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Press release

Sep 28, 2018

Energy transition threatens to fail

The German SAI reports on the implementation status of energy transition.

“The intergenerational project of energy transition run by the Federal Government is at risk of failure. Our audit evidence suggests that implementation is largely falling short of the targets set”, concluded Kay Scheller, President of the German SAI when he communicated a report to Federal Parliament on how the Federal Ministry for Economic Affairs and Energy has implemented energy transition. He added: “So far, the enormous efforts associated with energy transition and the considerable burdens placed on citizens and the business community have not been matched by any reasonable benefit. If energy transition is to be successful, the Federal Government needs to change course.”

The German SAI found that the Ministry did neither effectively coordinate nor adequately steer the energy transition process. The financial burdens placed so far on private sector businesses and the taxpayers have been considerable. According to our assessment, costs and expenditures imputable to energy transition totalled at least €34 billion in 2017. Nevertheless, the Federal Government will fail to achieve almost all energy transition targets set for 2020. The audit findings illustrate that this failure is also due to shortcomings in the Ministry’s coordination and steering efforts.

The Ministry does not show the commitment need to manage such a complex project. For example, even after five years, it has not accurately defined how to perform the coordination function in order to help ensure that the Federal Government accomplishes the targets set for energy transition efficiently and effectively.

We pointed out options to enhance coordination and steering of the process. For instance, it is a top priority to establish a body that is vested with overall responsibility and decision-making power for implementing energy transition.

The Ministry needs to ensure full transparency of all related costs both for the purpose of steering and increasing general acceptance of energy transition. Furthermore, the Ministry should clearly define the terms of energy security and affordability. The Federal Government should abandon its approach of using a large number of complex rules and regulations governing energy transition. Instead, the federal Government should establish a legal framework and economic incentives to encourage environmentally friendly behaviour. Carbon pricing is one option to this end. Imposing such a charge would make a large number of levies and taxes obsolete and help clear the jungle of rules.

The Ministry rejected the majority of our recommendations. The Ministry does not see any need for action and believes that energy transition is coordinated effectively and efficiently.

In the past five years, the costs imputable to energy transition totalled at least €160 billion. If the costs continue to increase and the targets set are not achieved, trust in government may further deteriorate. From our perspective, significant improvements in coordinating and steering energy transition are vital.

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