This interview by Anne-Sophie Clulow Garrigou was published in The Beam #1. We were lucky enough to speak with Professor Claudia Kemfert, head of the Department of Energy, Transportation and Environment at the German Institute for Economic Research, and Professor of Energy Economics and Sustainability at the Hertie School of Governance in Berlin. Here she shares her hopes and concerns with us about the future of renewable energy. Subscribe now to read more on the subject.
The Beam: Where are we now in terms of energy transition? Which country would you say is on the right track, and where could it be improved?
Prof. Claudia Kemfert: Denmark is quite far in its energy transition, with increasing shares of wind energy and an intended reduction of fossil fuels. Norway and Austria both have a high share of renewable hydro energy. China and USA both invest a lot in renewable energy and intend to substantially reduce their share of coal. Germany has done a lot but must do more especially to reduce the share of coal and increase the share of renewable energy. Much more has to be done to save energy and make transportation more sustainable and climate-friendly.
What are the German efforts in reducing CO2 emissions in comparison with other countries? Is Germany still an international pioneer?
Germany is one of the pioneers — but not the leading one — as it managed to reduce emissions by 32 percent in comparison to 1990. But the intended emissions reduction of minus 40 by 2020 will most likely not be met because of the still high share of coal and the missing strategies for sustainable and climate-friendly transportation and energy saving.
What are the main obstacles to the development of renewable energy sources today?
An energy system, which is based primarily on renewable energy, will be more decentralized, more dynamic, flexible and smart than the previous one based on conventional energy. All kinds of flexibility options are necessary such as dynamic real-time price information, demand side responses as well as more dynamic supply and demand reactions. We need smart grids, virtual power plants, demand-side mechanism, and storage. To implement all these changes a clever market design is crucial. This, however, is difficult to implement in a conventional energy system. The old system is not the new system. The old system has incentives to hinder an effective change towards the new system. That is a big obstacle.
What kinds of general trends have you seen in the renewable industry that stand out to you?
One major and impressive trend is still today the learning curve effect because of technological improvements and economies of scale. There will be more technological innovation towards flexibility mechanisms such as smart grids and storage based on renewable energy.
What are your main challenges in your work as an economist in renewable energy?
Economists look at how the economy can be regulated in order to act in a more sustainable way. Market regulation is necessary to get a more sustainable market, a more sustainable future. We need a new and better system to act in a more sustainable way. We need to move the market towards renewable energy — sustainable mobility and also energy saving. We need to get the prices right — and fair. Fossil fuels are still globally heavily subsidized causing a disadvantage to renewable energy. We have to reduce fossil fuel subsidies soon.
As an economist and professor, how do you think we can make renewable energy “sexier” than it is today for the general public?
A clever framework and political mechanisms are always necessary in order to improve the system. In my opinion, economists are crucial for this as they assess the economic consequences of climate policy and guide the politicians towards a more effective framework. Climate change is a severe problem. We need to reduce emissions and reduce reliance on fossil fuels by developing alternative technologies; for example, renewable energy or alternative fuels or more energy saving all need a framework. After the Paris agreement on climate change, the public is interested in solutions. Energy and climate change economists can provide transparency.
What is the economic cost of climate change according to your expertise?
The costs of climate change are huge, as several reports have shown. The economic chances of climate protection are huge, as there will be massive investment in innovative technology like renewable energy , smart grids, storage of energy efficiency technology, and jobs. Energy saving investment causes a double dividend as energy costs are reduced and the competitiveness of the whole economy is improved. In addition, the investment in regional economy is beneficial.