least at this point, we are leaving the realm of impartial analysis. It is quite true that many things went wrong, but why and what could have been the better alternatives is difficult to say. As mentioned above, we are dealing with a political process in which over time political priorities change; individuals, parties, and organizations responsible for the electricity transition changed; decision-making competencies were shifted between ministries, and so on. Insofar, we can clearly identify a lot of problematic developments that were and are happening from different points of view, but to say that there is or was one best way to proceed moves the whole thing out of the realm of politics and envisions a know-all, powerful external actor.

One of the best traits of the book is its dealing with the cost question. Unnerstall makes clear that the cost issue has been blown out of proportion in the public discussion in order to delegitimize the energy transition. He also states very clearly that the whole discussion should not concentrate only on abstract costs but on the financing mechanisms chosen to pay for the transition and thus responsible for the costs the individual user has to pay.

Overall, it can be said that the book is worthwhile reading, and it provides a host of interesting figures and arguments. The argumentation overall is clearly one inspired by economic thinking. A truly impartial analysis should not be expected and will for all we know an unachievable task.