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4 August 2022updated 26 Aug 2022 9:46am

Energy crisis: what the UK could learn from Germany

While Berlin is investing heavily to boost energy efficiency and cut usage, the British government is in denial.

By Philippa Nuttall, Anoosh Chakelian, Ido Vock and Nick Ferris

John Kampfner’s book Why the Germans Do It Better: Notes from a Grown-Up Country caused a stir when it was published in 2020. Conservative politicians might not have liked the contents, but many reviewers and readers agreed that the Germans were better than the Brits at many aspects of life. Today, Berlin’s reaction to the worsening energy and climate crises suggests a maturity that London is currently lacking, as shown by Westminster’s refusal to accept that public money is vital to increase energy efficiency and bring down emissions and energy bills.

“The most glaring difference is that the UK has spent little to nothing on building renovation,” says Jan Rosenow, European programme director at the Regulatory Assistance Project, an energy non-governmental organisation. Experts have been shouting for years about the need to insulate British homes, yet neither Boris Johnson nor the two candidates fighting to replace him as prime minister have shown any real willingness to use the public purse to fund insulation.

The UK’s energy security strategy, published in April, lacked any focus on demand-side measures. Ramping up renewables, as well as domestic oil and gas, were the headline proposals. Cutting energy use was ignored. Germany, in contrast, even before the Russian invasion of Ukraine, had set forth various policy packages which, as well as increasing solar and wind power capacity, concentrated on making buildings more energy efficient. A law passed in March stipulates that all new heating systems introduced after January 2024 in Germany must, wherever possible, provide 65 per cent of their heating demand from renewable energy sources. It also offers support for households wanting to replace older fossil-fuel heating systems with heat pumps. From 2026, the installation of single-fossil-fuel boilers will be banned. The Netherlands has agreed a similar ban, and both countries are offering generous funding for heat pumps. The Dutch government has reserved €150m a year between now and 2050 to help homeowners purchase and install a heat pump. The UK has said it will end home heating with fossil fuels by 2035, but this pledge is not backed by legislation.

Most recently, Germany said it would spend €56.3bn of public funds on renovating buildings to make them more energy efficient from 2023 to 2026, the equivalent of €14bn a year. “Britain is spending a fraction of that,” comments Germany-born Rosenow, who now lives in the UK. In fact, Rishi Sunak has suggested that as prime minister he would take hundreds of millions of pounds away from programmes to incentivise the installation of heat pumps and spend the money on energy efficiency instead. This makes no sense, given that insulation and heat pumps are both necessary parts of the energy transition, and the amount of money transferred “would be next to nothing”, says Rosenow.

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Rosenow suggests that the UK’s generally “mild summers and winters” have given people less cause to consider energy efficiency than in countries with more extreme temperatures, until now. This could change with “more heatwaves and higher energy prices”. But the bottom line is that energy efficiency requires public funding, and lots of it. In 2013 the UK government slashed support for insulation, and no Tory leader since has been willing to reinstate it. 

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In Germany “energy efficiency is properly on people’s minds”, says Rosenow. “There is constant coverage in the media and people seem to be really trying to take action.” Sarah Bird, 35, a musician living in Berlin, said this winter she had made "a conscious choice not to use the heating too much”. Instead, she “put on a winter coat and used two duvets and, like an old nanna, I take a hot water bottle to bed.” Her latest energy-saving measure is to buy a sand timer to encourage shorter showers. Marie, who works in the publishing industry in the German capital, said her employer was considering closing all but one floor of its offices this winter and mandating that most employees work from home most of the time. Money saved on heating bills could be transferred to employees to help them with spiralling energy costs, according to the plan.

[See also: Rishi Sunak boasted of taking money from “deprived urban areas” to help wealthy towns]

It could be argued that Germany cares more about saving energy because it is so reliant on Russian gas. Gazprom, the Russian state-owned energy giant, has cut deliveries of natural gas to Germany via the Nord Stream 1 pipeline to just 20 per cent of capacity, raising fears of energy shortages this winter. In response, Olaf Scholz, the German chancellor, has called for a national mobilisation. Modest energy-saving measures, such as banning the heating of private swimming pools, have been passed into law. Several cities have launched energy conservation measures, including lowering the temperature of public swimming pools and switching off some lighting at night. Berlin has turned off the night-time illumination of hundreds of monuments, such as the Victory Column in the central Tiergarten park.

The energy savings of these measures are likely to be fairly marginal compared with the electricity consumption of the city as a whole, but they help heighten awareness of the issue at a time when few Berliners are thinking about their heating. And Germany is not the only country rationing its energy. Spain's government this week banned businesses from lowering their air conditioning to below 27°C this summer and from turning their heating up above 19°C this winter. Likewise, shop fronts must go dark by 10pm. It would seem highly unlikely that either Rishi Sunak or Liz Truss would impose such top-down measures.

All countries in Europe are facing spiralling energy costs. Rationing usage saves energy and reduces bills. In the UK, the pain of rising energy bills (and the relief if the price falls) is dispersed in six-monthly chunks (soon to updated quarterly). A cap on energy prices means the next time it’s lifted, in October, the average energy bill will hit £3,549.

UK government support has been directed both universally and to the most vulnerable: a £150 council tax rebate for most homes; £400 deducted from all energy bills or given in vouchers over six months from October; a £650 means-tested one-off payment to more than 8 million low-income households; £150 for those on disability benefits; and £300 for pensioners. But this help is out of date – designed for when the forecast for the October price cap was just £2,800.

The number of people who cannot heat their homes this winter in the UK is expected to be so high that councils are preparing “warm spaces”. A campaign called Don't Pay UK is aiming for at least a million people to refuse to pay their energy bills in October.

“Life is harder now than when I was growing up,” said Sue Davis, 63, a retired shop worker and former care assistant living in the suburbs of Wolverhampton, who spoke to the New Statesman about the impact of inflation during the colder weather in April this year. She said she faced a choice between heating her house and eating. Living in a cold house was also exacerbating her health conditions. “Why won’t Boris stop these energy companies getting richer while we’re getting poorer?” 

Already, 17 per cent of low-income households in the UK are in arrears on their energy bills (up from 12 per cent last October). High energy bills have a knock-on effect on other spending. According to a survey conducted for anti-poverty charity the Joseph Rowntree Foundation, seven million low-income households are going without essentials such as heating, showers, toiletries or adequate clothing, or failing to eat enough. Polling by the foundation shared exclusively with the New Statesman found that 43 per cent of people who were in energy arrears now said that they had always been able to pay their bills in full and on time before 2022 – and a further 40 per cent said that they could often pay in full before 2022.

“The dramatic increase in the number of families with nothing to spare already in arrears with their energy bills should be ringing alarm bells in government,” says Rachelle Earwaker, the Joseph Rowntree Foundation’s senior economist, warning that the situation "will undoubtedly get worse". She suggests various solutions, such as reforming Universal Credit to ensure people can always at least afford the essentials. But properly financing the energy transition would also have a significant impact. Energy price inflation in homes with better insulation, heat pumps and electric vehicles is almost a third lower than homes with average insulation, gas boilers and petrol cars, according to analysis by the UK-based Energy and Climate Intelligence Unit.

Germany‘s maturity around climate and energy policies was, at least in part, triggered by two crises: the terrible floods last summer and the Russian invasion of Ukraine. Last month's heatwave should have been the moment when the UK also decided to grow up and take energy efficiency seriously.

[See also: Nuclear energy vs renewables: which is the best solution for the climate crisis?]