“The costs of climate change are huge” says German economist expert Claudia Kemfert
Claudia Kemfert,
Professor Energy Economics and Sustainability at German Institute for Economic Research Berlin
“We need a new and better system to act in a more sustainable way.”
March 2016, BERLIN - Claudia Kemfert is a German economics expert in the areas of energy research and environmental protection. She is a Professor of Energy Economics and Sustainability at the Hertie School of Governance in Berlin and heads the Energy, Transportation and Environment department at the German Institute for Economic Research (DIW Berlin). I talk to Kemfert about the main obstacles and most interesting trends in the development of renewable energy globally.
Where are we globally today in terms of the transition to renewable energy systems? Which countries would you say are on the right track?
Denmark is quite far in the energy transition, with increasing shares of wind energy and intended reduction of fossil fuels. Norway or Austria both have a high share of renewable hydro energy. China and USA both invest a lot for renewable energy and intend to substantially reduce the 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 the mobility more sustainable and climate friendly.
What are the German efforts in reducing CO2 emissions in comparison with other countries? Is Germany still seen as a pioneer today?
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 missing strategies for a sustainable and climate friendly mobility 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 kind of flexibility options are necessary 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 are the most interesting trends that you have seen in the renewable industry?
One major and impressive trend is still the learning curve effect because of technology improvement and economies of scale. There will be more technology innovation towards flexibility mechanisms 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 subsidised causing a disadvantage to renewable energy. We have to reduce fossil fuel subsidies soon.
As an economist and professor, how do you think can we make the information around renewable energy more accessible 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 fuel by developing alternative technologies, so for example renewable energy or alternative fuel 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 economical 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 as renewable energy , smart grids, storage of energy efficiency technology, cause value added 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, investment in regional economy is beneficial.