Traditional Energy

Grasping at Hot Coal

  • Why it matters

    Why it matters

    Coal is a lucrative multi-million dollar industry, accounting for more than 40 percent of Germany’s electricity production.

  • Facts

    Facts

    • Germany has vowed to generate 80 percent of its electricity from renewables by 2050 in what’s known as the Energiewende, or energy transition.
    • As economy minister, Sigmar Gabriel Mr. Gabriel negotiated a €1.6 billion agreement with energy companies to keep lignite fired power plants online for emergencies for seven years.
    • The government has admitted that it will likely miss its 2020 target of cutting emissions by 40 percent according to 1990 levels.
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    Audio

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The future of Germany's coal industry is a gray area. Source: AP/Michael Sohn

US President Donald Trump has few fans in Germany, but one of them is Roger Miesen. Sitting on the management board of RWE Power, a division of the German energy giant that does business in combustibles, Mr. Miesen was likely pleased to see the US pull out of the Paris Climate Accord.

The evening Mr. Trump announced it, the executive spoke at an event in Berlin. He told the audience that according to his calculations, gas emissions would not reduce even if all German lignite fired power plants shut down. The price for carbon credits, allowances purchased by industrial companies for every ton of CO2 they emit, would fall drastically. Companies outside Germany would just snap them up, and as much greenhouse gas would be sent into the atmosphere as ever.

Germany’s leading the global charge against the president’s landmark decision, and rightfully so – the country has vowed to generate 80 percent of its electricity from renewables by 2050 in what’s known as the Energiewende, or energy transition. But despite the country’s largely successful climate and anti-nuclear movements, there are still plenty of influential Germans who don’t agree with going so green.

Today more than 40 percent of German electricity is generated by coal-fired power plants. As renewables have brought down the wholesale price of electricity, coal has come to replace gas as the fossil fuel of choice, as providers seek out profits. In turn, the fossil fuels lobby is obviously worried about losing its money-making machinery.

The Berlin Circle issued a statement smacking of "moral blackmail"

German Chancellor Angela Merkel, who appealed for protecting “Mother Earth” after Mr. Trump’s decision, is facing harsh backlash within her center-right Christian Democratic Union. The Berlin Circle, an ultra-conservative traditionalist faction within the CDU, issued a statement following Mr. Trump’s press conference, smacking of “moral blackmail” via climate protection policy and calling for a “farewell to Germany’s special targets.”

The Berlin Circle is known as a group that uses every opportunity it can to complain about Ms. Merkel, but they are not alone in the criticism. A coalition crossing party lines also opposes excessive climate protection, once belonged to by Foreign Minister Sigmar Gabriel during his post as economy minister. The Social Democrat refused to name a specific year by which Germany should abandon dirty coal, citing the importance of not causing uncertainty in coal-mining areas such as Lusatia or the Ruhr Area.

During his tenure, Mr. Gabriel even gifted energy companies with a €1.6 billion agreement to keep lignite fired power plants online for emergencies for seven years – negotiated at taxpayers’ expense. Lignite, or brown coal, is the dirtiest kind of coal.

For the energy industry, it was a lobbying triumph. Energy bosses have stronger ties to top government and party representatives than most other German industries, considering their work is highly state-regulated. An inquiry by the Left Party in the Bundestag showed that between 2014 and 2017, E.ON chief executive Johannes Teyssen and the former head of RWE Peter Terium, who now runs Innogy, visited the chancellery and economy ministry repeatedly.

Since the Fukushima nuclear disaster in 2011, the industry is tenacious in protecting its interests. When Ms. Merkel decided to phase out all nuclear reactors by 2022 shortly afterwards, it was the loss of energy providers’ most important business model.

“Never Again Fukushima” is now the mantra of the energy industry and the labor unions they stand shoulder-to-shoulder with. They’ve also got a few state premiers on their side.

It’s no surprise that North Rhine-Westphalia – where the Ruhr area is located, with over 20 coal fired power plants statewide  – wants to draw out keeping as much coal as possible, for as long as possible. Brandenburg state premier Dietmar Woidke has also spoken for it, stating that the Jänschwalde power plant in Lusatia should “not be prematurely shut off for a replacement energy source that currently is not guaranteed.”

German Energy-01

Saxon State Premier Stanislaw Tillich has also publicly voiced skepticism. A high number of wind turbines and renewable energy facilities have been set up in eastern Germany, but expensive network costs have led to problems. In the former East, which still struggles to catch up to the West economically, lignite equals cheap electricity.

While Ms. Merkel is a climate change champion in international headlines, the reality in Germany is a different story. The government has admitted that it will likely miss its 2020 target of cutting emissions by 40 percent according to 1990 levels. In 2014, the government preemptively set up an action plan for CO2 reduction, knowing it would miss the target by up to 8 percent. It’s helped, but not enough – Germany might still fall short as much as 5 percent.

The problem is not necessarily coal, but that other types of energy consumption have not been taken into account, for example fueling vehicles and heating and cooling buildings and factories. It further bolsters the cases of coal supporters, who say the industry has already done its part and cleaned up enough.

“Other areas of the economy such as transportation, agriculture and private households, as well as the heat market in addition to electricity, must make a bigger contribution to CO2 reduction,” Saxony’s Mr. Tillich stated.

Many politicians also fear energy companies will sue for damages just as their nuclear colleagues already did, which currently expects to receive €6 billion in fuel taxes.

The Greens are so far alone in tackling coal lobbyists head-on. Its mandate calls for immediately shutting down 20 of the worst polluting coal-fired power plants. If the party gets into parliament – the latest polls indicate it will – even more pressure will be put on for an exit from coal power. Financial investors also agree with the Greens that there is no real future for dirty technology.

 

A version of this article originally appeared in Handelsblatt Global’s sister publication WirtschaftsWoche. Marc Etzold, Angela Hennersdorf, Andreas Macho and Cordula Tutt are the writers. To contact the authors: wirtschaft@wiwo.de

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