Germany is a pioneer in green growth policies. The country was one of the first to cut
greenhouse gas emissions: in 2009, it decreased CO2
emission by 23 percent relative to
1990 levels; energy consumption from renewables shot up fivefold from 1990 to 2010; and,
the country has by far the largest solar energy capacity in the world. Germany shapes the
debate on sustainable growth in Europe and will be at the heart of any serious multilateral
effort to address environmental issues: the country’s response to the recent disaster at Japan’s
Fukushima nuclear reaction was to begin phasing out all nuclear power in Germany. The country
leveraged upon green technology to promote job creation and economic growth with the aim
of energy policy being to contribute to exports and value added as well as sustainable living.
How has Germany done this and how can other countries follow? First, the political economy
of energy and environmental sustainability has been favorable. The focus on environmental
concerns and sustainable energy began early, during the late 1960s, when green policy was
less controversial and politicized and gained momentum after reunification with East Germany
when the discussion of the need to shut down polluting factories in the East became prominent.
The electoral successes of the country’s environmental party—Die Grünen—reflect the public’s
demand for more green policy and serves to keep the discussion on environmental issues in the
policy mix in a way seen in few other countries. Second, the government directly encourages
investment in renewable energy sources: regulators created a fixed feed-in tariff that forces
utilities to purchase renewable energy at higher, fixed rates from independent sources. These
incentives facilitated the development of a renewable energy industry. What others can learn
from the German example? Germany shows that policymakers, businesses, and consumers can
view environmental policies as a way to facilitate economic growth rather than a cost that
slows economic development.