Policy Lessons from Germany: What the EEG Can Teach Us About Building a GND
It’s easy to compare the Green New Deal to FDR’s original New Deal. Let’s also compare it to a country who’s recently been there, done that.
Photo by Jacek Dylag.
In 2009, I took a newly-minted English degree and joined a ten-person solar energy outfit. I didn’t hear anyone say “climate change” once that year; it felt like we had all the time in the world. When I visited Munich for an energy conference, everyone talked about a very different phenomenon: why was Germany, a country with 80 million residents and generally unremarkable sunlight, buying up all the world’s solar panels?
Ten years later, we have a very different collective relationship with time when it comes to climate change and biodiversity loss. We have one final decade, roughly, to enact transformative social and economic change around our emissions levels and energy mix. Otherwise, trouble.
If there’s a path to optimism for our domestic, decarbonized future in the United States, presently it starts and largely ends with the Green New Deal. Whether you demonize or embrace it, we’re all talking about it because it’s the only real conversation to have. Funding mechanisms, taxing carbon, implementation specifics—those are footnotes and second-order details far beneath the headline manifesto. Within the U.S. policy ecosystem, it’s the singular climate vision where the changes being proposed conform to the scale of the existential problems at hand.
Recalling FDR’s economic New Deal package that helped pull America out of the Great Depression, the Green New Deal’s inspiration and namesake is quite deliberate. In Alexandria Ocasio-Cortez’s media-capable hands, it also holds a great deal of symbolic power. Same goes for its messaging links and references to World War II economic mobilization. Assuming we can rally the electoral support to pass a substantive version, it instantly becomes historic, transformative legislation. To get the job done, it has to be.
But because the Green New Deal’s chosen name does quite a bit of leading the witness, most media and policy discussion has so far focused on its 1930’s analogue. In characteristic, continental fashion, we compare America present and future to America long past. Instead, we should be talking a lot more about a more modern policy reference point: the German Erneuerbare-Energien-Gesetz (translation: Renewable Energy Sources Act), commonly known as the EEG.
Thanks to a fairly unique political coalition of agriculture, green, labor, and economic development interests, the original EEG was passed into law in Germany on April 1, 2000, replacing its weaker predecessor, the 1991 Electricity Feed-in Act. At the time, the stated goal of the EEG was simple and transparent: encourage local renewable energy development through expanded economic incentives.
And encourage it did. Since the EEG’s introduction and subsequent revisions, electricity generation by renewable energy in Germany has grown by a quaint 504%, while national coal usage dropped 21%. Over a time when U.S. greenhouse gas emissions have remained relatively flat (they declined through 2014, only to spike three percent in 2018), Germany’s have fallen 14%. In fact, if Germany hadn’t made the questionable decision to prioritize phasing out nuclear instead of coal, national emissions could be decreasing even more. Throughout its tenor the EEG has been controversial, occasionally chaotic, and in some ways both transformational and insufficiently transformational. One fact, however, is hard to argue: it’s been effective, far more so than anything the United States is doing. Perhaps our policymakers—at least the ones actually listening—should take a few pointers.
When examining the EEG in terms of good, bad, ugly, and constructive, it’s helpful to first look at its overall principles and structure. True to the diversity of the coalition behind it, the EEG is a tall cocktail of economic and social philosophies.
First, the EEG operates through a form of market-based eco-capitalism—to the extent such a thing can be said to exist. By implementing a feed-in tariff subsidy (i.e., if you set up a renewable energy system, whether that “system” is a massive offshore wind farm or a few solar panels mounted on the shed in your backyard, your local corporate grid operator has to buy the electricity you generate and pay you for it) alongside a grid interconnection guarantee (i.e., no one—including that same corporate grid operator—can stop you from connecting your system and selling power, within reason), the EEG ensures predictable costs and financial returns for clean energy system owners, installers, and lenders, a bit like an insurance policy or a “put”. At a basic level, a feed-in tariff is a lot like your monthly electric bill flipped in reverse. But unlike a typical household utility bill, EEG incentives decline over time, meaning you’ll get more money if you install renewable energy today, rather than waiting until next year. This in turn means in order for clean energy to be as good of a deal in the future, the technology needs to get cheaper, more efficient, or both.
Second, the EEG simultaneously prioritizes middle and working class equity. In addition to guaranteeing a safe return for renewable energy investment, the EEG specifically and deliberately sets higher rewards and added benefits for small energy operators. The “100,000 roofs program” (100.000-Dächer-Programm) offered small solar system owners low-interest loans reminiscent of the post-WWII Veterans Affairs Home Loan Guaranty Program in the US that fueled middle-class home buying and allowed (predominantly white) veterans to own property. Estimates from recent years suggest close to half the renewable energy capacity in Germany is owned by citizens through household installations and more than 800 energy cooperatives, known as Genossenschaft. From early on, Germany’s metal workers unions (IG BCE and IG Metall), engineering association (the VDMA), and German crafts guilds like ZDH were active members of the EEG coalition, and benefited significantly from the job creation and employment stability it afforded.
Third, the EEG aims to be self-funded. Germany’s energy industry is a mix of public, private, and co-op organizations, but ultimately the EEG is a deficit-neutral roll-out with no changes to the country’s public finances. Individuals and companies install and operate renewable energy generation, get compensated for it by their local utility, and the utility passes along any costs or rate differences to all the consumers in its network. You stream power just like you might stream video on YouTube, but you can “create your own show” (by generating your own renewable energy), stream it back, and earn compensation. There is no “EEG tax” or official levy, for example, but it’s a pot both the energy haves and have-nots both pay into.
So what lessons might aspiring Green New Deal policy-makers and actors draw?
In the generally “good” column, the EEG notches some clear wins. A sizeable amount of renewable energy generation has been deployed, much of it owned and operated by individual families or for public benefit.
Moreover, albeit with some inconsistencies, the EEG has benefited Germany’s working class in terms of job creation and wages. There is however, some regional variance. If you’re a farmer in southern Bavaria, it’s more likely you own your own home and have plenty of land (or barn roof) to set up your personal microgrid operation. For an apartment renter in Berlin, there are additional barriers to getting a solar system installed on your roof, though I’ve still seen it done. This is a classic challenge in network economics and social theory; is everyone paying their fair share for participation in the network? And is everyone benefitting equally?
In the U.S., this aspect will make state and municipal energy policy as important in some regards as a federal Green New Deal. For one, states and cities don’t have to wait for Washington, D.C. to act on climate. California and Hawaii already have, while other pending legislation like the New York State Climate and Community Protection Act (CCPA) has a good chance of passing this year. Last week Highland Mark, MI even became the first city in America to formally adopt the Green New Deal itself through a city council resolution.
But another reason why state and city-level climate policy matters is because different parts of the country have different economic, demographic, and social interests. You can’t install a big solar farm in downtown Chicago like you might be able to in rural Minnesota, but you could make all of the buildings a lot more energy efficient. Different places and populations need different policy solutions, because they’ll end up playing different roles in decarbonizing society.
Another mark in the win column is that the EEG has been admirably iterative. In repeated bouts of humility and adaptiveness, German policymakers have recognized design flaws, attempting to steer and reform policy as its impacts are observed and interconnected ecosystems evolve. This approach makes abundant sense for the Green New Deal. We likely won’t get it right the first time. What matters is the courage to try a set of measures this ambitious at all, then learn from our successes and mis-steps. The Green New Deal should enact a formal, empowered committee to monitor progress, keep the plan on track, and propose amendments.
In the “mixed” column, the EEG’s financing strategy is noteworthy. To accommodate the massive influx of renewable energy the plan unleashed, Germany’s four major grid operators RWE, E.ON, ENBW, and Vattenfall (which is actually Swedish) made meaningful infrastructure investments to modernize the country’s electrical infrastructure. Those were largely private investment programs that passed costs on to rate-paying consumers. For the Green New Deal to succeed, similar-if-not-greater grid and energy storage investments must be made, and it will be essential to look at how those programs operate, who its stakeholders and constituents are, and where the benefits accrue. To adequately fund the Green New Deal, we should significantly cut down and reallocate wanton and destructive military spending, levy a carbon tax on polluting corporations, and ensure a regulatory environment where high-emissions companies can’t just pass the buck through to our monthly grocery and electric bills. And if that requires some level of deficit spending, so be it. Just ask Emmanuel Macron about his recent experiences allocating carbon costs to the working class.
Another question around the EEG—and really, globalization as a whole—is how to think about local climate policy in the context of global imperatives, pressures, and forces. While the EEG was a net boon to the German economy, environment, and working class, price competition from Chinese suppliers decimated subsets of Germany’s clean energy manufacturing. A small trade war ensued. Most of Germany’s leading solar cell and module manufacturers, Q-Cells, SolarWorld, Conergy, were pushed into bankruptcy and private bailouts.
Paradoxically, this price competition has made technologies like solar more affordable worldwide, a key feasibility step to making a Green New Deal affordable and ultimately possible. The cheaper a solar panel gets, the more local jobs to install them on rooftops get created, one of the reasons why solar installer is the fastest growing job in seven states: California, Florida, Minnesota, Missouri, North Carolina, New Mexico, and New Jersey. Even Trump’s 30% tariff on imported solar panels hasn’t blunted this trend.
Supply chains are complex. A rooftop solar installation in Florida might use steel from Pittsburgh, modules from China, and an SMA inverter from Niestetal and Kassel, Germany. Amid calls from groups like Detroit DSA to create a new federal “Great Lakes Authority” to revive domestic cleantech manufacturing and “make the rust belt green,” the Green New Deal will need to create fairness and equity for local workers and communities, and attempt to strike the right balance against these pressures. Like the EEG, a Green New Deal will have economic winners and losers. How do we re-train and re-skill fossil fuel workers who get displaced? How do we introduce enough clean economic development in areas that have traditionally relied on more carbon-intensive industry?
Certain initial signs are encouraging. In Holyoke, Massachusetts, a recent eco-labor coalition helped decommission the local coal plant, replacing it with 17,000 solar panels and a battery storage system. The surrounding area is being re-zoned for modern industry, while the former coal plant workers are receiving benefits and being educated and re-trained for new jobs. This is the type of model the Green New Deal will need to push forward with aggression and empathy all across the country.
The Green New Deal will also need to be even more holistic in its view of decarbonization than the EEG. The EEG’s impact and scope for transportation or eco-agriculture has been limited, and its policies have been justifiably criticized for not going far enough. Remember, Germany created domestic boom-bust cycles, instances of electricity grid instability, and plenty of public controversy with a deployment corridor aimed at 80% renewable generation by 2050. The Green New Deal targets a 100% net zero economy by 2030, alongside a much more comprehensive social justice framework.
To recap, there are at least four lessons U.S. policymakers and organizers should take to heart from the EEG:
1. Renewables are a critical starting point for grid decarbonization, economic development, and labor relations. We can’t even begin to decarbonize without unprecedented solar, wind, hydro, battery, and *cringe* nuclear capacity at the foundation of our energy system. But just as importantly, clean energy has to create and sustain a transitioning working class, providing wage-levels and opportunities that work for displaced fossil fuel and industrial workers. We likely can’t build the political power to enact a Green New Deal without stronger eco-labor solidarity; healthy eco-labor relations were a bedrock of German political coalition that passed the EEG. Similarly, the Green New Deal must contain genuine solutions for towns like Flint, Michigan, Everett, Washington, and Crossett, Arkansas—communities hit by environmental failures who lack the stability or privilege to think of them in those terms. We need to be on each other’s sides there too.
2. But, unlike Germany, our plan can’t just start and end at energy—we will need to take the same transformative leaps in agriculture and transportation.
3. The Green New Deal will need to be iterative, open to regular amendments, measurement, and fine-tuning. That said, “fine-tuning” a rapid, trillion-dollar mobilization to save humanity is going to cause some fairly wide pendulum swings. We need to anticipate and accept that, while protecting vulnerable communities who might inadvertently bear the brunt of the downside.
4. Finally, the Green New Deal can’t be a tax on the working class. There are plenty of answers for the obstructionists and budget ideologues, from re-allocating existing government funds and creating new sources of revenue, to direct deficit-funded stimulus. As many salient thinkers have already pointed out, we’re going to pay for climate change one way or another. We might as well pay for it on our own terms.
Overall, EEG-era Germany is an instructive Petri dish for modern clean energy policy, one our policymakers and pundits should inspect under a microscope more often. Similar lessons are visible in Japan’s recent, multi-decade journey to decarbonization, though that’s a separate article entirely. What’s clear, however, is the EEG’s twenty-year road to a renewables-rich Germany shows broad aspects of a Green New Deal are as feasible as they are desirable—but certainly not easy.
A Green New Deal will need to be bolder and even more socially inclusive than the EEG. And be both of those things in half the time.
Chris Bolman helps empower progressive organizers and people who care at Brightest, a New York Renews climate coalition member.
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