Handelsblatt Exclusive

Leader Rejects Call to Shutter Coal Plants

Die nordrhein-westfälische Ministerpräsidentin Hannelore Kraft (SPD) spricht am 18.12.2015 in Marl (Nordrhein-Westfalen) bei einem Festakt auf der Zeche Auguste Victoria. Die Zeche wird heute mit einem Festakt und dem Fördern der letzten Kohle geschlossen. Foto: Roland Weihrauch/dpa +++(c) dpa - Roland Weihrauch
North Rhine-Westphalia's state premier, Hannelore Kraft, at the closing of the Auguste Victoria colliery in her state last December.
  • Why it matters

    Why it matters

    • Germany’s plan to power itself with renewable energy is proving to be a difficult transition, particularly for the coal industry.
    •  
  • Facts

    Facts

    • Hannelore Kraft is the premier of North Rhine-Westphalia, Germany’s most populous state, home to a significant brown coal industry.
    • She rejects the idea of phasing out fossil fuels in the medium term as part of the country’s shift to renewable energy.
    • In 2011, Germany announced plans to phase out nuclear energy by 2022 and draw at least 80 percent of its power from renewable sources by 2050.
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    Audio

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Hannelore Kraft, the premier of the western state of North Rhine-Westphalia, cares deeply about energy policy. That’s because the issue has huge economic implications for her state, Germany’s most populous and one of the biggest coal-producing regions in Europe.

Ms. Kraft, a member of the center-left Social Democrats, discussed the implications of Germany’s commitment to move toward renewable energy sources. In an exclusive interview, she rejected demands to shutter the coal industry more quickly by junior coalition partners, the Green Party.

Handelsblatt: When will Germany’s last coal-powered plant go offline?

Hannelore Kraft: That is a decision for companies that operate coal-powered plants. But I  imagine that the last one in North Rhine-Westphalia will cease operations around 2050, because the mining of brown coal, or lignite, will also end about then. But that can’t be said today with absolute certainty, because there are still unknowns.

There are still more than three decades before we reach 2050, the year Germany plans to be powered mainly by renewable energy sources. But the Green Party recently issued a demand for an exit from coal within 15 to 20 years. How realistic is this demand?

Last year, more than 30 percent of electricity produced in Germany already came from renewables. That is an extremely positive development. Everything points to a continuous rise in this figure in the coming years. But it can’t be assumed that a decision can be made today about when we can do without coal-powered plants completely.

Why not?

In the medium term, we need conventional plants as a backup. They guarantee security of supply. We must be able to fall back on them at any time. There are still phases when windmills and photo-voltaic cells make essentially no contribution to electricity production. Today, no one can say when it will be possible through a combination of renewables and storage units to provide sufficient energy for all consumers, particularly for large industrial ones, every second of the year.

So there is no timed plan?

No. Plants powered by fossil fuels will continue to be indispensable. In the meantime, there are phases of several hours per year in which renewables can meet all of Germany’s electricity needs. But these are only brief snapshots. It is a long way until this can be guaranteed around the clock, 365 days a year.

Don’t the opponents of coal-powered plants acknowledge these interconnections?

I don’t know. In any case, we should recognize that electrical supply security is precious.

 

In the medium term, we need conventional plants as a backup. They guarantee security of supply.

What’s wrong with planning the exit from coal? A concept could be developed together with all the players. That is certainly better than a disorderly departure in a few years.

I don’t see the necessity. How are we supposed to develop a schedule now if we still don’t know what storage capacities will be available when and to what extent and at what cost? A Germany-wide plan for phasing out coal is an extremely theoretical approach. It’s not needed at the moment.

But you certainly realize that coal doesn’t have a great future. How are you getting ready for the transition?

In NRW, we are giving great thought, together with all parties involved, to what the future holds for the Rhineland brown-coal region. We are experts in structural change but it must be prepared well to occur without disruption. Such change affects economic development in the region and thus the creation of new jobs, but also the reclamation of the former mining areas, so that they can be used once again by humans and nature.  There is already a deeply-rooted awareness of the inevitability of structural change in the region.

What are the future prospects for brown coal in NRW? Does it make any sense to start a new brown-coal mine?

There will be no new mines. There are concrete phase-out plans for the mines that we have. The plan is to cease operations at the Inden mine in 2030. The two remaining mines, at Hambach and Garzweiler, are expected to close in 2050. In view of current developments in the energy industry, we have now decided together with our state coalition partner, the Green Party, to somewhat reduce [the lignite mine] Garzweiler II to avoid superfluous relocations. Thus, overall in the Rhineland region, CO2 emissions are expected to decline by some 40 percent by 2030.

When will Garzweiler be depleted?

Electric utilities firm RWE says that will be the case around 2050.

Will that be the end of brown coal?

Today, we speak only about the use of brown coal in the energy industry, for instance, by burning it in a power plant. But it is conceivable that at some point a chemical utilization will also become interesting. RWE is pursuing research into this technology. This option should be kept in mind.

Is NRW as an industrial location in its current form even conceivable without coal-powered plants?

Certainly not today. We are phasing out atomic power. It wouldn’t work to renounce coal at the same time.

Coal-generated electricity would perhaps have a chance in combination with carbon capture and storage. Do you see a possibility of reviving the issue?

I personally don’t believe that it will become a major issue in generating electricity but possibly in industrial production, for example, in the steel industry.

Uniper, the company that split off from German electric-utility giant E.ON, is starting out in unfavorable circumstances because it holds all the conventional plants powered by fossil fuel. What chances do you see for Uniper?

Energy prices and security of supply play an enormous role in maintaining an industrial location such as NRW. These are key factors for the economic development of the state and all of Germany. Efficient energy providers – large, small and municipal utilities – are important for maintaining this development. We are fighting to make sure these firms have good opportunities in the future. The political framework is established not only by us, but also in Berlin and Brussels.

For many years, energy-intensive companies in Germany have been investing less than they write down. In other words, they are consuming their substance. Does that worry you?

Of course I am familiar with these figures, but I would caution against interpreting them so one-dimensionally. One of the more pleasant tasks of a state premier is to open up new industrial facilities. Fortunately, these kind of appointments are frequently on my agenda, most recently in the chemical and steel industries. The political sector is responsible for creating dependable framework conditions. That is the most important foundation for assuring that firms continue to invest in a location.

This year in Brussels, important decisions will be made about reforming emissions trading. The European Commission has submitted proposals that are deeply disconcerting for industry. Do you sympathize with the companies?

This is a fundamental issue for NRW and all of Germany. Successful, energy-intensive industry is the basis of the closed value-creation chain for which we are envied the world over. I hope the current European Commission also sees things this way. The problem, however, is that public debate is not conducted with sufficient depth. We will do everything in our power to see that our industry has positive developmental chances in the future as well.

The European Commission intends to tighten up the requirements for industry regarding emissions trading. Companies are warning that they will have to buy more emissions certificates. The cost burden would be enormous. How do you intend to prevent this?

We must examine, evaluate and integrate the practical information before introducing it into political discussion. It is crucial for making an intelligent decision. Only with real-life data can we prevent Brussels from decreeing regulations that endanger the very existence of companies. There are industrial sectors that have already made great preliminary efforts in protecting the climate. These companies must not be subsequently punished for their achievements. It’s relative simply to save the first 50 percent of energy. Saving a further 25 percent is an extremely difficult process. No injustices may be allowed to occur here.

Germany’s Environment Minister Barbara Hendricks, who belongs to your  center-left Social Democrats, sees things differently. She says she has no sympathy for the “moaning” of industry players.

I am not familiar with that statement. But I understand that Ms. Hendricks has a position differing from that of the economics minister and, in part, from ours in NRW. That’s the nature of things – and relates to our respective responsibilities.

Despite this, will Germany be able to present a united front in Brussels?

We’ve always managed to do that in the end. We’ll certainly do so this time as well.

 

This interview was conducted by Klaus Stratmann, who focuses on energy policy, and associate editor Thomas Tuma To contact the authors: stratmann@handelsblatt.com and tuma@handelsblatt.com

 

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