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The GDR's energy policy and its implications for the intensification drive
JOCHEN BETHKENHAGEN
The GDR’s Energy Policy and its Implications for the Intensification Drive
Energy Policy as a Part of the I~tensi~cation
Strategy
The sudden increases in the prices of oil in 1973 and 1979/80 introduced
by the OPEC
cartel fundamentally changed economic framework conditions all over the world. The GDR was not initially as badly affected by this as most of the Western industrial countries, mainly because it is less dependent on imported energy sources, and because OPEC imports account for only a slight share of these. The GDR’s most important source of energy imports is the Soviet Union. Since 1975 prices in CMEA intra-bloc trade have in principle
been set at the average
level of world market
prices in the
preceding five years, and adjusted annually. Consequently, when world market prices for energy were rising, Soviet clearing prices for oil and gas remained relatively low. Up to 1984 the GDR
benefited
from this; indeed,
in some years the clearing
prices for
Soviet oil were only half of world market levels (see Fig. 1). After the second oil price shock in 1979, it became clear that energy imports would continue
to be very expensive
in the coming years. At the end of 1979 Erich Honecker
commented: “We are not just facing a further complication in a situation that is already complicated enough; we are facing an entirely new situation.“’ Some months before, the Soviet Union had already indicated to the GDR that the GDR could not expect a further increase
in oil supplies from the Soviet Union
in the eighties.
In that situation
the GDR had in principle three options: -to increase energy imports from other sources; -to -to
expand domestic production of primary energy, intensify the energy conservation efforts.
in particular
of lignite; and
Due to chronic hard-currency shortages, the GDR could not afford to expand imports from third countries. On the contrary, the reduction of imports got highest priority. Because this could not be achieved sufficiently by conservation, the economic leadership decided also to expand the domestic production of lignite and natural gas in order to substitute for imported oil. However, there are some contradictions inherent in the targets of saving energy and import substitution. Initially, oil and hard coal were only to be replaced with lignite. But the transport and conversion of lignite requires a greater use of energy than the transport and conversion of oil; indeed, this was the main motivation for switching from coal to oil in earlier years. Restructuring energy consumption to use more lignite therefore defeats efforts aimed at energy conservation. But this is correct only as far as the energy consumption is measured in quantitative terms. Measured in terms of the GDR’s cost accounting, the substitution of lignite for
1. SeeErich Honecker STUI)IES
IN COMPAKATIVE
0039-3592/87/01
in Neues ~~~sch~ff~d (December COMMUNISM,
14, 1979)
VOL. XX, No. 1,
0055-14 $03.00 @ 1987 University
SPRING
of Southern
1987, 55-68
California
56
STUDIES IN COMPAKA?‘IVE COMMUNISM
@K! CMEA clearing price in world market price
25
SSR’s clearing price2
5
01 ’ 197273
’
74
’
75
’
76
’ ’
77 78
’
79
’ ’ ’ 80 81
’ ’
82 83
84
’
85
’
86
’ ’ ’ 87 88
89
’
90
’ ’ 91
1. 1972 to 1985: Price of Arabian hght, f.o.b. Ras Tanura. From 1986 onwards hypothetical price assumption of $15 per barrel. 2. 1972 to 1984: USSR’s clearing price for oil exports to the GDR. From 1985 onwards: average of the world market price of the preceding 5 years. FIG. 1. Trends 1991 (1986-91
in oil prices. World market prices and the USSR’s model calculation).
CMEA
clearing
price 1972 to
imported energy sources is economically meaningful. For instance, the cost of 1 t of steam produced by lignite is determined to be 12 marks; the respective figure for 1 t of steam produced
by heating oil is 65 marks.*
Table
1 provides
an overview of energy
costs for the years 1980 and (forecasted) 1990. There is no information available on how the costs are calculated. that they do not include the costs for environmental
protection
It is quite obvious
measures.
However,
the
data do show that the relevant expenditure on the production of export goods, which can be regarded as the costs of imported energy, are recorded very high. These figures also show how problematic it is to make long-term decisions on a very uncertain price basis. At the moment it is more likely that in 1990 the price for heating oif will be lower than it was in 1980 instead of doubling, as indicated in Table 1. However, the Table represents the perception of price developments by the GDR economic leadership at the beginning of the eighties. Against this background it is understandable that under the specific conditions of the GDR, a reduction of energy costs can only be achieved by a two-pronged strategy: energy conservation and import substitution. In this respect it is part of the intensification strategy of the GDR. Intensitication in the energy sector ultimately means that the expenditures for the preparation of energy 2. See Siegfried Wenzel, Zentralkomitees der SED,”
‘“Fra~en
der
umfassenden
Intensivierung
in Wtrtschafisw~~senschafi, 6/1985, p. 809.
in Auswertung
der 9. Tagung
des
The GDR’s TABLE
57
Energy Policy
1. Expenditure on the preparation (expenditure in marks/GJ) 1980
of
energy
1990
sources
1980 = 100
(prognosis)
Source Crude lignite Lignite briquettes Coal Heating oil Natural gas Liquid gas
2.4 4.8 10.0 12.4 11.9 13.5
3.1 7.0 13.0 27.0 25.0 29.0
129 146 130 218 210 215
Source: Dieter Fahlbusch and Bodo Wolf: Zu einigen Wertigkeiten und Grundsatzen der Abwarmenutzung, in: Energieanwendung. Heft 6/1982, p. 201.
sources should be reduced. goal?
Generally
speaking there are four approaches
to achieve this
-Because the expenditures on the preparation of 1 Joule of electricity differ from those on the same amount of raw lignite, the saving effects are also different; -Given the form of final energy used (GDR term: Gebrauchsenergie), conservation of costs depends
on the primary
raw lignite is less expensive
energy
utilized-e.g.,
than that produced
electricity
produced
by
by heating oil;
-Energy can be saved in quantitative and value terms by reducing the losses in the process of energy conservation. At the present time the total losses during that process are about 40 percent (and as far as electricity is concerned, about 68 percent). If electricity consumption increases faster than the consumption of total energy, the average losses will increase. This effect can only be diminished by intensifying the -Cost reductions of lignite for oil In practice, all four simultaneously.
Energy
Policy
use of heat losses (secondary energy). can be achieved by a change of the energy mix. The substitution aims at this target. approaches for a more intensive use of energy must be followed
Measures
Energy saving and restructuring in the GDR are mainly to be achieved through administrative measures. These include state norms on consumption, investment and prices, which are to be reinforced
by measures of control,
sanctions
and incentives.
Energy Planning and Consumption Norms Ministry of Coal and Energy is responsible for planning and steering energy policy. But in 1979 a Central Energy Commission was established by the Council of Ministers to work out proposals for energy policy measures and take over the coordination, control and direction of these. The “Rational Energy Use” working group of the GDR The
Council
of Ministers
is to work out concepts
for the more efficient
use of energy.
3. See Gerd Schirmer, “~konomische Probleme der Einsparung van Energie, Rohston‘en und Material 111986, p. 42. bci intensiv erweiterter Reproduktion, ” in Wirtschnfiswicsenschafl,
58
S-RJDIESINCOMPARATIVE COMMUNISM
Q)
W
59
The GDR’s Energy Policy Regular
seminars
are held on “the rational
organs to further the implementation
use of energy”
for control
and steering
of energy policy. Also in 1979 enterprises
were
given target figures for energy consumption in the state plans; before that only their supplies of energy were fixed, leaving them room for the manipulation of stock. To enable better control of the use of energy and faster savings, enterprises were obliged to calculate their energy consumption per month. In addition, any investment that would result in using more energy than 12,500 tonnes of raw lignite equivalent requires special approval from the energy industry organs. When working out economic plans the Ministries and combines (Kombinate) are obliged to show what measures they have taken to ensure a rational use of energy or to save energy. Under the Energy Order (EVO)+ passed in 1980, the use of waste heat where possible is obligatory. The “secondary energy” potential that is technically and economically viable is determined to be 10 percent of total demand for primary energy for 1983 in the GDR, and two-thirds of it was used. By 1985 the utilization of secondary energy was to be brought up to 75 percent. Energy consumption norms are prescribed to promote new products, plant and technologies with low energy requirements. Most of the current 550 energy norms were dropped by 15 percent at the beginning of the 1980s. To guarantee a rational use of energy in existing production, plant consumption norms have to be worked out by the superior organs of control. They must be revised at the latest after three years. The constant adjustment of norms and standards to technical developments is a major problem for the administration in steering consumption. Since the plants want to build up energy reserves they tend to quote exaggerated requirements to the central office. That is why an analysis of the norms now applicable showed that the actual consumption of energy was in some cases as much as 50 percent below the norms; the guidelines of the Ministry
of Transport
for fuel consumption
by private cars are regularly undercut by up
to 1.5 litres per 100 km. Energy consumption for heating in residential buildings is a long-term concern. Again norms are issued on heat consumption in new buildings, and according to these the specific heating requirements for one housing unit is to be dropped by 40 percent of the 1980 level by 1985. There have already been complaints in the GDR that policy and practice tend to diverge widely; some contend, for example, that shortcomings in the quality of building mean that these energy consumption norms are undercut by between 20 and 30 percent. So far extensive use has not been made of insulation material. One reason for this could be the need to save oil, for the material is mainly made from petroleum products. However, a switch to silicon products is envisaged. A ministerial decision of September 1979 prescribes maximum thresholds for heating workplaces and housing. They are, in general: -19’ to 21’ for housing, -18’ for shops, -18’ to 20” for production areas where workers sit most of the time, and -12” to 16’ for the rest. (In Fahrenheit, these are the equivalent of 66.2” to 69.8” for housing; 64.4O for shops; 64.4O to 68O for production areas where workers sit most of the time, and 53.6O to 60.8O 4. See “Verordnung fiber die Energiewirtschaft in der Deutschen Demokratischen blatt der Deutschen Demokratischen Republik, Teil I, 33 (December 10, 1980).
Republik,”
in Gesefr-
60
STUDIES IN COMPARATIVE COMMUNISM
for the rest.) Frequently the norms cannot be observed simply because there is no regulatory equipment installed. But automatic thermostats are obligatory now in new industrial buildings at least. Considerable savings in energy
can be achieved
indirectly
by lowering
specific
material consumption. For the five-year plan 1981/85 the required savings in rolled steel, aluminum, copper and cement are to reach an energy equivalent of 20 million t of raw lignite, Transport
or 29 percent of the total savings envisaged.
Measure3
Fifteen percent of final energy and two-thirds of the consumption for transport. The main ways to achieve savings here are by
of diesel fuel are used
-shifting road transport to the railways and inland waterways, where the relative energy consumption is said to be only around one-fifth that of road transport; -electrifying
more of the railways to increase
the share of electric trains;
-optimizing transport routes; -lowering speed limits; and -introducing obligatory carburetor adjustments. The share of goods transported by rail rose from 67 percent in 1981 to 73 percent in 1984.
At the same time the length
of electrified
track was increased
from 1,700
to
2,320 km. a share of almost 14 percent. Around one third of transport is now on these sections of track. The cost of transport on electric track is said to be about 40 percent below that on diesel tracks;
moreover,
lignite. Up to 1,980, commercial
transport
the electricity by enterprises
can be produced
from domestic
showed an above-average
rate of
expansion, but this has now been cut down and transport is more centralized. This is to avoid unnecessary journeys and achieve savings by combining transport processes. The norms for commercial transport by enterprises appear to have been fairly liberal: the plants had succeeded in obtaining fairly high fuel quotas and the state norms for fuel consumption by the centralized transport network were a good 20 percent lower. So from 1982 on, the fuel quotas outside the private sector were made more stringent. In addition, the freight tariffs were raised by 55 percent and a surcharge of 20 to 25 percent put on road transport The GDR already
over distances in excess of 50 km. had speed limits before 1973. While
that of 100 km/h on the
autobahns had not been changed, that on main roads was lowered from 90 to 80 km/h in 1979. In 1984 limits of between 60 and 80 km/h, depending on the type of vehicle, were imposed to achieve a more economical use of fuel by commercial vehicles. Where the limits were observed this has resulted in considerable savings by lorries, especially. A lorry of the type W 50 produced in the GDR is said to consume 47 litres of fuel per 100 km at 80 km/h, but only 29 litres at 60 km/h. The annual checks and adjustment of combustion engines that have been obligatory since 1984 is seen primarily as an environment protection measure, but it should also result in some fuel savings.
Price Changes
The state monopoly of foreign trade and foreign exchange makes it possible to isolate domestic prices from those on world markets. There are also two different and
61
The GDR ‘s Eneru Policy independent
price levels on the domestic
private consumers. The GDR is the only CMEA
country
market,
industrial
sales prices and prices to
not to have changed
its prices and rates for
energy consumption to private households over the period under review. Energy is regarded as a primary commodity and it is to be available at a low price. One kw of electricity per hour has cost 8 pfennigs since 1946, and one cubic meter of urban gas supply, 16 pfennigs. The corresponding prices for electricity generation and transport are given as 12 pfennigs for the beginning of the 1980s. The state subsidizes the difference. The cost of subsidizing the energy used by only one apartment on the longdistance heating system is put at around 800 marks per year. But households themselves only spend around 1.5 percent (approximately 300 marks a year) of their net income on electricity, gas, heating and water. Consequently, there is no financial incentive to save energy in the private sector. Nor does the way the bills are calculated encourage people to save energy. Analyses have shown that in apartments where flat amounts are paid for hot water, the consumption per person is 60 percent higher than when each occupier pays for what he has actually used.5 But industrial producer prices have risen greatly. The first changes were made in 1976 and 1980; in 1976 there were the following increases: natural gas 200 percent, heating oil 155 percent, coal 90 percent, lignite 50 percent, crude lignite 40 percent, and electricity 33 to 66 percent. Annual price increases of around 2 percent are given for the five-year plan periocl 1981 to 1985. Altogether this has meant that up to 1985, in relation to 1979, the price level for imported energy, i.e. heating oil and coal, has risen by around 50 percent, for urban and natural gas by around third, and for lignite, electricity and long-distance heating by 12 percent.6 The structure of prices based on sources of energy is clearly designed to encourage the replacement of imported energy by energy from domestic sources. Including transport costs the 1983 price relations were: Crude lignite Lignite briquettes Coal Heating oil
1.0 1.4 c. 4.8 c. 11.5
However, the substitution of urban or domestic natural gas for imported gas is not being encouraged, and the rates would not encourage economy here either. The combination of a delivery price independent of consumption with a proportional labor price results in a regressive overall rate. This kind of rate is used for electricity, longdistance heating and natural gas, to promote a more balanced use of energy and avoid peak demand periods. But it has the undesired side effect that the cost per unit decreases the greater the number of units used. So, although its domestic prices are in principle isolated from those on the world market, the GDR has reacted to world market price changes and some very considerable adjustments have been made in the structure and level of energy prices to commercial consumers. Economic levers have been used to save energy and switch to different energy sources. Nevertheless, the effectiveness of these instruments is limited right from the start, since part of the prices can be passed on as cost factors, while the absolute price level is still relatively low and saving energy does not result in any 5. See Willi Riesner, Rafionelle Enngieanwmdung (Leipzig, 1984), p. 39. 6. See Wilhelm Riesner and Werner Sieber, Wvtschaftliche Energieanwendung (Leipzig,
1982),
p. 28.
62
STUDIES IN COMPARATIVE COMMUNISM
improvement in personal incomes. The private consumer, on the other hand, has not felt the increase in energy prices. That also makes it more difficult to induce people to be energy-conscious
and probably
stands in the way of energy-saving
at work as well as in
the home.
Controls and Sanction5 The extent to which the decisions by the party and economic leaders on energy saving and substitution are really being implemented is controlled by the “Energy at the Central Energy Commission of the Council of Ministers.’ Inspectorate” Sanctions can be imposed for infringements until the situation is rectified, and fines of up to 100,000 marks can be imposed if the requirements are not met. If the obligations are not fulfilled, fines of up to 1,000 marks can be imposed on those responsible. In practice, however, this is rare. In the first two years the controls led to savings of around 0.8 million t of crude lignite equivalent. The new regulations that have been in force since 1980 on quotas provide for sanctions to the amount of ten times the industrial producer price of the source of energy involved for exceeding state quotas. The regulations on rates also provide for a surcharge of 50 percent if the contractually amount to be bought or produced is exceeded.
agreed
Incentives Since there is no calculable improvement in personal earnings in the GDR as a result of energy saving in the plant, specific incentives have been introduced. The Central Energy Commission awards a certificate “for exemplary economy with energy at work.” This brings a material bonus and can also be awarded to plants and combines. Bonuses
are paid to individual
workers
for saving
energy
and material.
Various
multipliers are used for the individual sources of energy and they are between 1.3 (natural gas, coal) and 2.5 (electricity). Drivers are paid special bonuses, which can be up to 0.74 marks per litre of fuel saved.
Success in Saving Energy Statistical Problems There are statistical difficulties in assessing the degree of success there has been in saving energy, since the GDR’s reporting of developments in primary energy consumption is neither complete nor free of contradictions. Data on primary energy consumption first appeared in the Statistical Yearbookfor 1982, covering the economy as a whole from 1975 to 1981. The data are limited, however, as in the following years, to total primary energy consumption and consumption of raw lignite and other solid fuels. Some further information was given on the year 1970 and individual sources of energy in an article published in the GDR.8 But the quantity consumed has to be estimated for the years
7. See Boris Kudevita, “Die Rolle der Energieinspektion bei der Verwirklichung der Energiepolitik der DDR,” in Energieanwendung, l/1982, p. 1. 8. See Dietmar Ufer and Gotthard Gerisch, “Die Energiestrategie der Deutschen Demokratischen Republik und ihre Widerspiegelung in der nation&n Energiebikmz, ” in Energietechnik, 1211983,p. 456.
63
The GDR ‘s Energy PoliGy 1971 to 1974, and from 1975 on, consumption
is not reported
on the basis of energy
sources. The data published by the GDR on energy consumption are not always in line with the foreign trade data, from the relation of which to production figures the domestic consumption, apart from changes in stock, is calculated. Up to 1978 the figures for consumption calculated from the production and foreign trade data are largely identical with the figures given by the GDR itself. From 1979 on, however, they diverge widely, especially on oil consumption.g This gap can only be explained by re-exports of crude oil. This item is listed neither in the table “Export of Selected Goods” in the Statistical Yearbook of the GDR nor in the CMEA Statistical Yearbook. In the OECD statistics there are no imports of crude oil from the GDR mentioned, either. But this is no contradiction ofour assumption, because in the OECD foreign trade statistics the imported crude oil is reported as coming from the country of origin.
Energy Consumption and Economic Growth A change in the trend of primary energy consumption is evident in 1980. Up to 1979 energy consumption was rising, and it actually rose faster from 1976 to 1978 than in the live previc.ls years (2.8 percent or 0.6 percent on average for the year). Over the period 1980 to 1983 the greater efforts to save energy, however, brought some success and primary energy consumption was reduced in absolute terms. It was not until 1984 that there was again a noticeable rise ( + 2.7 percent); but the 1979 peak was not reached again. The success in saving energy is remarkable because it was achieved with a high level of economic growth at the same time. In the seventies the GDR succeeded in reducing specific consumption in relation to the produced national income every year; a growth in the national income of 1 percent on average for the year was achieved with a growth of less than half as much in primary energy consumption. In the period from 1980 to 1983 it actually proved possible to uncouple overall growth from growth in energy consumption altogether. The decoupling of economic growth from growth in energy consumption is also the result of the intensification strategy. In the phase of extensive growth, production increases were frequently related to the construction of new production plant. The decline in investment
that has now set in and the concentration
TABLE 2. Primary
energy consumption and economic in % on average for the year)
Primary energy consumption Produced national income Elasticity’ 1. Percent increase in primary growth in national income. 9. For further details see Jochen Wochenbericht des DZW. 51-5211985.
Bethkenhagen,
of funds on existing
growth (increase
1979180
1983179
1985/83
2.0 4.8 0.42
-0.7 4.1 -0.17
3.0 5.2 0.58
energy
“Der
consumption
per 1 percent
Primirenergieverbrauch
in der DDR,”
in
64
STUDIES
IN
COMPARATIVE COMMUNISM
150
1970
1972
1974
1976
1978
1980
1982
1984
FIG. 3. National income (NI) and primary energy consumption (PEC) in the GDR 1970-84. plant have reduced the additional need for room heating, lighting and transport within the plant. However, it is easier to save energy given the waste of energy which the GDR bemoans, and in such a situation regulations and controls can achieve quite considerable savings over the short term. But without economic levers, making people more energy-conscious over the longer term is bound to be a very slow process. The annual average 3 percent increase of primary energy consumption in 1984 and 1985 can be regarded as a proof for that thesis. Up to now, the GDR has only exhausted the easiest conservation potential, and it remains to be seen whether substantial progress will be made in the coming years. The figure for primary energy consumption per inhabitant is an indication that there is still considerable waste of fuel, for it is very high in comparison to the Federal Republic of Germany, at 224 TJ in 1985. This is 20 percent higher than the West German figure, although the GDR has only about three quarters of the West German national product per inhabitant. lo Restructuring
Primary
Energy
Consumption
The period 1979/80 marked a break in the structure of primary energy consumption
as
well. Up to then the share of coal, which was far above the international average, was being reduced and the use of oil and gas increased. The aim was to modernize the consumption structure, since oil and gas cost less to convert and transport and cause less damage to the environment. But in view of the “new situation” this trend was reversed, and the aim was then to expand the use of domestic sources of energy. The share of lignite-and of natural gaswas increased through remarkable increases in domestic production (see Table 3). In 1985 the GDR produced 312 million t of lignite (1974: 243 million t), Most of this was used directly to fire power stations and heating plants (60 percent), and it is mainly 10. See Deutsches p. 144.
Institut
fijr Wirtschaftsforschung
(ed.),
Handbuh
DDR- Wirtschafl (Hamburg,
1985),
65
The GDR ‘s Energy Policy TARLE 3. Share of raw lignite and oil in GDR primary energy consumption (in %)
Raw lignite Oil
1970
1979
1984
1985
78 13
63 20
71 11
70 11
in heating plants that lignite has replaced oil. Altogether in the GDR level.
the consumption
of heating oil
is said to have been reduced to less than 20 percent of the 1978 consumption
A relatively high proportion of lignite mined in the GDR is processed. The first stage is briquettes, and around 100 million t of lignite are taken by the briquette factories every year. The reduction in their capacities (started in the mid-sixties) was stopped in 1973 and since then around 50 million t of lignite briquettes have been produced every year. About half is used for domestic heating purposes; a good quarter passes on to the second processing stage (degasiftcation, gasification, liquefication, which is done in the carbonization plants in Espenhain, Boehlen and Deuben, the high temperature lignite coking
plants
in Lauchhammer
and Schwarze
Pumpe
and the firm-bed
pressure
gasification plant, also at Schwarze Pumpe). There is as yet no direct hydrogenation. Dust pressure lignite gasification is at the advanced stage of development and the aim is to produce synthetic gas. Hard coal mining stopped in the GDR in 1978. Most of the demand is met by imports from the Soviet Union and Poland, and imports from the Federal Republic of Germany have been only slight on average for the years 1981 to 1984, at 0.3 million tons. Here too there have been considerable reductions in consumption and so in imports over recent years. At around 6 million tons the quantity used in 1984 was only half that of 1979. The biggest increase in share has been in natural gas over the entire period under review, and in 1984 this accounted for roughly 10 percent of primary energy consumption (1970: 1 percent). The gas comes from domestic resources and also from the Soviet Union; the heating value of the GDR gas is about one third lower. Since it is hardly possible to increase domestic production further, the expansion of the use of this energy source, which is very low in pollution effect, will depend mainly on what can be imported from the Soviet Union. Since the GDR will also share in the construction of natural gas pipelines in the Soviet Union in the next five-year plan period, an increase in deliveries is likely. The GDR went on expanding its consumption of oil right up to 1978. The increase in supplies agreed with the Soviet Union enabled an increase in consumption over 1973 of 4 million to 17.9 million tons. According to our estimates the figure dropped to around 10 million tons by 1984. That is a reduction in the share of oil in primary energy consumption from 2 1 to 11 percent. Thus the GDR oil on the domestic market. But there must have been of crude oil and petroleum products, for oil imports from 20 million tons in 1978 to 23.2 million tons in
has been very successful in saving a considerable increase in exports shown by the GDR actually rose 1984. From this it follows that the
GDR has increased its total oil exports (crude and products) from 2 million tons in 1978 to about 13 million tons in 1984. Our guess is that most of the oil from the Soviet Union is exported after processing while the other imports-mainly from OPEC countriesare directly re-exported.
64.5 6.9 20.2 6.7 1.8 1.6
64.4 7.7 19.5 6.7 1.8 1.6
66.7 7.2 18.8 6.3 1.2
0.9
1. Natural gas in bill. cbm; primary electricity in TWh. Source: DIW data bank on CMEA energy.
Lignite Hard coal Oil Natural gas Primary energy of which: Nuclear power
-
Total
11,89
102
121
in Peta-Joule 3,605 3,563 2,252 2,257 2.50 228 720 616 265 324 118 139
9,77
121
3,574 2,327 179 596 331 142
11,90
2.3
62.8 7.2 20.6 6.8 2.6
2.8
3.4
Structure (total = 100) 62.5 63.3 6.9 6.4 20.0 17.3 7.4 9.1 3.3 3.9
3.4
65.1 5.0 16.7 9.3 4.0
3.2
68.1 4.4 14.4 9.6 3.6
111
3,510 2,390 153 504 338 125
lo,85
272,17 6,Ol 12,39 16,20 12,21
1982
Change in percent compared with the previous year 2.4 1.4 - 1.1 0.3 -1.8
29
2.2
82
54
55
2,179 235 613 205 38
3.9
3,555 2,233 255 734 241 93
3,473 2,241 238 700 232 62
7,93
5,21
3,397 2,187 260 663 227 60
3,269
$27
264,74 7,04 14,6l 15,81 13,91
2,74
253,52 9,28 17,93 13,18 8,98
254,50 9,14 17,ll 12,57 5,93
in mill. t’ 255,16 256,21 10,io 8,99 17,61 15,07 13,89 15,Ol 11,32 13,64
248,50 9,70 16,21 12,til 5,78
247,60 9,21 15,Ol 10,92 3,60
Total Lignite Hard coal Oil Natural gas Primary electricity of which: Nuclear power
Lignite Hard coal Oil Natural gas Primary electricity of which: Nuclear power
1981
1980
1979
1978
1976
1975
1977
in the GDR 1975 to 1984
4. Primary energy consumption
TABLE
3.6
69.1 3.7 12.8 10.4 4.0
-0.1
125
3,507 2,423 131 449 363 141
12,23
276,15 5,23 11,06 18,20 13,80
1983
3.3
69.4 6.1 10.7 10.3 3.5
2.7
120
3,601 2,498 221 386 371 125
11,74
285,35 7,38 9,56 19,29 12,24
1984
The GDR ‘s Energy Policy
67
The share of nuclearpower in total energy consumption has remained at the relatively low level of 3 percent since 1979. There are two nuclear power stations in operation. One is located near Rheinsberg (70 MW), the other near Greifswald on the Baltic Sea (1,760 MW), which produced in 1985 about 11 percent of total electricity. The expansion of nuclear power is marked by delays. In contrast to earlier plans, according to which the capacity in Greifswald was tb be doubled in the first half of the 198Os, no new reactor has gone into operation. East Germany is endowed with uranium deposits. There is still the joint SovietEast German company (Sowjetisch-Deutsche Aktiengesellschaft) Wismut which exploits the reserves of uranium in the GDR. However, as far as the fuel cycle is concerned the GDR is totally dependent on the USSR, to which the GDR has to deliver all its uranium. Within the CMEA the USSR has a monopoly for the enrichment and reconversion facilities. As far as total primary energy is concerned, ing its dependency
on imports.
met by foreign sources, Problems
the GDR has been successful in diminish-
While in 1979 about one-third
this share decreased
of total consumption
was
to about 20 percent in 1985.
and Limitations of Intensification in the Energy Sector
It is very difficult to assess the impact of the achieved energy savings on the intensification policy. It is true that in the period under review the GDR has been able to lower the energy intensity of the economy year by year. Between 1980 and 1984 it even proved possible to achieve an absolute reduction in energy consumption. However, these are quantitative effects, while intensification aims at the reduction of expenditures. In view of increasing costs for imports and domestic production of energy, it is not surprising that in value terms the energy intensity of the produced national income has increased, too. At the beginning of the eighties the relation of the average growth rate of primary energy costs to the growth of produced national income was 4: 1; in the period 1960 to 1980 the respective figure was 3.3: 1 .I1 The main problems for the GDR economy are the more or less artificial prices and the (still dominating) thinking in quantitative terms. Most of the articles on energy conservation
emphasize
the joules or calories but not the marks which could be saved.
There are only few examples which refer to the fact that the total cost of substitution conservation
measures
has to be taken into account. l2 However,
or
it is very difficult to
calculate these total costs. Heinrichs stated that in the five-year plan period 1981 to 1985 about one-quarter of all industrial investments had to be allotted to the basic industries. But these expenditures reflect only half of the means which are necessary to expand production. The other half has to be spent in the transportation and construction sectors, in the chemical and metallurgy industries, as well as for participation in investment projects in the USSR.t3 Another problem is gaining more and more in importance: the damage to the environment due to the intensive use of lignite, which applies to the devastation of land
11. SeeGerd Schirmer, “Okonomische Probleme ,” p. 40 and Gerd Schirmer, “Energieintensitit und intensiv erweiterte Reproduktion,” in Wirlschaftswlssenschaft, 811984, p. 1128. 12. See Gerd Schirmer, “EnergieintensitPt ,” p. 1128 and Wolfgang Heinrichs, “Wirtschaftswachstum und langfristige Deckung des Energiebedarfs, ” in Wirtschafisiuissenschafi, 1011982, p. 1441. 13. See Wolfgang Heinrichs, “Wirtschaftswachstum ,” p. 1453.
68
STUDIES IN COMPARATIVE
as well as to air pollution. compared
The extensive
COMMUNISM
emission
to 3 million tons in West Germany14)
of SO,
(5 million
tons in 1985,
is mainly the result of that policy.
Against this background the question arises whether it would have been more advantageous for the GDR to pursue an export-oriented strategy instead of one based of on import substitution. Such a strategy, which had to aim at the modernization export industries in order to earn the money which is necessary to finance energy imports, has never been discussed openly. The GDR has pursued an import substitution policy despite the fact that this strategy is linked to high burdens for investments and the environment.
This policy cannot only be explained
by “autarky-mentality.”
The relatively low competitiveness of East German industry has not allowed the GDR to pursue a more efficient energy policy, which in addition allows for environmental protection. In the coming years the chosen strategy has to be continued. According to the directive of the 1 lth SED congress on the 1986 to 1990 plan period,t5 the specific energy consumption in 1990 has to be reduced by an equivalent of 80 million tons of raw lignite as compared
with 1985. i6 This allows an increase
of primary
energy consumption
of
1 percent per annum while the produced national income is to grow by a respective rate of 4.6 percent. Raw lignite mining million tons) while energy imports
is to be increased to 333 million tons (1985: 312 from the Soviet Union are to be expanded only
slightly. According to the trade agreement signed in 1985, the envisaged energy shipments of the USSR to the GDR in the period 1986 to 1990 are planned as follows (annual average): Crude oil: 17.1 million tons (1984 actual: 17.1 million tons) Natural gas: 6.9 billion cbm (6.2 billion cbm) Hard coal: 4.5 million tons (3.6 million tons) The targets for energy conservation technological
are mainly to be achieved by means of scientific-
solutions for electricity and heat production
as well as for energy-intensive
processes and methods and by means of new products with reduced energy consumption. Thus conservation results will become more and more dependent on the implementation of scientific-technical solutions. In the past, however, energy conservation was mainly achieved by improving norms, reducing quotas and by diminishing energy waste. The application of already existing technology or even the indigenous development of key technologies have been of minor importance. To make the two latter sources effective the GDR has not only to improve the incentive system. If new technologies are to have a substantial effect with respect to energy conservation, they must be utilized broadly, and this requires substantial whether the GDR will achieve in the coming intensification of energy utilization.
investments. It remains to be seen years such a breakthrough in the
14. See Jochen Bethkenhagen, Doris Corn&en, Rainer Hopf, Manfred Melzer und Cord Schwartau, “Luftverunreinigung in der DDR: Die Emission van Schwefeldioxid und Stickoxiden.” in Wochenherichl des DZW, 30/1985, p. 345. 15. See Neues Deutschland (April 23, 1986). 16. See .Veues Deutschland (iYrwember 1, 1985)
The GDR’s Energy Policy and its Implications for the Intensification Drive
Energy Policy as a Part of the I~tensi~cation
Strategy
The sudden increases in the prices of oil in 1973 and 1979/80 introduced
by the OPEC
cartel fundamentally changed economic framework conditions all over the world. The GDR was not initially as badly affected by this as most of the Western industrial countries, mainly because it is less dependent on imported energy sources, and because OPEC imports account for only a slight share of these. The GDR’s most important source of energy imports is the Soviet Union. Since 1975 prices in CMEA intra-bloc trade have in principle
been set at the average
level of world market
prices in the
preceding five years, and adjusted annually. Consequently, when world market prices for energy were rising, Soviet clearing prices for oil and gas remained relatively low. Up to 1984 the GDR
benefited
from this; indeed,
in some years the clearing
prices for
Soviet oil were only half of world market levels (see Fig. 1). After the second oil price shock in 1979, it became clear that energy imports would continue
to be very expensive
in the coming years. At the end of 1979 Erich Honecker
commented: “We are not just facing a further complication in a situation that is already complicated enough; we are facing an entirely new situation.“’ Some months before, the Soviet Union had already indicated to the GDR that the GDR could not expect a further increase
in oil supplies from the Soviet Union
in the eighties.
In that situation
the GDR had in principle three options: -to increase energy imports from other sources; -to -to
expand domestic production of primary energy, intensify the energy conservation efforts.
in particular
of lignite; and
Due to chronic hard-currency shortages, the GDR could not afford to expand imports from third countries. On the contrary, the reduction of imports got highest priority. Because this could not be achieved sufficiently by conservation, the economic leadership decided also to expand the domestic production of lignite and natural gas in order to substitute for imported oil. However, there are some contradictions inherent in the targets of saving energy and import substitution. Initially, oil and hard coal were only to be replaced with lignite. But the transport and conversion of lignite requires a greater use of energy than the transport and conversion of oil; indeed, this was the main motivation for switching from coal to oil in earlier years. Restructuring energy consumption to use more lignite therefore defeats efforts aimed at energy conservation. But this is correct only as far as the energy consumption is measured in quantitative terms. Measured in terms of the GDR’s cost accounting, the substitution of lignite for
1. SeeErich Honecker STUI)IES
IN COMPAKATIVE
0039-3592/87/01
in Neues ~~~sch~ff~d (December COMMUNISM,
14, 1979)
VOL. XX, No. 1,
0055-14 $03.00 @ 1987 University
SPRING
of Southern
1987, 55-68
California
56
STUDIES IN COMPAKA?‘IVE COMMUNISM
@K! CMEA clearing price in world market price
25
SSR’s clearing price2
5
01 ’ 197273
’
74
’
75
’
76
’ ’
77 78
’
79
’ ’ ’ 80 81
’ ’
82 83
84
’
85
’
86
’ ’ ’ 87 88
89
’
90
’ ’ 91
1. 1972 to 1985: Price of Arabian hght, f.o.b. Ras Tanura. From 1986 onwards hypothetical price assumption of $15 per barrel. 2. 1972 to 1984: USSR’s clearing price for oil exports to the GDR. From 1985 onwards: average of the world market price of the preceding 5 years. FIG. 1. Trends 1991 (1986-91
in oil prices. World market prices and the USSR’s model calculation).
CMEA
clearing
price 1972 to
imported energy sources is economically meaningful. For instance, the cost of 1 t of steam produced by lignite is determined to be 12 marks; the respective figure for 1 t of steam produced
by heating oil is 65 marks.*
Table
1 provides
an overview of energy
costs for the years 1980 and (forecasted) 1990. There is no information available on how the costs are calculated. that they do not include the costs for environmental
protection
It is quite obvious
measures.
However,
the
data do show that the relevant expenditure on the production of export goods, which can be regarded as the costs of imported energy, are recorded very high. These figures also show how problematic it is to make long-term decisions on a very uncertain price basis. At the moment it is more likely that in 1990 the price for heating oif will be lower than it was in 1980 instead of doubling, as indicated in Table 1. However, the Table represents the perception of price developments by the GDR economic leadership at the beginning of the eighties. Against this background it is understandable that under the specific conditions of the GDR, a reduction of energy costs can only be achieved by a two-pronged strategy: energy conservation and import substitution. In this respect it is part of the intensification strategy of the GDR. Intensitication in the energy sector ultimately means that the expenditures for the preparation of energy 2. See Siegfried Wenzel, Zentralkomitees der SED,”
‘“Fra~en
der
umfassenden
Intensivierung
in Wtrtschafisw~~senschafi, 6/1985, p. 809.
in Auswertung
der 9. Tagung
des
The GDR’s TABLE
57
Energy Policy
1. Expenditure on the preparation (expenditure in marks/GJ) 1980
of
energy
1990
sources
1980 = 100
(prognosis)
Source Crude lignite Lignite briquettes Coal Heating oil Natural gas Liquid gas
2.4 4.8 10.0 12.4 11.9 13.5
3.1 7.0 13.0 27.0 25.0 29.0
129 146 130 218 210 215
Source: Dieter Fahlbusch and Bodo Wolf: Zu einigen Wertigkeiten und Grundsatzen der Abwarmenutzung, in: Energieanwendung. Heft 6/1982, p. 201.
sources should be reduced. goal?
Generally
speaking there are four approaches
to achieve this
-Because the expenditures on the preparation of 1 Joule of electricity differ from those on the same amount of raw lignite, the saving effects are also different; -Given the form of final energy used (GDR term: Gebrauchsenergie), conservation of costs depends
on the primary
raw lignite is less expensive
energy
utilized-e.g.,
than that produced
electricity
produced
by
by heating oil;
-Energy can be saved in quantitative and value terms by reducing the losses in the process of energy conservation. At the present time the total losses during that process are about 40 percent (and as far as electricity is concerned, about 68 percent). If electricity consumption increases faster than the consumption of total energy, the average losses will increase. This effect can only be diminished by intensifying the -Cost reductions of lignite for oil In practice, all four simultaneously.
Energy
Policy
use of heat losses (secondary energy). can be achieved by a change of the energy mix. The substitution aims at this target. approaches for a more intensive use of energy must be followed
Measures
Energy saving and restructuring in the GDR are mainly to be achieved through administrative measures. These include state norms on consumption, investment and prices, which are to be reinforced
by measures of control,
sanctions
and incentives.
Energy Planning and Consumption Norms Ministry of Coal and Energy is responsible for planning and steering energy policy. But in 1979 a Central Energy Commission was established by the Council of Ministers to work out proposals for energy policy measures and take over the coordination, control and direction of these. The “Rational Energy Use” working group of the GDR The
Council
of Ministers
is to work out concepts
for the more efficient
use of energy.
3. See Gerd Schirmer, “~konomische Probleme der Einsparung van Energie, Rohston‘en und Material 111986, p. 42. bci intensiv erweiterter Reproduktion, ” in Wirtschnfiswicsenschafl,
58
S-RJDIESINCOMPARATIVE COMMUNISM
Q)
W
59
The GDR’s Energy Policy Regular
seminars
are held on “the rational
organs to further the implementation
use of energy”
for control
and steering
of energy policy. Also in 1979 enterprises
were
given target figures for energy consumption in the state plans; before that only their supplies of energy were fixed, leaving them room for the manipulation of stock. To enable better control of the use of energy and faster savings, enterprises were obliged to calculate their energy consumption per month. In addition, any investment that would result in using more energy than 12,500 tonnes of raw lignite equivalent requires special approval from the energy industry organs. When working out economic plans the Ministries and combines (Kombinate) are obliged to show what measures they have taken to ensure a rational use of energy or to save energy. Under the Energy Order (EVO)+ passed in 1980, the use of waste heat where possible is obligatory. The “secondary energy” potential that is technically and economically viable is determined to be 10 percent of total demand for primary energy for 1983 in the GDR, and two-thirds of it was used. By 1985 the utilization of secondary energy was to be brought up to 75 percent. Energy consumption norms are prescribed to promote new products, plant and technologies with low energy requirements. Most of the current 550 energy norms were dropped by 15 percent at the beginning of the 1980s. To guarantee a rational use of energy in existing production, plant consumption norms have to be worked out by the superior organs of control. They must be revised at the latest after three years. The constant adjustment of norms and standards to technical developments is a major problem for the administration in steering consumption. Since the plants want to build up energy reserves they tend to quote exaggerated requirements to the central office. That is why an analysis of the norms now applicable showed that the actual consumption of energy was in some cases as much as 50 percent below the norms; the guidelines of the Ministry
of Transport
for fuel consumption
by private cars are regularly undercut by up
to 1.5 litres per 100 km. Energy consumption for heating in residential buildings is a long-term concern. Again norms are issued on heat consumption in new buildings, and according to these the specific heating requirements for one housing unit is to be dropped by 40 percent of the 1980 level by 1985. There have already been complaints in the GDR that policy and practice tend to diverge widely; some contend, for example, that shortcomings in the quality of building mean that these energy consumption norms are undercut by between 20 and 30 percent. So far extensive use has not been made of insulation material. One reason for this could be the need to save oil, for the material is mainly made from petroleum products. However, a switch to silicon products is envisaged. A ministerial decision of September 1979 prescribes maximum thresholds for heating workplaces and housing. They are, in general: -19’ to 21’ for housing, -18’ for shops, -18’ to 20” for production areas where workers sit most of the time, and -12” to 16’ for the rest. (In Fahrenheit, these are the equivalent of 66.2” to 69.8” for housing; 64.4O for shops; 64.4O to 68O for production areas where workers sit most of the time, and 53.6O to 60.8O 4. See “Verordnung fiber die Energiewirtschaft in der Deutschen Demokratischen blatt der Deutschen Demokratischen Republik, Teil I, 33 (December 10, 1980).
Republik,”
in Gesefr-
60
STUDIES IN COMPARATIVE COMMUNISM
for the rest.) Frequently the norms cannot be observed simply because there is no regulatory equipment installed. But automatic thermostats are obligatory now in new industrial buildings at least. Considerable savings in energy
can be achieved
indirectly
by lowering
specific
material consumption. For the five-year plan 1981/85 the required savings in rolled steel, aluminum, copper and cement are to reach an energy equivalent of 20 million t of raw lignite, Transport
or 29 percent of the total savings envisaged.
Measure3
Fifteen percent of final energy and two-thirds of the consumption for transport. The main ways to achieve savings here are by
of diesel fuel are used
-shifting road transport to the railways and inland waterways, where the relative energy consumption is said to be only around one-fifth that of road transport; -electrifying
more of the railways to increase
the share of electric trains;
-optimizing transport routes; -lowering speed limits; and -introducing obligatory carburetor adjustments. The share of goods transported by rail rose from 67 percent in 1981 to 73 percent in 1984.
At the same time the length
of electrified
track was increased
from 1,700
to
2,320 km. a share of almost 14 percent. Around one third of transport is now on these sections of track. The cost of transport on electric track is said to be about 40 percent below that on diesel tracks;
moreover,
lignite. Up to 1,980, commercial
transport
the electricity by enterprises
can be produced
from domestic
showed an above-average
rate of
expansion, but this has now been cut down and transport is more centralized. This is to avoid unnecessary journeys and achieve savings by combining transport processes. The norms for commercial transport by enterprises appear to have been fairly liberal: the plants had succeeded in obtaining fairly high fuel quotas and the state norms for fuel consumption by the centralized transport network were a good 20 percent lower. So from 1982 on, the fuel quotas outside the private sector were made more stringent. In addition, the freight tariffs were raised by 55 percent and a surcharge of 20 to 25 percent put on road transport The GDR already
over distances in excess of 50 km. had speed limits before 1973. While
that of 100 km/h on the
autobahns had not been changed, that on main roads was lowered from 90 to 80 km/h in 1979. In 1984 limits of between 60 and 80 km/h, depending on the type of vehicle, were imposed to achieve a more economical use of fuel by commercial vehicles. Where the limits were observed this has resulted in considerable savings by lorries, especially. A lorry of the type W 50 produced in the GDR is said to consume 47 litres of fuel per 100 km at 80 km/h, but only 29 litres at 60 km/h. The annual checks and adjustment of combustion engines that have been obligatory since 1984 is seen primarily as an environment protection measure, but it should also result in some fuel savings.
Price Changes
The state monopoly of foreign trade and foreign exchange makes it possible to isolate domestic prices from those on world markets. There are also two different and
61
The GDR ‘s Eneru Policy independent
price levels on the domestic
private consumers. The GDR is the only CMEA
country
market,
industrial
sales prices and prices to
not to have changed
its prices and rates for
energy consumption to private households over the period under review. Energy is regarded as a primary commodity and it is to be available at a low price. One kw of electricity per hour has cost 8 pfennigs since 1946, and one cubic meter of urban gas supply, 16 pfennigs. The corresponding prices for electricity generation and transport are given as 12 pfennigs for the beginning of the 1980s. The state subsidizes the difference. The cost of subsidizing the energy used by only one apartment on the longdistance heating system is put at around 800 marks per year. But households themselves only spend around 1.5 percent (approximately 300 marks a year) of their net income on electricity, gas, heating and water. Consequently, there is no financial incentive to save energy in the private sector. Nor does the way the bills are calculated encourage people to save energy. Analyses have shown that in apartments where flat amounts are paid for hot water, the consumption per person is 60 percent higher than when each occupier pays for what he has actually used.5 But industrial producer prices have risen greatly. The first changes were made in 1976 and 1980; in 1976 there were the following increases: natural gas 200 percent, heating oil 155 percent, coal 90 percent, lignite 50 percent, crude lignite 40 percent, and electricity 33 to 66 percent. Annual price increases of around 2 percent are given for the five-year plan periocl 1981 to 1985. Altogether this has meant that up to 1985, in relation to 1979, the price level for imported energy, i.e. heating oil and coal, has risen by around 50 percent, for urban and natural gas by around third, and for lignite, electricity and long-distance heating by 12 percent.6 The structure of prices based on sources of energy is clearly designed to encourage the replacement of imported energy by energy from domestic sources. Including transport costs the 1983 price relations were: Crude lignite Lignite briquettes Coal Heating oil
1.0 1.4 c. 4.8 c. 11.5
However, the substitution of urban or domestic natural gas for imported gas is not being encouraged, and the rates would not encourage economy here either. The combination of a delivery price independent of consumption with a proportional labor price results in a regressive overall rate. This kind of rate is used for electricity, longdistance heating and natural gas, to promote a more balanced use of energy and avoid peak demand periods. But it has the undesired side effect that the cost per unit decreases the greater the number of units used. So, although its domestic prices are in principle isolated from those on the world market, the GDR has reacted to world market price changes and some very considerable adjustments have been made in the structure and level of energy prices to commercial consumers. Economic levers have been used to save energy and switch to different energy sources. Nevertheless, the effectiveness of these instruments is limited right from the start, since part of the prices can be passed on as cost factors, while the absolute price level is still relatively low and saving energy does not result in any 5. See Willi Riesner, Rafionelle Enngieanwmdung (Leipzig, 1984), p. 39. 6. See Wilhelm Riesner and Werner Sieber, Wvtschaftliche Energieanwendung (Leipzig,
1982),
p. 28.
62
STUDIES IN COMPARATIVE COMMUNISM
improvement in personal incomes. The private consumer, on the other hand, has not felt the increase in energy prices. That also makes it more difficult to induce people to be energy-conscious
and probably
stands in the way of energy-saving
at work as well as in
the home.
Controls and Sanction5 The extent to which the decisions by the party and economic leaders on energy saving and substitution are really being implemented is controlled by the “Energy at the Central Energy Commission of the Council of Ministers.’ Inspectorate” Sanctions can be imposed for infringements until the situation is rectified, and fines of up to 100,000 marks can be imposed if the requirements are not met. If the obligations are not fulfilled, fines of up to 1,000 marks can be imposed on those responsible. In practice, however, this is rare. In the first two years the controls led to savings of around 0.8 million t of crude lignite equivalent. The new regulations that have been in force since 1980 on quotas provide for sanctions to the amount of ten times the industrial producer price of the source of energy involved for exceeding state quotas. The regulations on rates also provide for a surcharge of 50 percent if the contractually amount to be bought or produced is exceeded.
agreed
Incentives Since there is no calculable improvement in personal earnings in the GDR as a result of energy saving in the plant, specific incentives have been introduced. The Central Energy Commission awards a certificate “for exemplary economy with energy at work.” This brings a material bonus and can also be awarded to plants and combines. Bonuses
are paid to individual
workers
for saving
energy
and material.
Various
multipliers are used for the individual sources of energy and they are between 1.3 (natural gas, coal) and 2.5 (electricity). Drivers are paid special bonuses, which can be up to 0.74 marks per litre of fuel saved.
Success in Saving Energy Statistical Problems There are statistical difficulties in assessing the degree of success there has been in saving energy, since the GDR’s reporting of developments in primary energy consumption is neither complete nor free of contradictions. Data on primary energy consumption first appeared in the Statistical Yearbookfor 1982, covering the economy as a whole from 1975 to 1981. The data are limited, however, as in the following years, to total primary energy consumption and consumption of raw lignite and other solid fuels. Some further information was given on the year 1970 and individual sources of energy in an article published in the GDR.8 But the quantity consumed has to be estimated for the years
7. See Boris Kudevita, “Die Rolle der Energieinspektion bei der Verwirklichung der Energiepolitik der DDR,” in Energieanwendung, l/1982, p. 1. 8. See Dietmar Ufer and Gotthard Gerisch, “Die Energiestrategie der Deutschen Demokratischen Republik und ihre Widerspiegelung in der nation&n Energiebikmz, ” in Energietechnik, 1211983,p. 456.
63
The GDR ‘s Energy PoliGy 1971 to 1974, and from 1975 on, consumption
is not reported
on the basis of energy
sources. The data published by the GDR on energy consumption are not always in line with the foreign trade data, from the relation of which to production figures the domestic consumption, apart from changes in stock, is calculated. Up to 1978 the figures for consumption calculated from the production and foreign trade data are largely identical with the figures given by the GDR itself. From 1979 on, however, they diverge widely, especially on oil consumption.g This gap can only be explained by re-exports of crude oil. This item is listed neither in the table “Export of Selected Goods” in the Statistical Yearbook of the GDR nor in the CMEA Statistical Yearbook. In the OECD statistics there are no imports of crude oil from the GDR mentioned, either. But this is no contradiction ofour assumption, because in the OECD foreign trade statistics the imported crude oil is reported as coming from the country of origin.
Energy Consumption and Economic Growth A change in the trend of primary energy consumption is evident in 1980. Up to 1979 energy consumption was rising, and it actually rose faster from 1976 to 1978 than in the live previc.ls years (2.8 percent or 0.6 percent on average for the year). Over the period 1980 to 1983 the greater efforts to save energy, however, brought some success and primary energy consumption was reduced in absolute terms. It was not until 1984 that there was again a noticeable rise ( + 2.7 percent); but the 1979 peak was not reached again. The success in saving energy is remarkable because it was achieved with a high level of economic growth at the same time. In the seventies the GDR succeeded in reducing specific consumption in relation to the produced national income every year; a growth in the national income of 1 percent on average for the year was achieved with a growth of less than half as much in primary energy consumption. In the period from 1980 to 1983 it actually proved possible to uncouple overall growth from growth in energy consumption altogether. The decoupling of economic growth from growth in energy consumption is also the result of the intensification strategy. In the phase of extensive growth, production increases were frequently related to the construction of new production plant. The decline in investment
that has now set in and the concentration
TABLE 2. Primary
energy consumption and economic in % on average for the year)
Primary energy consumption Produced national income Elasticity’ 1. Percent increase in primary growth in national income. 9. For further details see Jochen Wochenbericht des DZW. 51-5211985.
Bethkenhagen,
of funds on existing
growth (increase
1979180
1983179
1985/83
2.0 4.8 0.42
-0.7 4.1 -0.17
3.0 5.2 0.58
energy
“Der
consumption
per 1 percent
Primirenergieverbrauch
in der DDR,”
in
64
STUDIES
IN
COMPARATIVE COMMUNISM
150
1970
1972
1974
1976
1978
1980
1982
1984
FIG. 3. National income (NI) and primary energy consumption (PEC) in the GDR 1970-84. plant have reduced the additional need for room heating, lighting and transport within the plant. However, it is easier to save energy given the waste of energy which the GDR bemoans, and in such a situation regulations and controls can achieve quite considerable savings over the short term. But without economic levers, making people more energy-conscious over the longer term is bound to be a very slow process. The annual average 3 percent increase of primary energy consumption in 1984 and 1985 can be regarded as a proof for that thesis. Up to now, the GDR has only exhausted the easiest conservation potential, and it remains to be seen whether substantial progress will be made in the coming years. The figure for primary energy consumption per inhabitant is an indication that there is still considerable waste of fuel, for it is very high in comparison to the Federal Republic of Germany, at 224 TJ in 1985. This is 20 percent higher than the West German figure, although the GDR has only about three quarters of the West German national product per inhabitant. lo Restructuring
Primary
Energy
Consumption
The period 1979/80 marked a break in the structure of primary energy consumption
as
well. Up to then the share of coal, which was far above the international average, was being reduced and the use of oil and gas increased. The aim was to modernize the consumption structure, since oil and gas cost less to convert and transport and cause less damage to the environment. But in view of the “new situation” this trend was reversed, and the aim was then to expand the use of domestic sources of energy. The share of lignite-and of natural gaswas increased through remarkable increases in domestic production (see Table 3). In 1985 the GDR produced 312 million t of lignite (1974: 243 million t), Most of this was used directly to fire power stations and heating plants (60 percent), and it is mainly 10. See Deutsches p. 144.
Institut
fijr Wirtschaftsforschung
(ed.),
Handbuh
DDR- Wirtschafl (Hamburg,
1985),
65
The GDR ‘s Energy Policy TARLE 3. Share of raw lignite and oil in GDR primary energy consumption (in %)
Raw lignite Oil
1970
1979
1984
1985
78 13
63 20
71 11
70 11
in heating plants that lignite has replaced oil. Altogether in the GDR level.
the consumption
of heating oil
is said to have been reduced to less than 20 percent of the 1978 consumption
A relatively high proportion of lignite mined in the GDR is processed. The first stage is briquettes, and around 100 million t of lignite are taken by the briquette factories every year. The reduction in their capacities (started in the mid-sixties) was stopped in 1973 and since then around 50 million t of lignite briquettes have been produced every year. About half is used for domestic heating purposes; a good quarter passes on to the second processing stage (degasiftcation, gasification, liquefication, which is done in the carbonization plants in Espenhain, Boehlen and Deuben, the high temperature lignite coking
plants
in Lauchhammer
and Schwarze
Pumpe
and the firm-bed
pressure
gasification plant, also at Schwarze Pumpe). There is as yet no direct hydrogenation. Dust pressure lignite gasification is at the advanced stage of development and the aim is to produce synthetic gas. Hard coal mining stopped in the GDR in 1978. Most of the demand is met by imports from the Soviet Union and Poland, and imports from the Federal Republic of Germany have been only slight on average for the years 1981 to 1984, at 0.3 million tons. Here too there have been considerable reductions in consumption and so in imports over recent years. At around 6 million tons the quantity used in 1984 was only half that of 1979. The biggest increase in share has been in natural gas over the entire period under review, and in 1984 this accounted for roughly 10 percent of primary energy consumption (1970: 1 percent). The gas comes from domestic resources and also from the Soviet Union; the heating value of the GDR gas is about one third lower. Since it is hardly possible to increase domestic production further, the expansion of the use of this energy source, which is very low in pollution effect, will depend mainly on what can be imported from the Soviet Union. Since the GDR will also share in the construction of natural gas pipelines in the Soviet Union in the next five-year plan period, an increase in deliveries is likely. The GDR went on expanding its consumption of oil right up to 1978. The increase in supplies agreed with the Soviet Union enabled an increase in consumption over 1973 of 4 million to 17.9 million tons. According to our estimates the figure dropped to around 10 million tons by 1984. That is a reduction in the share of oil in primary energy consumption from 2 1 to 11 percent. Thus the GDR oil on the domestic market. But there must have been of crude oil and petroleum products, for oil imports from 20 million tons in 1978 to 23.2 million tons in
has been very successful in saving a considerable increase in exports shown by the GDR actually rose 1984. From this it follows that the
GDR has increased its total oil exports (crude and products) from 2 million tons in 1978 to about 13 million tons in 1984. Our guess is that most of the oil from the Soviet Union is exported after processing while the other imports-mainly from OPEC countriesare directly re-exported.
64.5 6.9 20.2 6.7 1.8 1.6
64.4 7.7 19.5 6.7 1.8 1.6
66.7 7.2 18.8 6.3 1.2
0.9
1. Natural gas in bill. cbm; primary electricity in TWh. Source: DIW data bank on CMEA energy.
Lignite Hard coal Oil Natural gas Primary energy of which: Nuclear power
-
Total
11,89
102
121
in Peta-Joule 3,605 3,563 2,252 2,257 2.50 228 720 616 265 324 118 139
9,77
121
3,574 2,327 179 596 331 142
11,90
2.3
62.8 7.2 20.6 6.8 2.6
2.8
3.4
Structure (total = 100) 62.5 63.3 6.9 6.4 20.0 17.3 7.4 9.1 3.3 3.9
3.4
65.1 5.0 16.7 9.3 4.0
3.2
68.1 4.4 14.4 9.6 3.6
111
3,510 2,390 153 504 338 125
lo,85
272,17 6,Ol 12,39 16,20 12,21
1982
Change in percent compared with the previous year 2.4 1.4 - 1.1 0.3 -1.8
29
2.2
82
54
55
2,179 235 613 205 38
3.9
3,555 2,233 255 734 241 93
3,473 2,241 238 700 232 62
7,93
5,21
3,397 2,187 260 663 227 60
3,269
$27
264,74 7,04 14,6l 15,81 13,91
2,74
253,52 9,28 17,93 13,18 8,98
254,50 9,14 17,ll 12,57 5,93
in mill. t’ 255,16 256,21 10,io 8,99 17,61 15,07 13,89 15,Ol 11,32 13,64
248,50 9,70 16,21 12,til 5,78
247,60 9,21 15,Ol 10,92 3,60
Total Lignite Hard coal Oil Natural gas Primary electricity of which: Nuclear power
Lignite Hard coal Oil Natural gas Primary electricity of which: Nuclear power
1981
1980
1979
1978
1976
1975
1977
in the GDR 1975 to 1984
4. Primary energy consumption
TABLE
3.6
69.1 3.7 12.8 10.4 4.0
-0.1
125
3,507 2,423 131 449 363 141
12,23
276,15 5,23 11,06 18,20 13,80
1983
3.3
69.4 6.1 10.7 10.3 3.5
2.7
120
3,601 2,498 221 386 371 125
11,74
285,35 7,38 9,56 19,29 12,24
1984
The GDR ‘s Energy Policy
67
The share of nuclearpower in total energy consumption has remained at the relatively low level of 3 percent since 1979. There are two nuclear power stations in operation. One is located near Rheinsberg (70 MW), the other near Greifswald on the Baltic Sea (1,760 MW), which produced in 1985 about 11 percent of total electricity. The expansion of nuclear power is marked by delays. In contrast to earlier plans, according to which the capacity in Greifswald was tb be doubled in the first half of the 198Os, no new reactor has gone into operation. East Germany is endowed with uranium deposits. There is still the joint SovietEast German company (Sowjetisch-Deutsche Aktiengesellschaft) Wismut which exploits the reserves of uranium in the GDR. However, as far as the fuel cycle is concerned the GDR is totally dependent on the USSR, to which the GDR has to deliver all its uranium. Within the CMEA the USSR has a monopoly for the enrichment and reconversion facilities. As far as total primary energy is concerned, ing its dependency
on imports.
met by foreign sources, Problems
the GDR has been successful in diminish-
While in 1979 about one-third
this share decreased
of total consumption
was
to about 20 percent in 1985.
and Limitations of Intensification in the Energy Sector
It is very difficult to assess the impact of the achieved energy savings on the intensification policy. It is true that in the period under review the GDR has been able to lower the energy intensity of the economy year by year. Between 1980 and 1984 it even proved possible to achieve an absolute reduction in energy consumption. However, these are quantitative effects, while intensification aims at the reduction of expenditures. In view of increasing costs for imports and domestic production of energy, it is not surprising that in value terms the energy intensity of the produced national income has increased, too. At the beginning of the eighties the relation of the average growth rate of primary energy costs to the growth of produced national income was 4: 1; in the period 1960 to 1980 the respective figure was 3.3: 1 .I1 The main problems for the GDR economy are the more or less artificial prices and the (still dominating) thinking in quantitative terms. Most of the articles on energy conservation
emphasize
the joules or calories but not the marks which could be saved.
There are only few examples which refer to the fact that the total cost of substitution conservation
measures
has to be taken into account. l2 However,
or
it is very difficult to
calculate these total costs. Heinrichs stated that in the five-year plan period 1981 to 1985 about one-quarter of all industrial investments had to be allotted to the basic industries. But these expenditures reflect only half of the means which are necessary to expand production. The other half has to be spent in the transportation and construction sectors, in the chemical and metallurgy industries, as well as for participation in investment projects in the USSR.t3 Another problem is gaining more and more in importance: the damage to the environment due to the intensive use of lignite, which applies to the devastation of land
11. SeeGerd Schirmer, “Okonomische Probleme ,” p. 40 and Gerd Schirmer, “Energieintensitit und intensiv erweiterte Reproduktion,” in Wirlschaftswlssenschaft, 811984, p. 1128. 12. See Gerd Schirmer, “EnergieintensitPt ,” p. 1128 and Wolfgang Heinrichs, “Wirtschaftswachstum und langfristige Deckung des Energiebedarfs, ” in Wirtschafisiuissenschafi, 1011982, p. 1441. 13. See Wolfgang Heinrichs, “Wirtschaftswachstum ,” p. 1453.
68
STUDIES IN COMPARATIVE
as well as to air pollution. compared
The extensive
COMMUNISM
emission
to 3 million tons in West Germany14)
of SO,
(5 million
tons in 1985,
is mainly the result of that policy.
Against this background the question arises whether it would have been more advantageous for the GDR to pursue an export-oriented strategy instead of one based of on import substitution. Such a strategy, which had to aim at the modernization export industries in order to earn the money which is necessary to finance energy imports, has never been discussed openly. The GDR has pursued an import substitution policy despite the fact that this strategy is linked to high burdens for investments and the environment.
This policy cannot only be explained
by “autarky-mentality.”
The relatively low competitiveness of East German industry has not allowed the GDR to pursue a more efficient energy policy, which in addition allows for environmental protection. In the coming years the chosen strategy has to be continued. According to the directive of the 1 lth SED congress on the 1986 to 1990 plan period,t5 the specific energy consumption in 1990 has to be reduced by an equivalent of 80 million tons of raw lignite as compared
with 1985. i6 This allows an increase
of primary
energy consumption
of
1 percent per annum while the produced national income is to grow by a respective rate of 4.6 percent. Raw lignite mining million tons) while energy imports
is to be increased to 333 million tons (1985: 312 from the Soviet Union are to be expanded only
slightly. According to the trade agreement signed in 1985, the envisaged energy shipments of the USSR to the GDR in the period 1986 to 1990 are planned as follows (annual average): Crude oil: 17.1 million tons (1984 actual: 17.1 million tons) Natural gas: 6.9 billion cbm (6.2 billion cbm) Hard coal: 4.5 million tons (3.6 million tons) The targets for energy conservation technological
are mainly to be achieved by means of scientific-
solutions for electricity and heat production
as well as for energy-intensive
processes and methods and by means of new products with reduced energy consumption. Thus conservation results will become more and more dependent on the implementation of scientific-technical solutions. In the past, however, energy conservation was mainly achieved by improving norms, reducing quotas and by diminishing energy waste. The application of already existing technology or even the indigenous development of key technologies have been of minor importance. To make the two latter sources effective the GDR has not only to improve the incentive system. If new technologies are to have a substantial effect with respect to energy conservation, they must be utilized broadly, and this requires substantial whether the GDR will achieve in the coming intensification of energy utilization.
investments. It remains to be seen years such a breakthrough in the
14. See Jochen Bethkenhagen, Doris Corn&en, Rainer Hopf, Manfred Melzer und Cord Schwartau, “Luftverunreinigung in der DDR: Die Emission van Schwefeldioxid und Stickoxiden.” in Wochenherichl des DZW, 30/1985, p. 345. 15. See Neues Deutschland (April 23, 1986). 16. See .Veues Deutschland (iYrwember 1, 1985)