Episode 965: Das Green Old Deal : Planet Money We team up with Vox's The Impact, to tell the story of how one man changed the way Germany – and arguably the world – uses energy. | Subscribe to our weekly newsletter here.
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Episode 965: Das Green Old Deal

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Episode 965: Das Green Old Deal

Episode 965: Das Green Old Deal

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UNIDENTIFIED REPORTER, BYLINE: This is PLANET MONEY from NPR.

KENNY MALONE, HOST:

This is so cute. This is like a Hobbit house, Jillian.

JILLIAN WEINBERGER, HOST:

This is really cute.

MALONE: There's grass all over the...

WEINBERGER: This Hobbit house is perched on a hill in a tiny town in northern Bavaria, Germany.

MALONE: Picture, like, a - I don't know - like, a little fairy-tale log cabin.

WEINBERGER: Yeah. There are these flower boxes on every window.

MALONE: It's literally built into the side of a hill. The roof is, like, covered in grass.

HANS-JOSEF FELL: Hello.

WEINBERGER: It's so good to meet you.

FELL: Nice to meet you.

MALONE: Guten Tag. Guten Tag.

FELL: Will you come in?

WEINBERGER: Yes.

MALONE: In this little Hobbit house, a regular-sized man named Hans-Josef Fell revolutionized the way the world gets its energy.

WEINBERGER: Hans-Josef gives us a tour of his home, which is the most eco-friendly place I've ever seen. He walks us over to the indoor greenhouse covered in plants with its own well.

FELL: This is water from rain.

MALONE: He takes us outside to a homemade pond where, apparently, Hans-Josef swims every day.

FELL: Even in wintertime, swimming - it protects you from diseases.

WEINBERGER: But the reason we are here is because of what's on top of the house. Hans-Josef walks us into the backyard so we can see onto his roof.

FELL: You'll see the solar panels on my roof. The solar panels builded (ph) up in 1991.

MALONE: So these are the solar panels that, like, are the reason the world has renewable energy.

FELL: Yes.

WEINBERGER: It's a big claim.

MALONE: Yeah, but hear us out here.

WEINBERGER: Germany used to get nearly all of its energy from fossil fuels or nuclear power. But as of last year, it was getting almost half of its energy from renewables, like solar and wind.

MALONE: And, look; Germany isn't perfect with regards to green energy. It is a country that still loves its coal. But shifting to nearly half renewables is huge, and it is arguably because of Hans-Josef Fell. The solar panels on his roof gave him an idea that first changed his tiny town, then all of Germany, and now, potentially, the world.

(SOUNDBITE OF LEIGH MCALLISTER GRACIE SONG, "LET'S START A MOVEMENT")

MALONE: Hello, and welcome to PLANET MONEY. I'm Kenny Malone.

WEINBERGER: And I'm Jillian Weinberger.

MALONE: Jillian Weinberger, host of the fantastic Vox podcast "The Impact."

WEINBERGER: Yes. Our new season is out now.

MALONE: And, Jillian, you and I went to Germany because we wanted to see how exactly it is a major economy manages to transform the way it gets its power.

WEINBERGER: Yes, the story of Germany is the story of one of the most radical energy transformations the world has ever seen. But it also left some people living in the dark.

MALONE: I can't see anything electric that's running.

SUNDAY: We started turning it off when we're going to bed.

WEINBERGER: Like, literally in the dark.

MALONE: Even, like, the power strips - those are turned off.

SUNDAY: Yeah, yeah.

WEINBERGER: We talked with the man from the Hobbit house, Hans-Josef Fell, in his backyard under a trellis covered in grape vines.

MALONE: This is beautiful.

FELL: I hope it will be silent because sometimes the farmers...

MALONE: It's OK.

FELL: ...In the barnyards (ph) come with loud machines.

MALONE: Hans-Josef does not look like your typical eco-warrior. He's wearing a button-down shirt. He's got short, cropped hair. He's a tall guy in his late 60s. He looks like a retired bureaucrat, which is what he is.

WEINBERGER: Hans-Josef was a schoolteacher, but his political career started about 30 years ago when he ran for city council. Around the same time, he installed those solar panels.

FELL: Oh, it was so expensive. I remember it was about 70,000 deutsche mark.

MALONE: That's nearly $80,000 in today's money. And back then, the panels were really pretty inefficient.

WEINBERGER: Expensive and kind of crappy. And that is why practically no other houses in Hans-Josef's town had them.

MALONE: Did people know you as the guy with solar panels?

FELL: Yes, I was very famous.

MALONE: There's Hans, solar panel Hans.

FELL: Yeah, yes. Yeah, the solar freak.

MALONE: The solar freak. For Hans-Josef, those panels were not a good financial investment. They were an environmental investment. They were worth it to him because he wanted to do his part to stop climate change, however small that was.

WEINBERGER: But Hans-Josef knew that for renewable energy to actually make a difference, it couldn't just be a luxury for solar freaks like him. It had to make sense financially for everybody. But how does that happen?

MALONE: When Hans-Josef thought about this question, he thought about other technologies that started off really expensive but eventually ended up way cheaper.

FELL: Do you remember what your first scientific calculator cost? I had to pay 300 deutsche mark.

MALONE: Three hundred deutsche marks back in 1980 would be like $500 today, and that was buying Hans-Josef a pretty basic calculator.

FELL: As a student, it was very, very expensive, but I needed it. Ten years later, you got it for 1 deutsche mark.

WEINBERGER: Hans-Josef's point is that new technology is always really expensive, but if you can somehow just kick-start a market for that thing, the price should come down over time. There would be economies of scale. There would be technological breakthroughs. There's this snowball effect.

MALONE: And so Hans-Josef started to think about how to get that snowball rolling for cheaper solar panels. This was back in the early '90s, and he started talking about this idea with other officials from neighboring towns.

FELL: Some people in, often, advising (ph)...

MALONE: Hans-Josef and this band of merry solar freaks came up with a plan to use something called a feed-in tariff.

FELL: I did it first times in my hometown, where the first feed-in tariff for solar was paid in the world.

WEINBERGER: A feed-in tariff is a weird phrase.

MALONE: It's not great branding.

WEINBERGER: It's not. It's not. But it is a big idea, so we should talk about it for a second.

MALONE: Yeah. If Hans-Josef is the man who helped give the world cheap green energy, the feed-in tariff is the wonky policy idea that helped him do that.

WEINBERGER: The very, very basic idea is this. You are going to take a little bit of money from everyone who uses electricity.

MALONE: That is the tariff part of feed-in tariff.

WEINBERGER: Yes. And then we give that money to people who are investing in renewable energy, like solar and wind and hydropower and all that stuff.

MALONE: People who are feeding more green energy into the grid - the feed-in part of feed-in tariff.

Hans-Josef got to try this out on a local level first. Then, other cities in Germany were like, maybe we should do this.

FELL: Frankfurt, Nuremberg, Munich - they adopted it.

WEINBERGER: And then Hans-Josef's political party, the Green Party, they got into power on the national level, and he got his chance to try this feed-in tariff out on the entire country.

MALONE: It was this huge experiment, really. Can you create a market kind of overnight by tipping the financial scale away from fossil fuels and towards renewable energy? The big question really was, would this shift in incentives be enough to convert, like, regular Germans into solar freaks like Hans-Josef?

JOOST STRATER: Good morning.

WEINBERGER: Good morning.

MALONE: We drove to a tiny town in Germany full of cows called Saerbeck.

WEINBERGER: That's where we broke a milk vending machine.

MALONE: We did break a milk vending machine there.

WEINBERGER: An unfortunate accident. But we also got to meet a man named Joost Strater (ph).

MALONE: Can I just say I'm a little disappointed that you're wearing sandals but they're not Birkenstocks?

STRATER: (Laughter) I just use these sandals because my feet are sweating.

MALONE: Yeah.

WEINBERGER: Back in 2005, solar panels seemed like kind of a lousy deal. They were inefficient and expensive. But then, Joost heard about Hans-Josef Fell's feed-in tariff.

MALONE: The deal was if Joost put up solar panels, he could sell that solar electricity back to the grid, and the government would guarantee him a price - a very high price of 50 cents per kilowatt-hour for 20 years.

WEINBERGER: The solar panels would more than pay for themselves, so Joost started putting them up.

MALONE: How many panels do you have in total?

STRATER: Oh, let me see - 30 and one, two, three...

MALONE: You have so many you've lost count.

STRATER: (Laughter) Right.

WEINBERGER: Joost takes us inside his house and pulls up this very colorful solar electricity spreadsheet.

MALONE: Does the company give you this, or you...

STRATER: No, no. I did. I did it myself.

MALONE: You did all of this yourself?

STRATER: Yeah, sure.

MALONE: This is elaborate.

WEINBERGER: According to Joost's numbers, he makes about 3,500 euros per year selling solar electricity back to the grid. He has more than paid off his solar panels.

MALONE: Again, the way this works - this isn't some government subsidy. Everybody's electricity bill is going to go up a little bit so that somebody like Joost can get this very high guaranteed price for his solar electricity.

WEINBERGER: So if you want to think about who is really paying for this, it's people who are not taking advantage of the feed-in tariff, who are not putting up solar panels.

MALONE: Were you one of the first people in your neighborhood to put the panels on?

STRATER: Yes, I think so. Yeah.

MALONE: And did you look at your neighbors and think, suckers - like, you're paying for my panels?

STRATER: No, no, no, no, no, no. But I have been thinking, why don't you do it?

MALONE: As in, you should put your own panels up and also get the money, like me. We should mention that Joost gets a very high guaranteed price because he put his panels up 15 years ago, back when the technology was way more expensive. Somebody putting panels up today would get a lower guaranteed price.

WEINBERGER: But either way, the cost of the panels gets covered, and that is the beauty of the design of the feed-in tariff. It turns renewable energy from a luxury item into a solid investment. It transforms the solar curious into full-on solar freaks.

FELL: Yes.

MALONE: Again, full-on solar freak and feed-in tariff originator, Hans-Josef Fell.

WEINBERGER: So when did this become a success story in Germany? How did you see it become accepted and successful?

FELL: We could see a lot of new solar panels. You should drive in Hof, Bavaria (ph). You will see one village after the other, half of the rooftops are only solar rooftops. It is very, very good.

WEINBERGER: And sure enough, we saw his big idea at work all over the country. And it's not just solar panels. Lots of things are incentivized by the feed-in tariff - wind turbines, biomass plants and, yes, solar panels - so many solar panels.

MALONE: You are the solar freak. You would drive around, and it's like, new solar freak, another solar freak.

FELL: Yes, we have, oh, plenty solar freaks, but I'm the head of the solar freaks.

(LAUGHTER)

MALONE: You're the king solar freak.

WEINBERGER: Hans-Josef's idea helped grow a whole new market for renewable energy technology. Solar and wind companies started popping up in Germany and then all over the world.

MALONE: Eventually, China started producing these renewables as well, and prices of these expensive technologies plummeted, just like Hans-Josef had predicted, like he had seen with his scientific calculator.

WEINBERGER: And, sure, renewable energy is not a luxury item anymore. But after the break, how some Germans ended up paying way more than their fair share for this transition.

MALONE: As we said earlier, the thing about the feed-in tariff is that if you are not personally producing your own renewable energy somehow, you are essentially paying for the people who are.

WEINBERGER: At first, this wasn't such a big deal - just a little bit of extra money on people's electricity bills. But a few things happened that started to shift the financial burden of this energy transformation.

MALONE: A couple of those reasons are kind of complicated. There was a change in the way energy rates got calculated. Technologies got better faster than people expected. But one particularly interesting and maybe unsurprising problem was big company exemptions.

WEINBERGER: When Hans-Josef Fell envisioned this program, he was like, I'm a reasonable guy. I know that a few of our companies need exemptions in order to still compete globally.

MALONE: However, as time went on, more and more companies managed to weasel their way out of paying into the feed-in tariff even though it wasn't totally clear to Hans-Josef that these were the kinds of companies that needed an exemption

FELL: VC companies like - how do I say it in English? - companies who kill the chickens for meat must be exempt - chicken-killing companies. They have 10,000 of companies who are exempted.

MALONE: And in the beginning, it was really just five or six companies.

FELL: Yes, or about.

MALONE: Yeah, that's a big switch.

WEINBERGER: All of these changes meant that regular German citizens had to pay a greater share of the switch to green energy. And their electric bills started going up.

FELL: Yes, the surcharge is too high. It must not be so high. But it isn't too high to be a burden for the German economy and for the most people.

WEINBERGER: The thing about this feed-in tariff is that it is designed to create winners and losers. If you invest in renewable energy, you win, and you are essentially being paid by people who didn't invest.

MALONE: But there is a whole category of people who cannot invest, people who, for example, can't install solar panels on their roofs because they are renters or people who just don't have the money laying around to invest in a wind turbine. These are the people who are being asked to disproportionately pay for Germany's change over to green energy. And, often, these are poorer Germans whose electricity bills have been going up really fast.

WEINBERGER: Germany has had to develop an entire program - a kind of electricity special forces - to help people deal with soaring electricity costs.

(SOUNDBITE OF KNOCKING ON DOOR)

FELL: Guten Tag.

WEINBERGER: Hello.

We tagged along on one of these special forces visits - what they call a Stromspar-Check - at an apartment in Dusseldorf.

SUNDAY: My name is Sunday (ph).

DOLORES: My name is Dolores (ph).

SUNDAY: She's from Germany, and I am from Nigeria.

WEINBERGER: And who's this?

DOLORES: This is Jordan (ph), and he's 9 months old now.

MALONE: As soon as we walked into Sunday and Dolores' apartment, we noticed it was unusually quiet and dark. Like, it was summer, but there were no fans running. There was no air conditioning. All the window shades were down. But, basically, no lights were turned on.

WEINBERGER: We asked Sunday and Dolores about this.

MALONE: I can't see anything electric that's running. Even, like, the power strips - those are turned off.

SUNDAY: Yeah, we started turning it off last month.

WEINBERGER: Dolores and Sunday have three kids. And, sure, five people can use a lot of electricity. But their bills had gotten really high, like a fifth of their household income, more than a quarter of their rent.

DOLORES: We look it like - this is a small journey we can do with this money.

WEINBERGER: Right, you could take a vacation.

DOLORES: Yeah.

MALONE: So Dolores called Stromspar-Check, this government-nonprofit hybrid that goes to people's houses and tries to find every possible way to cut down on electricity.

WEINBERGER: For example, they told Dolores and Sunday that hot water uses a lot of electricity, so they should take shorter showers.

MALONE: This, by the way, a minor point of contention between Sunday and Dolores.

DOLORES: Like yesterday, I go and shower. And I come out, and he say, how long do you stay inside shower? It cost too much money (laughter). But I have long hair.

MALONE: Also, he has no hair.

DOLORES: Yeah.

(LAUGHTER)

DOLORES: That's it.

MALONE: So Dolores is taking shorter showers. Sunday is watching fewer soccer games on their big-screen TV. And they're even switching off their power strips when they're not using them.

WEINBERGER: In Germany, it has become very expensive not to keep track of every spark of electricity in your house. The country has the highest electricity prices in Europe.

MALONE: So you're paying a lot for electricity. And, ultimately, it is helping Germany transition to green energy, even if it costs you a lot of money. Are you OK with that?

DOLORES: Yeah, because you can see the climate's changing.

MALONE: The climate is changing, she says.

DOLORES: It's already too late. But if we can help, we have to. We have to.

WEINBERGER: Dolores gestures at her son Jordan, meaning we have to think about the future of our planet for my kids' sake.

MALONE: And surveys show that most Germans are like Dolores. They're OK with paying the extra money for this greater good.

WEINBERGER: They feel the costs of climate change are going to be really high - much higher than anyone's electric bill.

FELL: Everyone is benefiting when we have climate protection.

WEINBERGER: Again, Hans-Josef Fell, king solar freak, the man behind the renewable plan.

MALONE: Was this a success? Did this work?

FELL: Yes, the biggest success we ever had. No other law in the world stimulated that positive effect for climate protection because climate protection you can make only with zero-emission technology. And this came with a feed-in tariff.

MALONE: The feed-in tariff has really become one of the most significant tools for helping the world switch over to green energy. A ton of other countries have introduced their own versions, everywhere from Uganda to Spain to China, but not so much in the U.S.

WEINBERGER: No, the U.S. has tended toward different incentives, things like tax breaks or letting people sell electricity back to the grid at market rates as opposed to guaranteed prices like with the feed-in tariffs.

MALONE: Not to say that's good or bad. But compared to Germany's feed-in tariff, like, those are definitely less dramatic market interventions. Germany used the feed-in tariff like a kind of market accelerator. And because of that, there is a very reasonable argument that Hans-Josef Fell and the feed-in tariff are the reason that solar and wind and other renewable energies are now affordable and even good investments. Somebody had to pay the initial price to get that green energy market rolling.

WEINBERGER: Germany and, more specifically, German electricity consumers did just that.

FELL: The period in the world where we have to pay for clean technology and renewable technology is over.

WEINBERGER: Thanks to Germany.

FELL: Thanks to Germany, yes, and others, but mostly Germany. It starts to...

(SOUNDBITE OF LEIGH MCALLISTER GRACIE SONG, "WE GAVE UP TOO SOON")

MALONE: If you've got a story of a person kick-starting a global market - ideally, they live in a Hobbit house somewhere - we would love to hear about that. You can email us. We are planetmoney@npr.org. You can also find us on Facebook, Instagram, Twitter. We are generally @planetmoney.

Today's episode was produced by Alexi Horowitz-Ghazi and Byrd Pinkerton with editing from Amy Drozdowska. Alex Goldmark is PLANET MONEY's supervising producer. Bryant Urstadt edits the show.

WEINBERGER: Special thanks to Barbara Caulker (ph), Mikala Biscote (ph), Jurn Hautmann (ph), Annett Meiritz and Stefan Schulz (ph). And a very, very special thanks to Mischa Jost (ph), who drove us on the Autobahn, showed us his beloved windmill and tried to get German cows to talk to us.

MALONE: I mean, are you sure they're going to make noise?

MISCHA JOST: Yeah, we will try. Moo. Friends from news are here, coming from far away for a sound.

MALONE: They're just staring at you. (Imitating cow mooing).

JOST: Your muh (ph) is in English. She's a German cow.

MALONE: She's a German cow, OK. Muh (ph). It's an umlaut - muh (ph).

JOST: That is a Swedish moo. Moo.

MALONE: The cow was not interested.

I'm Kenny Malone.

WEINBERGER: I'm Jillian Weinberger.

MALONE: This is NPR. Thanks for listening.

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