State Secretary Graichen on Cleaning Up

My guest on last week's episode of Cleaning Up was State Secretary at the German Ministry for the Economy and Climate Action Patrick Graichen - essentially Mr Energiewende (until last year he was actually Executive Director of a think-tank called Agora Energiewende). It was an long and frank discussion; I asked him a lot of tough questions and he answered with extraordinary vision, grasp of detail and good humour throughout. What follows are some of the highlights...

It was an incredibly deep interview, and quite explosive in parts. For instance here is State Secretary Graichen explaining that the German heating industry needs to increase installations by 4-5 times in 18 months , from 130,000 to 800,000 or 900,000 installations per year. The entire value chain - in solar and wind as well as in heat pumps - has to grow three to four-fold.?Mr Graichen says he?keeps telling industry to invest but sometimes, to his astonishment, industry doesn't seem to believe it's actually going to happen .

Does State Secretary Graichen see Germany or the EU applying local content rules to capture jobs associated with the net zero transition? No, but he does see #reshoring and #friendshoring because of the Ukraine war and over-reliance on China .

So then we discussed how current events are forcing Germany to rethink its entire economic model and its reliance on free trade. "Suddenly there's geopolitics. And to be honest, Germany was never really good at geopolitics ." Well that certainly is honest! For example, Germany never had a law mandating minimum gas storage going into winter. "Then we ended up finding out that there were gas storages owned by Gazprom, and they were empty at the beginning of this winter. Looking back we know why! "

State Secretary Graichen says that "the nuclear issue is basically gone and decided". Here he explains why keeping the last three German nuclear plants open was considered, but was not really an option .

It was a very honest interview. Secretary of State?Graichen does not think renewables, efficiency, electrification and resilience are in conflict - but he does worry how to allocate his team's time between working on them, versus on diversification of fossil fuel supply.

Of course, the backdrop to all this is the ongoing Russian invasion of Ukraine. Germany is currently planning to keep buying Russian gas for the next two years. I pushed State Secretary Graichen very hard on Germany's reaction to the Russian invasion of Ukraine, starting by asking why the words "never again" don't mean an immediate stop to gas purchases . In fact the whole section on Germany's response to Russia's invasion of Ukraine is very much worth listening to. I respect Mr Graichen for doing his best to answer what are undoubtedly the toughest questions in energy policy today. Listen from 32'112 to 40'09" right now .

In parts it makes quite uncomfortable listening. Here I challenge State Secretary Graichen over the remark by German Finance Minister Christian Lindner that "we have to be patient" over Germany's response to the Russia-Ukraine war, asking him if the Ukrainian people under occupation should be patient. If only all politicians were prepared to be questioned like Mr Graichen answer so honestly.

I then asked the State Secretary whether German policy - his policy, effectively - was now to switch coal back on, given the urgency of eliminating the use of Russian gas. "Are you running all existing coal-fired power stations that have not been demolished, 24/7?" He pointed out, quite correctly that he doesn't run power stations, "the market decides that", but said it is indeed happening because high gas prices mean gas is behind coal in the merit order, but the challenge is where gas is used for CHP, so if you turn off the gas you turn off the heat. And Mr Graichen is redesigning incentives to get those CHP plants off gas.

"Having said all that," Mr Graichen was at pains to point out, "it is important to point out for the listeners interested in the clean energy transition this is not to shy away from the Coal Exit 2030. Not at all . Coal phase-out 2030 is part of our Coalition Treaty and that is what we will be doing. The essence is really about what do we do for the next 24 months."

Next up, the #Energiewende. I started by asking whether there was a sense of shame in Germany that the UK is further ahead, in part because the UK kept its nuclear plants. Mr Graichen talked about how Germany fell behind over the past four years of the previous government, but now aims to catch up. The whole section from 40'13" to 45'30" is worth a listen .

The UK has implemented a number of policies which Germany is now following, such as Contracts for Difference in place Feed-in Tariffs, so I asked the State Secretary rather cheekily: "Why not just copy what the UK is doing?" Mr Graichen answered with great humour and clarity: "We had a bad government the past four years, not focusing on wind and solar, and the UK really did their grids on wind. I'm impressed, I have to say. When I look at wind offshore in the UK, I kind of think, wow, we should have been doing that as well! "

Next up, State Secretary Graichen drops some absolute truth-bombs on hydrogen in the heating sector: "I say, don't put that stuff [hydrogen] into heating. I'm basically ending that discussion here in Germany , where I say: folks, it's is never going to go into heating for boilers, forget that." Well, you can't get much clearer than that - it's heat pumps all the way in Germany.

I love all episodes of?Cleaning Up equally, but I do think this episode with Secretary Graichen is one of the most fascinating and important to date. I strongly urge you to listen to the whole thing, either on YouTube or via your chosen podcast platform. And thanks once again to Mr Greichen for the honesty, detail and good humour with which he answered my questions.