September 21, 2017 Read More →

On the Blogs: The German Transition

ChinaDialogue.net:

If Angela Merkel is to win another term in Germany’s upcoming election on September 24, then winning the western state of North-Rhine/Westphalia (NRW) will be essential.

NRW is the country’s most populous state, making up a fifth of the electorate. It’s also the epicentre of another political tussle: What to do about Germany’s coal sector?

The state is the historic heart of Germany’s industry; an industry that is largely powered by coal. NRW sits atop Europe’s biggest lignite coal region, and despite Germany’s rapid adoption of renewables, NRW still generates 75% of its electricity from coal, making it responsible for almost 1% of global annual greenhouse gas emissions.

So it’s no surprise that the Rhineland coalfields near Cologne have become a hot spot for climate activists in the past few years.

Internationally, Germany is well-known for its Energiewende energy policy, a transition away from nuclear and fossil fuels to renewables. But despite the aggressive push toward renewables, coal remains central to Germany’s power supply. In recent years, electricity production from coal has hardly fallen, unlike in other developed countries such as the UK and US. In fact, lignite coal provided 23% of gross power production in 2016, and hard coal 17%.

Some critics argue that coal still dominates Germany’s power generation because the country has chosen to phase-out nuclear power, with the remaining plants to shut by 2022. In the aftermath of the Fukushima disaster in Japan, around a dozen new coal plants opened in Germany.

What’s missing from reports about the alleged “German coal renaissance” though is that Germany’s coal surge was part of a Europe-wide trend, and not just a reaction to the nuclear phase-out. Construction of many of the plants started long before the meltdown in Fukushima.

German utilities began abandoning coal projects around 2011 for the simple reason that there was no demand for them. By then, it was clear that renewables growth had been underestimated. Investors cancelled two dozen projects. The surge in wind and solar power combined with on-going coal power production led to an oversupply of electricity. As a result, power exports hit a record high by 2016. Almost 8% of electricity generated in Germany last year was used in neighbouring countries.

These developments have led to the so-called “Energiewende paradox”: Germany’s rapid development of renewable power has barely dented carbon dioxide (CO2) emissions even though electricity generated from renewables has more than replaced nuclear power.

The result is that Germany’s greenhouse gas emissions actually increased in 2016, and are expected to grow even more in 2017.

This begs the question: how will Germany kick its coal habit?

To get back on track with climate targets, Agora Energiewend is calling for Germany to adopt an emergency “Climate Protection 2020” programme as soon as possible after the federal elections this month.

And some utilities are already shutting down old coal plants for economic reasons. The power company STEAG, for instance, will decommission five coal-fired units because of low wholesale electricity prices. Other companies are hoping that a political agreement on phasing-out coal power will be sweetened by financial benefits for those shutting down plants.

An EU agreement on stricter pollution standards for existing power plants starting in 2021 will also factor into plans for a phase-out. Notably, the German government voted against these stricter standards.

Gerard Wynn from the Institute for Energy Economics and Financial Analysis (IEEFA) estimates that Germany has many gigawatts of coal and lignite generating capacity above the new limits. Owners are facing multiple headwinds: competition with renewables, sluggish power demand growth, and carbon emissions targets. Owners will have to decide whether to retrofit or close their plants. “Utilities may use this opportunity to close or sell certain coal plants before the new standard is implemented in 2021,” he said.

Germany’s current government coalition has avoided specific discussion of a coal phase-out. But there are signs that preparations for one are underway.

More: Future of Germany’s coal sector hangs on elections

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