No Country Is More ‘Green By Design’

The ripple effects of Germany's leadership role are felt far and wide—and dispute the conventional wisdom that higher environmental standards just send dirty production offshore. In 2007 China adopted the EU's directives that prohibit hazardous substances and mandate recycling of household appliances and consumer electronics. For China, says Schreurs, the idea was not only to clean up its own companies, notorious for ignoring product safety, but also to ensure that Chinese products could be exported to the European Union's 490 million consumers (compared with America's 300 million). Since it's usually more efficient to manufacture to a single standard, Asian companies often choose the stricter German or EU regulations.

Not incidentally, Germany's pioneering role has given its firms a head start in developing the technology to meet the environmental standards that are often copied later by others. When the EU adopted Germany's sulfur-dioxide standards in the 1980s, companies like Siemens already had the cleanup technology ready to install on the continent's coal-fired power plants. Today, German companies are leaders in photovoltaics, wind turbines, waste management and recycling. According to a 2007 study by the Roland Berger consulting group, German companies specializing in ecofriendly tech already have a turnover of €150 billion a year, with growth averaging 8 percent a year. Green tech, the study says, will pass cars to become the country's biggest industry by 2020 and account for 16 percent of German GDP by 2030. Study author Torsten Henzelmann sees Germany on the verge of a "green economic miracle."

Just recently, Germany has stepped up its efforts to take its environmental leadership beyond Europe. At the Bali climate conference last December, Chancellor Angela Merkel promised a unilateral reduction of German carbon emissions by 36 percent below 1990 levels by 2020. Merkle also pushed the EU as a whole to cut by 20 percent, to be raised to 30 percent if an international agreement was reached. In May, Germany pledged €500 million a year to help developing countries protect forests and habitats. When the EU this year began allowing member states to auction off emissions certificates (instead of giving them away free), Germany was the only country to specify that the windfall would not go into the general budget but to pay for specific green-tech projects. Of that, one third—€120 million this year, but rising sharply as the auctions gear up—will go to renewable-energy projects in developing countries.

There are some serious blotches on the Germans' record. It scores badly on the EPI on biodiversity, and its highly subsidized farmers and fishermen have done more than their share of harm. Germans are great, it seems, in telling the Brazilians to protect their indigenous species, but last year, when a wild bear returned to the German Alps after an absence of nearly a century, a nationwide hysteria broke out, and rangers shot the "intruder." A similar hypocrisy has so far let Germany cling to an old agreement to phase out nuclear power by 2030, despite the reappraisal of nukes as a carbon-free energy source.

Critics also say German policies don't always promote effectiveness and efficiency, especially if costs can be handed down to taxpayers and consumers. Some policies are outright nutty. Households are required to sort their trash into six different containers—even though modern recycling plants sort garbage with greater efficiency and precision, and running parallel collection systems is a tremendous waste of energy and resources.

Despite occasional overzealousness, however, Germany's great contribution is to show that environmental progress and economic development need not be mutually exclusive. A bit of it, of course, is luck—the country wouldn't be at this sweet spot today if energy and commodity prices had stayed low. But for deciding early on that green is an opportunity, not a threat, Germany ranks first.

© 2008