Proactive Energy Policy: Germany's EEG

Whether Sen. John McCain or Sen. Barack Obama becomes our nations next president, the issue of environmental policy and domestic energy production is going to play a dynamic role in our nation’s future. The question that these two candidates will have to answer during their campaigns is, “How will your energy policy create a better future for Americans and the environment?”

So far, McCain has suggested adhering to free market principles with clean energy except for government subsidies for nuclear power and clean coal. He has also promised a $300 Million incentive to the producer of a high achieving car battery. Obama, on the other hand, has promised money. In his proposed budget, Obama is allotting $150 billion over 10 years to clean energy initiatives compared with McCain’s $2 billion annual promise to clean coal production (only number available on McCain’s Lexington Project site). Maybe the promise of free market principles or a lot of money can solve our energy crisis, but then again, maybe they won’t. For this sake, I am promoting specific energy policies that act proactively instead of reactively. My model is Germany’s EEG, Erneuerbar Energie Gesetz, or Renewable Energy Law.

The EEG began with roots in the 1990s where wind power alone was benefited, but the law really developed during its actual birth in 2000 to include almost every source of renewable energy. The policy is based on the principle of Feed-In Tariffs, which work by guaranteeing the sale of renewable energy by its producer to the utility. The catch is that the RE producer is guaranteed to sell the energy at above market rates determined by the law, which it then distributes evenly across its customers. In the end an average family pays an additional 2-3 euro on the monthly bill. This way, the tariffs don't punish the utility, and the higher cost is distributed among all of the consumers based on their consumption. These tariffs regress in amount in fixed increments that are specified by the EEG and specific to the type of renewable energy technology used. Therefore, more affordable renewable energy sources see a lower tariff than a more expensive RE technology.

Examples of these Feed-In Tariffs:

Both on- and offshore Wind Turbines are guaranteed a feed in tarif of 8.96 €cents for every kWh produced in 2002, which regresses to 8.83 €cents in 2003, and then 8.70 €cents in 2004. Similarly, Biomass (up to 500 kW) earn a feed in tariff of 10.13, 10.03, and 9.93 €cents/kWh for 2002 to 2004 respectively. From Geothermal to Hydropower to Landfill gas, each Feed-in Tariff is in the 6 to 10 €cents/kWh with one exception; Solar PV. For Solar PV panels (5 MW), the Feed-in Tariff is 48.09 €cents for '02, 45.68 €cents for '03, and 43.40 €cents for'04.

*It is important to note that the EEG takes measures to benefit smaller energy producers with high respective FiTs. So while a Solar PV producer of 5 MW earns a tariff of 43.40 €cents/kWh in 2004, a homeowner with a PV panel capable of producing 30kW/h can earn a tariff of 57.4 €cents/kWh. The difference is substantial enough to promote small ventures and private investment in renewable energy.

**Also, The EEG is guarantees these FiTs for 20 years, thus providing the security that entrepreneurs need to set up shop in a new industry. This long term legislation is part of the reason why Germany in experiencing surprising economic growth despite the global credit crunch. The first quarter of 2008 was the best in the past 12 years, expanding their economy by 1.5 % for the quarter (compared to the 0.6% GDP first quarter growth of the US).

The tremendous difference in the FiT for Solar PV is mostly because of the expensive price of a Photo-Voltaic panel. A fraction of it might just be to provide incentive to create the strongest solar industry, which brings me to my next point.

While the EEG provides a proactive policy for the benefit of all renewable energies, it doesn't mean that similar Feed-in Tariff legislation needs to be conducted in this same manner. While it is ideal to promote a number of RE technologies, this is impartiality is expected on a national level. In order to expect the same here in the US, this would mean waiting around for our federal government to pass a FiT policy. I am advocating that states, specifically Michigan and Ohio, beat the federal government to the punch. We should be viewing a proactive policy like the Feed-in Tariff as an impetus for economic growth.

Here is my proposal: Because of the hurting state of Michigan and Ohio's economies, the state legislators should be picky with which types of RE technology benefit from a FiT policy. For example, Ohio could choose to only promote a FiT for wind turbines, and guarantee is for 15 or 20 years, long enough to convince start-ups to choose Ohio. Why should Ohio choose wind and not solar or geo thermal? First of all, Ohio isn't exactly the sunniest state in the US, and I don't know of any existing infrastructure that could really take off given a friendly market. On the other hand, Ohio, specifically southwestern Ohio, more specifically Dayton, is home to one of the nation's best aerospace infrastructures in Wright Patterson Air Force Base. We are also home to what is possibly the nation's preeminent composite industry, a composite valley.

Michigan could probably also benefit from a wind focused FiT policy, but just in other ways. While we lack the aerospace and composite infrastructure that southwestern Ohio has, we have lake effect winds on the west coast of the state.

Okay, I'm no economic developer or legislator, so I'm sure that there are holes in my idea. Commenters, have at it. I want to know what everyone thinks. Bring your best criticisms, especially if you are an economist or legislator. Will FiTs work on a state level?

Traveling Beyond Detroit: The Bicycle

We are all familiar with the argument; save gas, ride a bike. While many have decided to take the challenge and go by bike, the fact remains that we as a society are deeply attached to the personal automobile. This begs the question, "Why?"

As an avid rider myself, I find it hard to believe that such a large majority doesn't enjoy biking for the sake of biking. Rather, I think the determining factor is convenience. I realize that bikes often are less convenient than cars, but this is a convenience that is becoming ever more difficult to pay for. Also, the convenience of biking does not have to remain static. Imagine how much the convenience of driving a car everyday to work would diminish if the roads were constructed of nothing more than speed-impairing gravel, parking was sensible parking was nearly impossible to come by, and our traffic laws were designed with something other than cars in mind. The difference would be incredible. If much of convenience depends on external structures, than it is entirely possible to improve the convenience of something like biking as a form of transportation.

Since I'm living in Germany right now, I'll share some practices here that makes bike transportation more convenient.

Bike Lanes

In every German city that I have ever visited, the bike lane system is extensive. Each system stems from the heart of the city and branches out radially to connect different neighborhoods. Depending on the size of the city, the branched bike paths are connected in whichever manner makes the most sense. The bike paths are designed for mixed use, and are clearly divided between a pedestrian friendly half and a bicycle friendly half. If a biker is approaching a group of pedestrians, the biker just rings a bell, or squeaks the brakes to let the pedestrians know to move on their side on the path.

At the very heart of the city, it isn't uncommon for certain streets to be pedestrian only zones. These are usually the streets with outdoor markets. On any road without a bike path, the road is shared, and the those on bike ride without fear of cars (but they also follow rules).

Bike Storage

Just as cars need parking lots or garages, bikes need bike racks or lockers in order to increase the convenience. Plus, it's just good for organization and security. Cities won't have to worry about an entire workforce worth of bikes being locked to flagpoles, fences, rails, and trees. Riders won't have to fret about locking their bikes in a safe area.

Depending on the city design, a centralized bike locker can make sense. A centralized locker requires that a large number of jobs be concentrated in a relatively small area, so downtown business districts are usually a safe bet. In cities with less concentrated employment, centralized lockers can still make sense providing that public transportation or pedestrian traffic is accommodated to connect the dots. In some cases, smaller decentralized lockers will just make more sense, especially if there isn't already established convenient public transportation.

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Bike Storage Case Study: Freiburg, Baden-Württemberg, Germany

While I was in Freiburg earlier this summer for the TREE seminar, I took a renewable energy tour of the city. The tour covered solar and biogas, but we also spent time on transportation. The tour started at the RE-tour agency's office, located in a mixed use bike locker facility. It was part bike locker, part café, part bike shop, and part city of Frieburg renewable energy tour agency office space. On a side note, those are solar panels on the sattelite dish looking thing. On the front of the building hung a meter which showed how much energy was being generated and consumed by the building. This building was definitely a centralized bike locker, and the location definitelz impacted this. One needed only to step off the Straßenbahn (Tram) at the main stop, and walk 20 meters. Plus, the main stop was conveniently located on a bridge spanning Frieburg's Hauptbahnhof (main train station). This transportation trifecta allowed those living in neighborhoods outside the city to commute by bike (which, if only a few miles away is faster than the tram, because of the fluidity of the bike path and Tram stops), park their bikes at the locker, and then catch a quick Tram ride to their office building or a Train for a daytrip/weekend getaway. Prepare yourself for pictures.

The effect is that of a parking garage. This is the basement/ground floor, and these are all citzen bikes that get dropped off in the morning and picked up at the end of the workday.

This is looking inward toward the center of the building.


This picture makes it look like you just remember your number come pick-up.

The fun doesn't end here though, because as we made our way back upstairs an onward on the tour, our guide drew our attention once more to the exterior of the building. In this case, we were directed to study the café balcony. Go ahead, study...

Nothing yet? That's okay. The next picture is my attempt to get a closer shot.

Answer: The balcony railings are actually water pipes that take advantage of the sun's heat to warm the water before running through the boiler line to heat the café or hot water line in the kitchen and bathrooms. Be impressed, it's okay.

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So, what can we learn from Freiburg? The culture is obviously different, and so is the city design. Some naysayers might end the conversation there, saying that such infrastructure just wouldn't fly in the States, certainly not small Jackson, Michigan or suburban Dayton, Ohio. And they might be right, because we don't have the same city design, equivalent public transit, or bike culture. The thing is, we don't need to be the same as Freiburg. We can meet our own needs and still be progressive and ambitious enough to open the door to better bike culture and public transit.

Please use the comments as a forum to discuss this topic. What does everyone think? How can we build upon Freiburg's ideas? What is feasible? Do we need to consider other factors?

Catch-up Part 2: Home

Although I thoroughly enjoyed my time in Nicaragua, I was glad to be back in the states. My first night back, I stayed at my friend Sam’s in Dayton. He welcomed me back with familiar diet staples of mine: milk, cereal, and ice cream. What a guy! The next morning I rode back to Jackson with my sister Monica, who was nice enough to make the drive down to Dayton to pick me up. I was looking at five full days with the family before I had another plane to board. I did my best to knock off items systematically on the “To-Do” list, but some things were more of a challenge than I expected. My younger sister Gretchen luckily was already out of school, so we were able to catch up a fair bit, but much of the rest of my family were victims of one volatile “To-Do”… my plane ticket. I had reluctantly put off purchasing my plane ticket to Germany because my parents had graciously offered to gift some of their frequent flyer points to me, an offer that the cons of Procrastination never stood a chance at discouraging me from accepting.

Unfortunately, I, my mom, and my dad all lacked the necessary account information to make such a transaction, so we spent a good deal of time mixing up holding-time with increasingly more frantic explanations to the good people at Northwest Airlines’ 1-800 number. In the end it worked out, but the price I paid for booking my flight days before my intended departure was harsh; Instead of leaving on a Friday, I had to settle for Wednesday, and instead of flying direct, I was left with no other option but to connect from Detroit to Hartford to Amsterdam to Frankfurt.

New Mission: pack and arrange all travel accommodations in a day and a half. Yikes! I raced from the Nomad Bookhouse in downtown Jackson to pick up some books from my long hours to be spent en route, to St. Vincent de Paul’s to pick up some work slacks and shirts, to Gramer’s Chocolates on Waterloo to get some gifts for my hosts and friends that I would be meeting up with in Germany, only to come home receive gift cards to Elder Beerman’s from a mother who isn’t too keen on hearing that her son intends to wear thrift while overseas in fashion conscience Europe. Moms… aren’t they great?

Unfortunately, I still hadn’t packed. In fact I still needed to wash my clothes from Nicaragua. While my multiple loads of laundry passed through their spin cycles, I was graced by a last-night visit from my friend Mark; so much for sleeping. Mark and I covered a lot of ground, from dreams of grandeur and life plans to theology. By 4:00 or 5:00 in the morning of departure, I was back to folding my laundry and ready to start packing. By 8:00 AM, I figured I could lie down for a half hour, which inevitably turned into an hour. No worries, I recalled that my flight was to leave Detroit Metro at 12:40 or something like that. I can always sleep on the plane, I told myself.

Just as I finished the morning particulars, I decided to once again check my plane ticket. Yes, it’s still where I remember putting it, in my breast pocket. Departure time, 12:40? Departure time… Wait. Oh God, this can’t be right, I swear… 10:40? With heart beat gaining momentum, I quickly checked my watch. 9:17!

I burst into Monica’s room, who on the previous night offered to drive me to the airport, and awoke her from her sleep. This can’t be happening. I grabbed my bags and leaped down the stairs like I’m a contestant in the Gloucestershire Cheese Rolling race.Luckily, my dad walked in the front door as I tore through the family room. I don’t even know if I explained the full situation, but with one look, I knew that he understood. Four minutes later we already on the road, and I was already through a mental check of what I had forgotten in my scramble to get out of the door. All that I could come up with was my cell phone, which didn’t worry me too much, because I didn’t plan on making calls on it from Germany anyway, and besides, it didn’t work all too well. After trying to calculate the time that it would take to reach Detroit Metro and imploring my dad to drive faster, my list of left-behinds gained another member… the three 1-lb boxes of Dark Chocolate Turtles from Jackson’s very own Gramer’s Chocolates. Bummer, but still only a flesh wound. My hosts’ losses would just become my family's gain. After saying a clutch rosary with my dad, my heart rate started to settle down to a “dead at 45” obituary.

By the time we were driving through Ann Arbor, my flight was already boarding. I read on my boarding pass, for all International Flights present passport an hour previous to boarding. By the time we idled outside of McNamara Terminal, my watch read 10:15, at which I sincerely thanked my dad with a hug and made my way to the check-in Kiosk. As I hurriedly passed through Security and waited for the next Tram to my gate, I glanced yet again at my watch. 10:32. Although that had to be a record for airport security, I had only a few minutes until my plane took off!

As luck would have it, a guy next to me on the Tram was also on my flight to Hartford, and because of him and the fact that he was riding first class, I'm pretty sure the flight attendants kept the door open for just a bit longer than they usually would have. Without a minute to spare, I had made my flight. With a now obligingly descending heart rate, I succeeded in accomplishing at least one of my mental “To-Do” prompts without any complication. Sleep had never been so reassuring.