Mario Ingo Soos: Costs shouldn’t be an obstacle, but a motivation for a transition to renewable energy sources

Before coming to Ljubljana Mario Ingo Soos served as head of unit for energy and climate policy and deputy head of the econonic division at the German Embassy in Washington. Mr. Soos has been with the German Foreign Office since 1989. Prior to Washington he served as head of unit for regional cooperation in Southeast Europe at the German Foreign Office in Berlin. Other assignments include tours as Deputy Chief of Mission at the German Embassy in Nicosia, Cyprus, and postings at the German Embassy in Zagreb, Croatia and at the Economic Affairs Division of the German Foreign Office, Berlin.

PHOTO: Valerija Hozjan

In your career, you have served as Counsellor for environmental and energy policy issues at the German Embassy in Washington. What, in your opinion, are the biggest differences between the EU and USA, especially as regards the energy sector and climate policy?

I would rather talk about similarities. Because only if the U.S. and the EU work together do we have a chance to solve the problem of climate change and energy security. As for climate protection, the EU is clearly ahead. It decided already in 2007, during the German EU-Presidency, to reduce greenhouse gas emissions by 20 percent by 2020, and even by 30 percent if the other big emitters commit themselves to similar reductions. In the U.S. there still is an ongoing debate as to the extent and the speed at which emissions should be reduced. A bill is currently discussed that proposes a 17-percent reduction by 2020 based on 2005 levels. After this date, emissions would drop faster and by 2050 they would reach approximately minus 80 percent, like in the EU. However, it is clear that the U.S. and the EU cannot combat climate change alone. Even if they could immediately stop emitting CO₂ altogether, the global emissions would still be too high. For the climate it doesn’t matter where emissions come from. Therefore all countries, above all those with the highest levels of emissions, have to participate.

President Obama is now strongly occupied with the health reform the climate policy has been pushed in the background. Do you agree with this?

This is a question of the political agenda, which in the U.S. is not defined by the President alone. But I remember President Obama naming both of these goals as important priorities. Maybe health reform is currently the more urgent subject.

Do you think the USA and the EU will work together more closely in the future? How would you assess their cooperation to date?

Certainly. The EU and the USA are at the forefront of the development and diffusion of new technologies, which are necessary if we wish to replace fossil energy sources. Why should each country be reinventing the wheel? By working together in the development of technical and political solutions we can achieve more. This is why energy and climate protection have already assumed a central role in the transatlantic dialogue. On 9 November 2009 a US-EU Energy Council was launched, which should boost cooperation in the field of energy and climate.

Cars without petrol, heating without gas, electricity without coal ... Industrialised countries should almost entirely give up the use of fossil fuels by 2050. A budget of two tonnes of greenhouse gasses per person would be left after this point. This is less than a tenth of what average US citizens require for their lifestyle and a fifth of what average Germans need - in heating, lighting, transport, consumption. We have to act in a quick and determined way. Is the biggest obstacle the cost (a transition to alternative energy sources and therefore a mitigation of climate change will be expensive) or do you see other problems in meeting global targets?

Costs shouldn’t actually be an obstacle, but rather a motivation for a transition to renewable energy sources. Climate change is not an abstract problem of the future. The question is not whether it will happen, but to what extent and with what consequences. In 2006 the former chief economist of the World Bank, Sir Nicholas Stern, published a prominent study discussing the economic implications of climate change. He calculated that with only 1 percent of the global GDP the world could efficiently avert climate change if it would act now. The longer we wait, the more expensive it will be. Stern estimates that an unmitigated climate change would cost the global economy up to 20 percent of the GDP by 2050. At least since the publication of this study it is clear that climate protection and economic development go hand in hand. In addition, we have to keep in mind that the price of fossil fuels can only go up because their supply is limited. The availability of renewable energy, in contrast, is limitless, so its price can only drop. Today, the renewable energy is not yet competitive, but this will change with the increase of both the price on CO₂ emissions and the costs of fossil fuels. Just think of the summer of 2008 when oil prices suddenly sky rocketed to USD 150 per barrel and experts even though it possible for the prices to reach USD 200. The economic crisis may have interrupted this trend, but it didn't stop it.

In contrast to the Kyoto Protocol, the Copenhagen deal should have finally brought a real contribution to the fight against global warming by curbing the man-made global temperature increase to 2 degrees Celsius by 2050. This required more than just minimal acknowledgement of willing countries which leads to an inefficient agreement. The Copenhagen deal fell through.

With its climate policy decisions for 2020 the EU took over a leading role. This is why it is so important that we, the Europeans, maintain our course and show that ambitious climate goals are achievable and make economic sense. It is obvious that the effort of the EU alone is not enough. However, I am optimistic because other big countries, such as the USA, China, India and Brazil, have also begun implementing unilateral measures to protect the climate. Even though it needs to be emphasized that this is far from being enough and that national programmes cannot replace a global binding agreement, I still think this is a positive sign.

But the EU has not proven itself credible.

We have to distinguish between international climate negotiations and what countries, in this case the EU and its member states, do at the national level. There we can see that the EU adopted a climate and energy package a while ago and that the binding targets of this package are now being implemented. This is the difference between the EU and other large emitters, and therefore the EU has proven perfectly credible.

Another question is to what extent we managed to convince other countries with our approach. Indeed, the goal of a legally binding agreement was not achieved. But on the other hand we can see the emergence of many national programmes that aim at reducing energy consumption and CO₂ emissions. With the implementation of its targets for 2020 the EU sends an important message: we are serious about it and we act according to our plans regardless of the result of Copenhagen.

The EU will also show that investments in the restructuring of its energy system towards more energy efficiency and renewable energy are economically feasible and reasonable. Firstly this is a kind of a recovery program, secondly, these are long-term investments which will pay off later, and thirdly, measures like these help us save expenses for energy imports.

It is true that the Copenhagen talks did not turn out according to expectations. But they were a first step and the process will certainly continue. The German Chancellor Angela Merkel announced in Copenhagen that in summer Germany will host a ministerial conference on climate protection in Bonn. And in November the next conference of the parties to the climate convention will take place in Mexico.

Apart from tolerable climate, one of the global goals is also a healthy economy. To achieve it, we need an integrated climate and energy policy. At the moment the economic situation is not very encouraging. Where do you see the biggest possibilities for growth?

According to the estimates of the IEA the global energy demand will rise by approximately 55 percent by 2030. At the same time the reserves of fossil fuels are diminishing slowly but surely. The head of IEA has recently said the global oil supply would peak in 2020, after which the reserves would cease to grow. Some experts believe this moment has already come. Despite these warnings, measures to improve energy efficiency and increase the use of renewable energy are still in early stages. With their implementation something can be done to tackle all three crises at the same time: the energy crisis, the climate crisis and the economic crisis. It has been a year since UNEP suggested a green new deal and many governments have adopted this approach in their policies. The global recession now seems to be overcome and the economy is slowly recovering. The question is how quick and lasting the economic recovery will be. Renewable energy and energy efficiency are without a doubt two of the most important sectors that will secure growth in the future.

What is the German secret of success in the sector of new energy and energy efficiency (in view of the country’s upsurge of the alternative energy sources sector)? What strategy does Germany follow?

Indeed, this is a story of success, which was mostly brought about by the legislation on renewable energy (Erneuerbare-Energien-Gesetz, EEG) adopted in 2000. As a result of this legislation, the share of renewable energy in power generation has tripled to 15.1 percent in only 10 years. Germany plans to increase this share to 30 percent by 2020. Let me point at two more figures which show the importance of this sector for the economy: in 2008 it produced a turnover of about EUR 29 billion and employed 280,000 people.

The implementation of the EEG is constantly verified and measures are being adapted according to the development. We are still at the beginning of using renewable energy. As a next step the government will tap the potential of renewable energy in the heat sector, which is often seen as a “sleeping giant”. This includes geothermal power, the installation of solar thermal panels on rooftops and the use of biomass from agriculture and forestry.

The EEG is our most important tool in meeting our climate and energy targets for 2020 and an important factor in a future-oriented energy supply. We believe that by 2050 about a half of the German demand for energy can be covered by renewable energy. And I think this is possible in other countries, as well.

Subsidies for solar power will soon be reduced by 15 percent. Will this not impede the solar sector development at least to some extent? What is the reason for these cuts?

In the last several months the prices of solar panels have dropped substantially. This is a very encouraging development, because it shows our strategy works. In Germany it may soon be cheaper to use electricity that we produce ourselves from solar power than the electricity that we buy from the grid.

The regular and systemic reduction of the feed-in tariff is an important principle for the promotion of solar power. It forces companies to reduce costs and keep developing their products. As the technical development is often faster than expected, feed-in tariffs occasionally have to be additionaly adjusted. This happened now when the prices of panels dropped more than expected. The government does not see this as a brake, but as a necessary stabiliser of solar stimulation.

During the election campaign in Germany there was a heated debate on nuclear energy. What is the situation today? What kind of plans does Germany have in this sector?

My government believes that for a transitional period nuclear energy as a bridging technology is an essential part of our energy mix, until nuclear power can reliably be substituted with renewable energy. It is therefore willing to consider the extension of the running period of nuclear power plants under certain conditions. But this will all the same help improve the security of energy supply and climate protection.

Last summer Germany started working on the legislation on Carbon Capture and Storage...

Carbon Capture and Storage is an essential technology that sparks a lively debate. It is assumed that energy demand in Germany, just as elsewhere in the world, cannot be entirely accounted for without coal. However, from the climate aspect this is only acceptable if CO2 is captured and stored underground. This has to be done in a way that the CO₂ actually stays there and that responsibilities are clearly determined. This is why the creation of a legislative framework for CCS technologies is one of the most important tasks during the current legislative period.