Brown Coal

Dirty Energy on the Path to Clean Power

How do those windmills and solar panels look now? A brown coal strip mine in Germany. Source: DPA
Those windmills and solar panels don't look so bad now. A brown coal strip mine in Germany.
  • Why it matters

    Why it matters

    Germany’s switch to renewable energy sources could make dirty brown coal a necessary evil for electricity production for Europe’s largest economy.

  • Facts

    Facts

    • Germany is phasing out nuclear energy while ramping up renewables like wind and solar.
    • Mr. Kretinsky hopes brown coal, or lignite, will be used to bridge the transition to cleaner energy.
    • The Czech billionaire already owns Mibrag, which is one of three producers of brown coal in Germany.
  • Audio

    Audio

  • Pdf

Coal-fired plants have been given a bad name in Germany these days. Call it the next phase in the country’s aggressive transition to renewable energy. First it was nuclear energy, which, in 2012, was abandoned in the aftermath of the Fukushima plant disaster in Japan. Now the motto of environmental groups in Germany seems to be “Brown coal? No thanks.” The federal government may side with them and push for a phase-out of dirty coal, though German states that see jobs from mining are pushing back.

The Czech billionaire Daniel Kretinsky hasn’t been scared away just yet. In fact, the head of the energy firm EPH is expanding in Germany, having bought the Mitteldeutsche Braunkohlegesellschaft, or MIBRAG, a key exploiter of brown coal in the country. Now, Mr. Kretinsky said he has his eye on the German subsidiary of Swedish utility Vattenfall. If he buys this one too, the only brown-coal competitor left in Germany will be RWE.

Perhaps he’s on to something. While Germany may have fallen out of love with coal (see graphic below), the fossil fuel is still ripe for export. Coal will also still be needed until Germany completes its transition to renewable energy. In an exclusive interview with Handelsblatt, Mr. Kretinsky explains his own reasons for remaining in love with the dirty fuel.

Handelsblatt: Mr. Kretinsky, as a Czech power sector manager, what’s your opinion of Germany’s switch to renewable energy sources?

Daniel Kretinsky: If the Germans want to switch their energy supply to renewable energy, that’s their prerogative. It’s a decision that the German government and German voters made. It’s not my place to criticize that.

Well, your company is investing in Germany – but not in renewable energy. Your firm EPH owns the eastern German company MIBRAG, which is still producing dirty brown coal, or lignite, on a grand scale. It doesn’t really appear as if you believe the switch to renewables will be successful.

If Germany wants to switch its power supply to wind and solar, then it will take some time and money. As an investor, I’m less interested in the goal than the way in which Germany wants to achieve that. I’m convinced that brown coal can play an important role in the energy transition, especially considering its considerable contribution towards heating cities and towns, as well as for industry.

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