Keep-on-Track! Project National Report: Germany

Transcription

1 Keep-on-Track! Project National Report: Germany Contract No: IEE/11/842 Authors: Ingrid Bozsoki, eclareon Corina Bolintineanu, BEE (German Renewable Energy Federation)

2 TABLE OF CONTENT THE GERMAN RES-E SECTOR... 4 SUPPORT SCHEME... 4 BARRIERS TO THE ELECTRICITY SECTOR... 4 THE GERMAN RES-H&C SECTOR... 9 SUPPORT SCHEME... 9 BARRIERS TO THE HEATING AND COOLING SECTOR... 9 THE GERMAN RES-T SECTOR SUPPORT SCHEME BARRIERS TO THE TRANSPORT SECTOR LITERATURE AND OTHER SOURCES Disclaimer: The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein. 2

3 Interviewed Experts We would like to thank all interviewed experts for their very valuable input and support for this study. We highly appreciate their expert knowledge and availability in the framework of the Keep on Track! project on behalf of the European Commission. For this country study, the following experts were interviewed in 2014: Dr. Bern Wenzel, Institut für nachhaltige Energie- und Ressourcennutzung (INER) (Institute for Sustainable Use of Energy and Ressources) Johannes Daum, Verband der Deutschen Biokraftstoffindustrie e.v. (VDB) (German Biofuels Association) Jörg-Uwe Fischer, Deutsche Kreditbank AG (DKB) (German Credit Bank) Björn Klusmann, juwi AG 3

4 The German RES-E Sector Support scheme In Germany, electricity from renewable sources is supported through a feed-in tariff (FiT). The criteria for eligibility and the tariff levels are set out in the Act on Granting Priority to Renewable Energy Sources (Renewable Energy Sources Act - EEG). According to this act, operators of renewable energy plants are statutorily entitled against the grid operator to payments for electricity fed into the grid. The EEG also comprises the so-called market premium and the flexibility premium for plant operators who directly sell their electricity from renewable sources. Moreover, low interest loans for investments in new plants are provided by the KfW Renewable Energy Programme Standard (RES LEGAL Europe Database). The new government, formed by a coalition between the CDU/CSU (Christian Democratic Union of Germany/ Christian Social Union of Bavaria) and the SPD (Social Democratic Party of Germany), announced the fundamental reform of the feed-in tariff system as one of the first measures to be implemented. In January 2014, the Ministry for Economic Affairs and Energy (BMWi) presented a draft paper with key issues of this reform encompassing the reduction of support levels as well as fundamental amendments to the support system, such as obligatory direct marketing and a tendering procedure for determining support levels as of Barriers to the electricity sector Political and economic framework The existence of a general RES-E strategy and the reliability of the support scheme are questioned. In the context of last year s political debate on reforming the EEG and the draft paper presented by BMWi, the political and financial framework conditions for RES-E plants remain mostly uncertain. Especially with regard to the future design of the electricity market, no clear strategy exists. Building on coal as an indispensable energy source with shares of up to 40-45% in Germany s electricity mix until 2035 contradicts a rapid energy transition (re-frame.eu Database). Moreover, the proposals for reforming the EEG as outlined by the responsible Ministry are detrimental to the future development of renewables in Germany (re-frame.eu Database). In the wind sector, the proposed amendments, such as reducing support levels, introducing obligatory direct marketing and abolishing the market premium, and their implementation in the years to come, will cause uncertainties in capacity planning (Klusmann, juwi). These factors have already led to the reassessment of a number of wind projects that were in the pipeline, questioning their profitability under altering conditions (Fischer, DKB; Klusmann, juwi). The biogas sector, too, is hesitant to invest in new installations due to the uncertain future of the EEG, including future remuneration levels (reframe.eu Database). With regard to revenue risk under the given support scheme, the lengthy political discussion on slowing down rising electricity prices and the draft paper presented by the ministry created unstable general framework conditions for RES-E plants for the future (Fischer, DKB; Klusmann, juwi). For wind 4

5 power, concrete support tariffs have not been defined yet. It has only been indicated that support levels under the new EEG will be reduced by 10-20% as compared with 2013 support levels. Plant operators and banks need to turn to own assumptions in order to be able to assess the profitability of projects (Fischer, DKB; Klusmann, juwi). Rising financing risks tend to be passed on to project developers. Additional uncertainties regarding the costs and profitability of wind power generation are due to the introduction of obligatory direct marketing by 2017, the proposed flexible degression rate and repealing the market premium (Klusmann, juwi). In addition, a tendering procedure should be introduced by 2017 (BMWi, 2014). For biogas, not only did the Ministry lower remuneration levels in 2012, but proposals now include a yearly cap of 100 MW (Fischer, DKB). Given the increasing environmental and technical obligations for biogas plants (re-frame.eu Database), this technology cannot pay for itself anymore, which obstructs project financing (Fischer, DKB). The latest proposals for amending the EEG affect remuneration levels for RES-E across most technologies. Feed-in tariffs for wind power are set to be reduced by 10-20%, and yearly installation will be capped at 2500 MW with a flexible degression rate. For now, remuneration levels for wind power are estimated by banks and plant operators increasing financing risks for wind projects (Fischer, DKB). The 2012 amendments to the support system for PV installations, i.e. the reduction of tariffs by a flexible monthly degression rate, are considered effective by the new government and should be maintained. But tariffs have been reduced too much and too fast (re-frame.eu Database; Fischer, DKB). The amendments caused a decrease of newly installed plants of approx. 50% in 2013, with negative impacts on medium-sized producers in the PV sector (Fischer, DKB). The ongoing talk about reform of the EEG has had negative impacts on RES projects access to finance. In order to finance RES-E plants, banks need to take into account the financial framework conditions for these technologies over a period of at least 10 years. Uncertainties regarding the EEG have as a consequence the increase of investment risks for RES-E projects. Over the last years, new investors entered the market for PV installations. Insurances, fund managers and financial investors looked for long-term investment opportunities with reliable rates of return. These additional financial resources positively contributed to the development of the PV market over the last years, scaling up size and the financing security of PV projects. But in the course of 2013, decreasing rates of return ending up at 2-3% reallocated investments toward capital markets or other technology markets (Fischer, DKB). For wind power, financing costs increased, especially for project developers. This questions the profitability of a number of wind projects for which the authorisation procedure is in progress (Klusmann, juwi). Market structure The proposals for reforming the EEG include policy measures which might substantially transform the electricity market. Therefore, the existence of functioning markets for RES-E cannot be guaranteed in the future. Policy proposals for a significant transition to a market that sets sufficient incentives to sell renewable electricity are missing. Introducing obligatory direct marketing by 2017 and repealing the market premium do not allow for a better integration of renewables in the electricity market. 5

6 What is more, the green electricity privilege will be abolished without any comparable alternative (Klusmann, juwi). Another barrier, especially relevant in the Northern part of the country, where wind energy is well developed, is curtailment of wind power plants. This negatively impacts the financing of the project. According to existing legislation, wind power plants can be curtailed by the grid operator in case of grid bottlenecks. It is at the grid operator s discretion to compensate plant operators or not. Both options are regulated by law 1, though the decisions are most often non-transparent and difficult to question (re-frame.eu Database). Grid regulation & infrastructure An important source of barriers within this category is the lack of transparent and foreseeable grid development. As already outlined in last year s report, the current policy framework does not sufficiently stimulate grid reinforcement (Fischer, DKB). Taking into consideration that the amortisation of grid reinforcement investments takes approximately 40 years, the current policy framework does not provide adequate financial incentives to grid operators to undertake grid reinforcement. To date, transmission system operators (TSOs) are facing too high interest rates and have to account for risk liabilities, which leads to negative investment decisions. Financial incentives for a swift reinforcement are different for different grid operators. On one hand, there are two privately-owned TSOs which have vast financial resources at their disposal. On the other hand, there are partly state-owned TSOs which do not have these resources and cannot reinforce the grid accordingly. The same holds true for distribution grid operators (DSOs). Due to the vast number of DSOs, designing regulation to stimulate the financing of grid reinforcement is particularly difficult. Furthermore, the business model of DSOs based on collecting concession fees for the energy they transfer is in danger, partly due to the increase in own consumption. Seeing that many grids belong to municipalities, which can choose to invest the mentioned revenues in other areas, grid reinforcement activities are difficult to be carried out. In addition, grid expansion at the transmission and distribution level lacks coordination. Network development at the transmission level has to take (regional) network plans at the distribution level into account in order to achieve even greater coherency. Vice versa, bottlenecks at the transmission level also affect producers connected at the distribution level, and many RES-E producers feed in at this level. In case this relation between the transmission and distribution levels will not be considered, acceleration of grid expansion and optimisation will not be sufficient for keeping pace with the installation of RES-E plants (re-frame.eu Database), especially seeing how the implementation of grid expansion measures is already delayed both at transmission and distribution level (re-frame.eu Database). 1 Curtailment with compensation is laid down in 11 EEG; Curtailment without compensation is regulated by EnWG. 6

7 Another issue refers to the costs of RES-E grid access, which are increasing for biogas plants. Grid access is becoming more complex and costly due to higher technical requirements. In addition, plant operators have difficulties having grid access at all, given the delayed grid expansion (re-frame.eu Database). Administrative processes The majority of barriers reported within this category regard the integration of RES-E into spatial and environmental planning. Spatial planning in Germany differs from one federal state to another, for example as regards height and distance restrictions for erecting wind power plants. Spatial planning can even differ within one state, as some municipalities have planning authority on these issues and can decide for example to include a height limitation in their land-use plan (a common limitation is around 100 m overall height). These restrictions may hamper repowering of older wind power plants. Thus, in many German regions, it is not possible to use all available wind energy potential (re-frame.eu Database). While land-use planning has improved in this regard, for example in Schleswig-Holstein, where areas designated to wind doubled (re-frame.eu Database), federal states like Saxony and Bavaria intend to make use of the so-called Länderöffnungsklausel. According to the draft paper on reforming the EEG, this clause grants federal states even more regulatory freedom for determining minimum distances between wind power plants and residential areas. In February 2014, Bavaria passed a cabinet decision defining minimum distances for wind power plants, which must be at least ten times its hub height (Bavarian State Chancellery, 2014; Fischer, DKB). As a consequence, nearly 100% of potential areas for wind power development are not available anymore (Fischer, DKB). What is more, Bavarian District Offices ceased to emit authorisations for wind power plants even prior to the Bavarian cabinet decision (Klusmann, juwi). In other regions, an increasing number of wind projects are prohibited for the duration of the amendment procedure of regional plans (re-frame.eu Database). It is clear that this current tendency in spatial planning has the potential to completely stop the development of wind power at federal state level. Further issues regard units with an overall height of more than 100 m which require daylight marking and night-time safety lights and the proximity of wind turbines to radar areas. Residents feel disturbed by night-time safety lighting, which makes it difficult to realize potentials (re-frame.eu Database). Secondly, the proximity of wind power plants to radar areas is gaining significance. This applies to military radar areas as well as civil ones, of for example meteorological services or civil aviation (re-frame.eu Database; Klusmann, juwi). By the end of 2013, approx MW planned wind power projects could not be realised due to objections by operators of radars (BWE, 2014). A dialogue with the military on this matter has been initiated and contact persons have been assigned. Thus, progress has been made on this matter. However, cooperation with the German air traffic control and the German Weather Service proves to be more difficult constituting are more serious barrier (Klusmann, juwi). 7

8 Another barrier is related to the complexity of the administrative procedure for grid reinforcement. Authorization processes are lengthy at every level, and there is public resistance and delays by grid operators (re-frame.eu Database). Other In order to analyse public perception of RES-E in Germany, one needs to differentiate between public endorsement of the support mechanism at an overarching level and the opposition from local communities to the erection of such plants. Regarding the overarching public support, the debate still focuses on the cost aspect and the distribution mechanism of the support system for RES-E (EEG- Apportionment scheme). The mechanism used allows utility companies to pass the costs of the scheme on to consumers in form of a surcharge on electricity prices. However, equal burden sharing is undermined by existing exemptions for energy intensive industries on grounds of competition. It has been pointed out that the political debate focuses disproportionately on these cost aspects, neglecting the generally high level of support required for such a fundamental energy transition (Klusmann, juwi). As regards the acceptance of erecting RES-E plants in local communities, it has improved over the last two years, mainly due to public participation. Getting local citizens involved in the early stages of a project and giving them the possibility to take a financial share in the project is key to maintaining public support for the energy transition (Fischer, DKB; Klusmann, juwi). However, public acceptance varies across different technologies. Public acceptance of biogas in Germany is declining. The public discourse focuses on the food vs. fuel dilemma, creating thus a negative image of biogas as a renewable energy source. This perceived negative image influences political decisions about the support scheme for biomass and the concrete remuneration levels (reframe.eu Database). Geothermal energy projects have struggled with acceptance issues as well. Several project sites have experienced opposition by local citizens. The reasons were risks (such as seismicity) or economic inefficiency of the projects. The geothermal sector represents only a small fraction of the German renewable energy sector. Thus, it lacks the capacities to start comprehensive information campaigns to positively influence public perception so that projects get realised (re-frame.eu Database). 8

9 The German RES-H&C Sector Support scheme In Germany, heat from renewable energy sources is supported through the Market Incentive Programme (MAP) 2. The Federal Office of Economics and Export Control (BAFA) 3 provides investment support for heating systems under the MAP. Heating systems in existing buildings are eligible for this investment support. Systems in new buildings are only eligible under the Market Incentive Programme if process heat is used. The investment support is divided into basic support, bonus support and innovation support. Furthermore, the KfW bank offers loans for RES-H projects. By means of the Premium component of the KfW Renewable Energies Programme, the KfW provides long-term, low-interest loans including a repayment-free start-up period for the development and expansion of heat systems/plants. In order to be eligible for the above-mentioned support, systems need to be erected in Germany and need to continue operation for at least 7 more years after receiving support (RES LEGAL Europe Database). Barriers to the heating and cooling sector Political and economic framework The majority of barriers reported within this category refer to the existence of a general RES-H&C strategy and the reliability of the support scheme. Politics and the media and thus public discourse focus almost exclusively on transforming the electricity sector when referring to the German Energiewende. The heating market, with its huge potential for financial and CO 2 -savings, is widely ignored or considered only to a negligible extent (re-frame.eu Database). In addition, existing policy focuses mostly on new buildings (EEWärmeG and EnEV). As described in last year s report, the MAP (for existing buildings) has only had a minor positive effect on increasing the sales volume of renewable heating technologies, as it offers a continually changing and not sufficiently lucrative financing framework. Moreover, its technical and administrative requirements are too demanding and hard to be met (re-frame.eu Database). After being interrupted in 2010, the MAP lost reliability in the public perception. Because of that and because of discussions about introducing a tax relief for retrofitting the building stock - which had been going on during coalition negotiations in autumn the fear of missing financing led to a lack of confidence and to an inertia of consumers and installers. Finally, no tax relief was included in the coalition agreement of the new government. The unreliable funding, together with the intrinsic lack of confidence of consumers, has had a negative impact on the choice of technology, among which systems for heat from wood pellets (reframe.eu Database). 2 The provisions of the MAP are laid out in the Guidelines for the support of RES-H (Richtlinien zur Förderung von Maßnahmen zur Nutzung erneuerbarer Energien im Wärmemarkt vom 11. März 2011). 3 Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA) 9

10 Furthermore, the replacement of the heating system itself competes with energy efficiency investments. When deciding to renovate a building, private consumers are faced with a choice between different measures better insulation, new windows or the replacement of the heating system. Due to the high costs incurred by a new heating system and even more by the ones incurred by a solar thermal one, energy efficiency measures tend to be prioritised by consumers (re-frame.eu Database). At the same time, the lack of possibilities to implement energy efficiency measures, for example due to monument conservation regulations, may leave the buildings stock with a very high heat demand. Therefore, the different RES-H technologies may not live up to the building s high heat demand when operated in an energy and cost efficient way (Wenzel, INER). As a consequence, the absence of energy efficiency measures can be an indirect barrier for the use of RES-H technologies. The tenant-landlord dilemma is another barrier. Under current legislation, a new heating system based on renewables incurs costs, which cannot be passed on to the tenants, while tenants profit from reduced heating costs. Private landlords are not interested in replacing the heating systems of their buildings, and even among commercial landlords the interest is low (Wenzel, INER). To conclude, support instruments appear to be rather ineffective in substantially increasing the share of RES-H in buildings. Regarding the remuneration level for RES-H&C, solar installations have high investment costs, of which approx % go to installers for sale, installation and maintenance. Furthermore, the systems have a long payback period, of years (re-frame.eu Database; Wenzel, INER). Due to the absence of price transparency and competition between installers, decreasing production costs of solar installations are rarely passed on to the customer. However, it has to be considered that solar installations require a higher level of proficiency and skills of installers, as well as a higher amount of work to integrate the new heating system into the existing building than conventional heating systems (Wenzel, INER). Another barrier within this category refers to the access to finance. For example, geothermal projects are characterised by high capital requirements, but access to financing from banks can be obtained only after project developers have financed the boreholes (re-frame.eu Database). There are many uncertainties regarding the profitability and the stability of boreholes over refinancing periods of approx. 20 years. That is why banks usually consider geothermal projects to be venture capital businesses. In the context of access to finance, geothermal projects qualify as R&D projects, with corresponding risk levels (Fischer, DKB). Market Structure Within this category, the dominance of conventional retailers can be observed. RES heating systems still play a minor role when customers consult installers for alternatives. One reason is the cooperation agreements that installers have with conventional heating system providers (reframe.eu Database). Furthermore, some installers do not even recommend investing in renewable heating systems, which has a detrimental effect on the general acceptance of RES-H. 10

11 Other The public perception of RES-H&C is a relevant source of barriers within this category. The consumers are increasingly insecure and misinformed with regard to the best available heating system and to future possibilities for financial support. This applies to various technologies, for example heat pumps and solar thermal installations. In case of solar thermal installations, thermal energy meters are also not common, so that the correct functioning of the installation cannot be monitored. This means that the monitoring is delivered only at an additional cost. Regarding financial support, a lot of decisions to exchange old and inefficient heating systems were postponed, because consumers were expecting a policy introducing tax reductions for renewable heat to be passed. The policy was discussed during coalition negotiations in autumn 2013 by the coalition parties, but was finally excluded from the coalition agreement (re-frame.eu Database). As regards the distribution of heat pumps, this technology is very influenced by the negative perception of the general public about using electricity for heating purposes. However, because of Germany s altering electricity mix in the coming years and an increasing share of RES-E, heat pumps carbon footprint will improve further. The use of biomass for heating purposes is characterised by the same negative and mostly undifferentiated public perception as in the electricity and transport sector (re-frame.eu Database). However, in the future, the use of biomass for pellet heating might be restricted by Germany s overall biomass potential (Wenzel, INER). The training of installers also represents an important barrier to the diffusion of RES-H. Installers and craftsmen often lack the technical expertise necessary for a successful installation and maintenance of the different RES-H technologies. In many cases, installers and craftsmen cannot warrant the efficient operation of RES heating systems. Due to these inefficiencies, the operating costs of these installations increase. As a consequence, many installers do not even recommend investing in renewable heating systems. This has had a detrimental effect on the general acceptance of RES-H. Producers and manufacturers of the various heating systems will have to work on standardising their products and on making them more installer friendly in a plug-and-play mode (Wenzel, INER). 11

12 The German RES-T Sector Support scheme In Germany, the main support scheme for renewable energy sources used in transport (fuel for road transport) is a quota system. This scheme obliges companies importing or producing petrol, gas or diesel fuels to ensure that biofuels make up a defined percentage of the company s total annual sale of fuel as set out in the Biofuel Quota Act. Obliged fuel suppliers may assign this obligation to other companies. From 2015, a greenhouse gas reduction quota will replace the biofuels quota. Besides the quota, biofuels are supported through fiscal regulation. The Energy Tax Act on mineral oil products obliges companies producing, processing, holding, receiving or dispatching energy products to pay a defined amount of tax. The tax relief for biofuels varies by the type of biofuel. The tax relief is only granted if the biofuel is pure and not used to fulfil the biofuels quota (RES LEGAL Europe Database). Barriers to the transport sector Political and economic framework The barriers best described as the European institutions position on RES-T create a disadvantageous general framework for the German biofuels sector. The European Commission s 2030 climate and energy goals, presented on 22 January 2014, do not mention any RES targets for the transport sector (European Commission 2014). This lack of European perspective for the transport sector beyond 2020 fails to encourage EU member states to focus on target achievement for 2020 in their RES-T sector and will require national policy making. A renationalisation of RES-T policy in the European Union might narrow EU-wide market opportunities for the German biofuels sector (Daum, VDB). Another relevant barrier at the European level regards the ILUC debate. In October 2012, the European Commission released a legislative draft addressing indirect land use change (ILUC) caused by biofuels. However, there is no reliable scientific basis for measuring ILUC. The Commission, the Parliament and the Council could not reach an agreement on the draft leaving the European biofuels industry to grapple with a lot of uncertainty. The additional amount of administrative work for reporting on biofuels GHG emissions due to ILUC and the proposed cap of 7% for 1 st generation biofuels might stop the development of the biofuels sector altogether. Furthermore, the issue of indirect land use change is addressed selectively by focusing on biofuels, when ILUC occurs for every land use change, for example for fossil fuel power plants, for the building industry and for agriculture and food production (Daum, VDB; re-frame.eu Database). Restricting market opportunities for biofuels will also have negative impacts on R&D activities, such as R&D for shifting toward advanced biofuels based on agricultural and forestry residues as well as on used cooking oils and animal fats (Daum, VDB). 12

13 Another problem is that there is no coherence between the Renewable Energy Directive 2009/28/EC and the Fuel Quality Directive 2009/30/EC. So far, there is no approach at EU level to link the 10% target for renewables in the transport sector of Directive 2009/28/EC with the 6% GHG reduction target for fuels of Directive 2009/30/EC. On the one hand, most Member States have not transposed Directive 2009/30/EC into national legislation. On the other hand, the European Commission has not yet issued related definitions or methodologies, for example for GHG accounting of fossil fuels (reframe.eu Database). Important sources for barriers in the RES-T sector at the national level are the lack of a general strategy and the missing reliability of a RES-T support scheme. As already outlined in last year s report, German policy lacks a long-term vision about the role of biofuels in the German fuels market. A concretisation of how to implement the national 2020 target for the transport sector is missing. For the period after 2020, German policy lacks both targets and a plan for action (Daum, VDB). This leads to the lack of appropriate goals for the market development of biofuels a barrier prevailing since last year s report. The mineral oil industry is statutorily required to place each year a fixed share of biofuels on the market in order to fulfil a fixed quota of 6.25%. The biofuel quota will be abolished starting in Instead, global greenhouse gas reduction targets for the entire fuels market will be introduced, which can be achieved through the use of biofuels. As of 2015, 3% must be saved annually, as of %, as of %. The 3% annually until 2017 can be met without any significant growth in the use of biofuels (re-frame.eu Database). Another still relevant barrier is the absence of financial incentives for pure biofuels. The fiscal stimuli for biofuels as set out in the Energy Tax Act are insufficient to stimulate the development of a functioning market for pure biofuels. The tax relief for biodiesel (B100), vegetable oil, bioethanol (E85) and biomethane are granted if the produced biofuel is pure and not used to meet the biofuel quota 4 (RES LEGAL Europe Database). However, the tax relief for biodiesel has been phased out on 1 January 2013, completing the gradual taxation of pure biodiesel that had started in The tax exemption for bioethanol will be phased out by As a result, the interest in developing pure biofuels has been reduced and market shares have decreased significantly over the last years (Daum, VDB; re-frame.eu Database). By neglecting the use of pure biofuels, for example in freight transportation, German policy misses an opportunity to increase the flexibility for achieving the 2020 target in the transport sector (Daum, VDB). Market structure Within this category a central barrier is related to the lack of fair and independent regulation of the RES-T sector at EU level. A dysfunctional single European market for biofuels still exists, with discriminatory, non-transparent administrative and tendering procedures in some EU Member States. This reduces the level playing field for German biofuel producers and needs to be solved at EU level (Daum, VDB). 4 Art. 50 EnergieStG in connection with Art. 37a (1), (3) and (3a) BImSchG. 13

14 Grid regulation & infrastructure As regards technological issues, an ambitious policy regarding blending limits is so far missing. The current blending quotas of 7% biodiesel with diesel and 10% ethanol with gasoline are insufficient to meet the 2020 target of 10% in the transport sector. Within the limits of technical feasibility, higher blending limits need to be set politically. Car manufacturers and the mineral oil industry have to be given sufficient time and incentives to adopt the new standards and to adapt technical standardisation. This way, the use of biofuels could be diversified. First attempts to bring forward standardisation of blending limits of 10% (B10) and 30% (B30) biodiesel with diesel can be witnessed at EU level (Daum, VDB; re-frame.eu Database). Administrative processes In this category, it is environmental issues concerning biofuels that represent a barrier for the sector. Switching to a greenhouse gas reduction quota in 2015 will again increase requirements for the German biofuels sector. Showing the achieved greenhouse gas savings will involve complex calculations and translate into an increased workload for biofuel producers (re-frame.eu Database). Moreover, the concrete processes, methodologies and provisions for calculating the quota are still undefined (Daum, VDB; re-frame.eu Database). Since Germany is the only EU country to introduce a greenhouse gas reduction quota, the level playing field for German biofuel producers will be reduced once again as compared to their European competitors. The same effect was witnessed when Germany unilaterally tightened its sustainability criteria for biofuels and European competitors could benefit from the experiences of German biofuel producers. Other Sustainability criteria for biofuels are one source of barriers within this category. Biofuels have to be certified as sustainable if they are counted towards fulfilling the quota or apply for tax exemptions or reductions. So far, not all EU Member States have introduced sustainability standards. At the same time, existing standards and certification practices vary considerably across Member States with Germany having a comparably rigid and far reaching regulation for certification. The absence of verification procedures or cross-country rules for the approval of national and voluntary schemes place German producers in a disadvantaged position on the European market. Furthermore, the absence of a harmonised EU-wide database for proofs of sustainability and a European clearing point for proofs of sustainability increases the risk for using one proof of sustainability in more than one Member State (Daum, VDB; re-frame.eu Database). As regards the taxing regime of biofuels, the tax exemption for biomethane will end by Until now, there is no decision to extend the tax exemption (re-frame.eu Database). The absence of a positive public perception of RES-T is an important barrier for the development of renewables in the transport sector. Despite the introduction of sustainability criteria, the media and the public debate frequently focus on the food vs. fuel dilemma, due to the extensive growth of 14

15 monocultures (maize), associated by the public with fuel production (re-frame.eu Database). Displaying greenhouse gas emissions caused by indirect land use change as foreseen by the European Commission might damage public reputation of biofuels even further. This is especially unfair, because ILUC regulations apply selectively to the biofuels sector and leave out other sectors like the fossil fuels sector or the food processing sector. In general, there is little differentiation in the public debate between different biofuels, and this hampers public acceptance. Most of the negative consequences of biofuel production such as land use change and deforestation of rainforests refer to palm oil production. It remains unmentioned that biofuels on the German market were produced to approx. 80% from canola in 2012, while palm oil covered a market share of only 5%. The complexity of the topic and the resulting lack of differentiation give rise to low levels of public acceptance (Daum, VDB). 15

16 Literature and other sources Bayerische Staatskanzlei Bavarian State Chancellery (2014): Pressemitteilung Bericht aus der Kabinettssitzung, Available at: pdf (last visit on ). Bundesministerium für Wirtschaft und Energie (BMWi) Federal Ministry for Economic Affairs and Energy (2014): Eckpunkte für die Reform des EEG. Available at: (last visit on ). Bundesverband WindEnergie e.v. (BWE) German Wind Energy Association (2013): Hintergrundpapier: Windenergieprojekte unter Berücksichtigung von Luftverkehr und Radaranlagen. Available at: (last visit on ). Daum, VDB: Johannes Daum, Verband der Deutschen Biokraftstoffindustrie e.v. (VDB) (German Biofuels Association). Interviewed on European Commission (2014): 2030 climate and energy goals for a competitive, secure and lowcarbon EU economy. Available at: (last visit on ). Fischer, DKB: Jörg-Uwe Fischer, Deutsche Kreditbank AG (DKB) (German Credit Bank). Interviewed on Klusmann, juwi: Björn Klusmann, juwi AG. Interviewed on re-frame.eu Database: Online database on barriers to renewable energy and the corresponding policy recommendations National profile for Germany. Available at: RES LEGAL Europe Database: Website on Legal Sources on Renewable Energy. European Commission. Available at: (last visit on ). Wenzel, INER: Dr. Bernd Wenzel, Institut für nachhaltige Energie- und Ressourcennutzung (INER) (Institute for Sustainable Use of Energy and Ressources). Interviewed on