Coal phase-out

The burning issue

EU Climate Talks
Mine all mine. Source: AP

With the UN climate summit taking place in Bonn this week and next, change is already in the air in Germany. But it seems not the change that everyone expected.

More than 50 of Germany’s largest businesses, including industrial giant Siemens and retailer Metro, have called on the government to phase out coal power – just as the country’s Green Party dropped its demands for an immediate withdrawal. Construction firm Hochtief, software giant SAP and discount supermarket chain Aldi Süd were among the firms that now want ministers to put climate change at the top of their agenda.

Their appeal is timed to coincide with coalition talks underway in Berlin, in which environmental policy has emerged as one of the main sticking points. It carries weight because the signatories employ some 400,000 people in Germany and 1.5 million worldwide, and together generate sales of more than €300 billion ($347 billion) per year.

“Germany's emissions have virtually stopped declining since 1990.”

Germanwatch

The future government must set a “reliable and socially-acceptable exit path for coal-fired electricity,” the companies said. They also called for urgent steps to reach Germany’s 2020 goal of cutting CO2 emissions by 40 percent compared with 1990 levels, suggesting an increase in the price of CO2 emissions certificates and shifting to greener forms of transport. At present, experts estimate that the reduction will be just 30 percent.

The four parties involved in coalition talks following the federal elections on September 24 are only too aware of this. But Angela Merkel’s conservatives, the pro-business Free Democrats and the Greens remain at odds about what to do about it, with climate change a particular sticking point in talks. That situation eased yesterday when the Greens backed off their demand that Germany’s 20 dirtiest coal-power plants close by 2020. They also rowed back on a long-standing policy that combustion engines be banned by 2030. Although condemned by environmentalists, the Greens’ announcement was welcomed by the other parties.

However, it was in stark contrast to the appeal by the companies, which met with a mixed response from business groups. The managing director of the BDI Federation of German Industry, Joachim Lang, dismissed it as “one contribution among many” in the climate debate, while metal industry association WVMetalle said it didn’t reflect the views of German industry as a whole. “The benchmark for the feasibility of our future climate policy mustn’t only be the companies that benefit from a new business model, but also the ones that have to pay for these measures,” said WVMetalle’s managing director, Franziska Erdle.

A closer look at the signatories shows that most of them have relatively low energy costs, and that some are benefiting from the green-energy revolution by selling products such as wind turbines or insulation materials. Many German firms are worried about their future energy bills if the country, whose electricity prices are already among the highest in Europe, steps up the pace of energy reform. “An overly hasty phase-out of coal-fired power plants would lead to power price increases,” warned Hans Jürgen Kerkhoff, president of the steel industry federation. He said that steel plants could face a 30 percent rise in energy costs if there were a rapid exit from coal.

Critics say Chancellor Angela Merkel is now falling down on her green pledges at home.

In addition, there are fears that exiting coal just as Germany gets ready to phase out its last nuclear reactors by 2022 will endanger the stability of the power supply. While the proportion of renewable energy generation is steadily rising, there are still occasions when they need to be bolstered by conventional sources, including coal. “I’m in favor of assigning an equal ranking to the goals of climate protection, competitiveness and safeguarding the power supply,” said Rolf Martin Schmitz, chief executive of energy generator RWE, which is heavily invested in coal.

Under Ms. Merkel’s leadership, Germany has been a driving force behind international efforts to combat global warming, and played a constructive role in negotiations to seal the Paris climate agreement. But critics say she’s now falling down on her green pledges at home.

“Germany’s climate performance in the last four years is dominated by a growing rift between successful climate diplomacy at the international level and a virtual standstill on climate policy in Germany,” said Christoph Bals, political director of Germanwatch, an independent environmental group. His organization says the country’s emissions have virtually stopped declining since 1990, and that the new coalition must tap new technologies rather than coal if it is to modernize the country.

Klaus Stratmann covers energy policy and politics for Handelsblatt in Berlin. Thomas Sigmund is the bureau chief in Berlin. Jürgen Flauger covers the energy market for Handelsblatt. To contact the authors: stratmann@handelsblatt.com, sigmund@handelsblatt.com, flauger@handelsblatt.com

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