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  • We need innovation, not governmental control

    Katherina Reiche is the Managing Director of the Association of Local Public Utilities (VKU), and was a member of the Commission on Growth, Structural Change and Employment (WSB Commission). If the phasing out of coal is to succeed, she demands firm commitments for regions and energy supply utilities.

    Mrs. Reiche, you worked intensively on the WSB Commission for seven months. What conclusion have you yourself reached?
    All those involved have done their utmost to find a solution to a conflict which is affecting society as a whole. It was important to me for us not only to chart the way for a phasing out, but also point out reliable future prospects for the people concerned, the regions and the energy sector. Value chains should be maintained. The ultimate aim was to provide security for the people concerned. The expertise of the many highly qualified employees in the affected industries is too valuable for us to be only talking about an “exit”.

    Which Commission recommendation do you attach the greatest importance to in terms of energy policy?
    The Commission has presented an inventory of the energy supply system which did not exist before. Organizing the end of coal-fired power generation while maintaining security of supply, value chains and the innovative capacity of the regions and keeping climate protection in mind was like squaring the circle. In the past, the energy policy target triangle was overlooked and one goal, climate protection, was placed above all the others. There needs to be more balance again. To achieve this, we do not need any further rigid emission reduction targets, but the freedom to invest in innovative climate protection technologies.

    How can a structural change in the lignite regions and at sites with hard coal fired power plants today be organized in such a way that it will have a lasting effect in 20 years?
    Structural change is a process that constantly transforms itself. The Federal Government must quickly put together a package in cooperation with the federal states and regions concerned. The Bonn-Berlin law offers a good blueprint of how to organize change in a binding way. Following that model, we now need a law on measures to be taken, in combination with an institution that will manage structural change in the long term.

    Shouldn’t the Ruhr region have articulated its demands earlier and more clearly?
    A central point was the development of future job prospects for highly qualified people. Where jobs are lost in the power plants and in open cast lignite mining or in the dependent trades, new jobs have to be created to the same extent, and if possible covered by collective bargaining agreements. The final report therefore also provides for structural aid for the hard coal fired power plant sites.

    In retrospect, there is an even stronger impression that there will be compensation arrangements for open cast mines and lignite-fired power plants, but that operators of hard coal fired power plants will be left to their own devices ...
    That impression is deceptive. If the legislature wants to accelerate the reduction of coal-fired power generation – which is already taking place through emissions trading and the expansion of energy from renewables – compensation must be paid. This was the basis of my negotiations. At the insistence of the industry, the final report makes it clear that negotiations with power plant operators must include arrangements on compensation. The level is not set by the Commission, but the principle certainly is.

    What could that compensation for the operators of hard coal fired power plants look like?
    Decommissioning should only take place with the agreement of the power plant owners. There are several options in this regard. A decommissioning premium or a conversion bonus under the Combined Heat and Power Act would have to be attractive enough for a power plant owner to decide in favor of decommissioning. This will be a particular challenge if the amount of the decommissioning premium is determined by auction. Nevertheless, the Commission also considers it conceivable that compensation could be based on the standby mode formula.

    In 2022, the last nuclear power plant is to be shut down, and at the same time lignite-fired and hard coal fired power plants with a capacity of more than twelve gigawatts (GW) are to be shut down. A maximum of nine gigawatts of lignite capacity and eight gigawatts of hard coal capacity are to be connected to the grid by 2030 – can security of supply really be guaranteed under these conditions?
    Security of supply plays a central role for Germany as a business location: Electricity straight out of the socket around the clock and a secure heat supply, the core competences of municipal utilities, are services of general interest. The development of generation capacity will need to be assessed more precisely in future. The Commission has followed the VKU proposal and recommends the further development of security of supply monitoring in order to continuously analyze future security of energy supply in a risk and demand oriented manner.

    In view of declining domestic generation capacities, will German industry have to prepare itself to become heavily dependent on electricity imports in the future?
    This is after all about reducing guaranteed capacity. If we want to compensate for that, we will need new generation plants in Germany. The scenarios drawn up by the Federal Network Agency show that by 2030 we will need an increase of up to ten gigawatts in gas-fired power plants. Otherwise, there will be a risk of considerable bottlenecks. Only 2.2 GW is under construction or in planning. Gas-fired CHP plants are essential for security of supply, and it is therefore a fundamental recommendation of the Commission that government support for combined heat and power generation should be extended and made more attractive.

    Is the inspection clause recommended by the WSB Commission sufficient to verify the effectiveness of the measures, or should there be further monitoring dates?
    The section on monitoring was fiercely debated until the last night of negotiations. We now recommend that in the years 2023, 2026 and 2029 the implementation of the measures and their effects on climate protection, security of supply, electricity costs and regional development and employment be comprehensively assessed. There will be another hold point in 2032 to check whether the assumptions under which 2038 was set as the closing date are still valid. This is a sensible approach.

    By 2022, the energy sector will have reduced its CO2 emissions by 45 percent compared with 1990 levels, while transport and the real estate industry are lagging far behind in their efforts – should corresponding benchmarks for those sectors be anchored in the planned climate protection law?
    The energy sector has delivered, even beyond its commitment. Now the heating and transport sectors have to follow suit. Instead of setting rigid targets for individual sectors, threatening fines and getting bogged down in small print on climate policy, we need a regulatory framework that shows how climate protection can be achieved with a view to politically, economically and socially justifiable costs. Here I expect courage and creativity from politicians to promote innovative and climate-friendly technologies.

    Katherina Reiche (45), studied chemistry at the University of Potsdam, Clarkson University (USA) and the University of Turku (Finland) after graduating from high school. Born in Luckenwalde, Brandenburg, she became engaged in politics during her time at university and joined Junge Union, the youth organization of the German conservative party CDU, in 1992. In 1996 she became a member of the CDU, and only four years later she was already a member of the CDU federal executive. Katherina Reiche entered federal parliament for the first time in 1998, and from 2005 to 2009 she was one of the deputy chairpersons of the CDU/CSU parliamentary group in the Bundestag. From 2009 to 2013, the CDU politician served as Parliamentary State Secretary to the Federal Minister for the Environment, Nature Conservation and Nuclear Safety, and from 2013 to 2015 as Parliamentary State Secretary to the Federal Minister for Transport and Digital Infrastructure. In the spring of 2015, Katherina Reiche was elected Managing Director of the Association of Local Public Utilities (VKU), shortly after which she resigned her seat in the Bundestag. Katherina Reiche is also a member of the Council for Sustainable Development and President of the European Federation of Public Employers and Enterprises CEEP.