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Germany belatedly joins Europe's war on coal

Europe’s largest coal consumer illustrates a pathway for the remaining hold-outs

The growing number of European nations that have pledged to phase out coal from their electricity generation fuel mix highlights a growing consensus that burning coal is inconsistent with the climate targets in the Paris Agreement. The latest nation to make such a pledge—Slovakia, which in June set a phase-out date of 2023—took the total to 12.

For most of these nations it was a relatively easy choice. Take, for example, the UK, the world's first country to do so, back in 2015, just before the Paris Agreement was signed.

The then energy and climate minister Amber Rudd proclaimed the UK would phase out coal-fired power by 2025. Since then, for reasons of economics rather than direct mandate, UK coal consumption for electricity generation has fallen off a cliff. So far in 2019, coal has contributed just 3pc to the power fuel mix and, in May, the UK used no coal at all for a fortnight. Rudd's deadline has become irrelevant.

Powering past coal

The real significance of Rudd's announcement was that it helped set in motion a trend. In 2017, at the COP 23 UN climate change talks in Bonn, the UK and Canada launched an alliance of nations, states and cities "committed to moving the world from burning coal to cleaner power sources"—the Powering Past Coal Alliance. Among the alliance's members are several European nations that have set deadlines for ending coal-fired power.

The list of the European countries that have since pledged to phase out coal-fired power (see Table 1) is, at first sight, impressive. It includes three of the four biggest economies in the EU: France, Italy and the UK. But these countries consume relatively little coal, a total of 25mn t oe in 2018. One of the countries in the list already has no coal in its electricity mix and most of the rest consume only small volumes.

The dozen nations burned a combined total of just 55mn t oe of coal last year, less than 1.5pc of global consumption—and less than Germany, which burned 66.4mn t oe (for all uses, not just power).

Missing climate targets

Phasing out coal from electricity generation is an entirely different matter for Germany, Europe's largest consumer. Despite its vaunted energy transition, the Energiewende, it still burns vast amounts of hard coal and lignite—a cheap but highly polluting form of brown coal. It has such a low calorific value that it is not worth transporting, so power stations must be built on top of the resource, usually exploited with open-cast mines that blot the landscape.

In 2018, Germany's coal-fired power stations generated 35.4pc of the nation's electricity (see Fig. 1), a touch more than renewables (34.9pc). Just 13pc of electricity came from gas and 12pc from nuclear, which is due to be phased out by 2022.

Germany's Energiewende has pushed the share of renewables in the power fuel mix to over one-third, at a cost of billions of euros in subsidies. However, the persistence of coal means it will miss its 2020 greenhouse gas (GHG) emissions target—a 40pc reduction on the 1990 level.

Statistics from the German environment agency (UBA) show that GHG emissions in 2017 were 905mn t CO2e, almost the same as in 2009 and a touch higher than in 2014. Progress towards the 2020 target was just 27.7pc. Emissions fell to 866mn t CO2e last year but the projection for progress by 2020 is still only 32pc. There are concerns also that, without major policy interventions, Germany will miss its 2030 target of 55pc below the 1990 level.

Coal-exit commission

It is a failure acknowledged by Chancellor Angela Merkel's coalition government, which in early 2018 promised to establish a commission to examine the implications of a coal-power phase-out and to make policy recommendations.

Nearly a quarter of Germany's electricity is generated by burning lignite and there are widespread concerns over social and economic impacts. Hard coal, by contrast, is imported following a decision taken over a decade ago to phase out its production. In December, Germany's president, Frank-Walter Steinmeier, marked the end of an era when he was handed a piece of coal at the closure ceremony for the nation's last hard coal mine.

The commission—formally the Commission on growth, structural change and employment, but colloquially the "coal-exit commission"—published its recommendations in January.

Remarkably—given that the commission's constituents included delegations from industry, environmental NGOs, civil society and policymakers—it achieved its brief of developing "a broad social consensus around structural changes to energy and climate policy". What is more, its belief that "the federal government will promptly and comprehensively implement the recommendations" was borne out.

The 2038 date set for a total phase-out of coal-power was criticised by some environmental NGOs, notably Greenpeace. But, of the 28 official members, only the representative of villages threatened by lignite mine expansions in Lusatia voted against the deal. The final report addresses the implications of a coal exit on the economic future of mining regions, energy supply security, power prices, industrial competitiveness and the Energiewende.

The 2038 headline date needs to be seen in context of the phased approach that the commission recommended. As a first step, at least 12.5GW of the existing 42GW of capacity should close by 2022, some of which has already been scheduled for closure. Further cuts would leave Germany with maximum capacities by 2030 of 9GW of lignite generation and 8GW of hard coal generation. There is an option for the 2038 end date to be brought forward to 2035.

"The coal exit commission gave a very strong recommendation, which is supported by consensus in society" says Mario Mehren, CEO of the newly-merged German oil and gas producer Wintershall Dea. "This will now be incorporated into legislation by the government.

"I believe this will happen fairly quickly because Germany has observed over many years that its climate emission goals have not been reached—and that is because of coal-fired power generation."

The recommendations made by the commission to support the affected communities and regions have been costed in media reports at around €40 billion, a figure that the government appears to have accepted as reasonable.

What about the rest?

Of Europe's top six coal consumers (see Table 2), Germany stands alone in actively drafting laws to implement a coal-power phase-out, although Spain is in the throes of a national debate.

None of Poland, Turkey, Ukraine and the Czech Republic, whose aggregate coal consumption is 135mn t oe, is considering a coal-power phase-out. Indeed, Turkey is planning to ramp up its coal-fired electricity capacity.

That said, Poland and the Czech Republic, as EU members, will find it increasingly difficult to resist closing down coal-fired power stations, because of growing pressures from rising carbon prices in the EU ETS and tightening regulations on power station NOx and SOx emissions.

In its final report, Germany's coal-exit commission optimistically says that "if Germany manages to successfully implement structural change processes and to find the right balance between climate action, the creation of good jobs, strengthening the country's position as a centre of commerce and industry and successfully developing the regions affected, then the energy transition and the associated ending of coal-fired power generation may provide an example for other countries". A good start would be to avoid the mistakes that Germany has made to date.

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