German coal industry underpins renewable push

A protester against coal There is a strong anti-coal movement in Germany

Germany is an enlightened leader in the global battle to reduce CO2 emissions, a pioneer in renewable energy and community power projects and a champion of energy efficiency.

Or so the common narrative goes.

But try telling that to Monika Schulz-Hopfner. She and her husband, along with 250 other residents of Atterwasch, a quiet village near the Polish border, face eviction from their home of 30 years to make way for the Janschwalde-Nord coal mine.

And not just any old coal, but lignite, the dirtiest form of this ancient fossil fuel that is mined in vast opencast pits.

If the plans go ahead, the village, parts of which date back more than 700 years, will be demolished.

"Since the plans for the mine were unveiled in 2007, we have lived with this constant threat, which has taken over the lives of every individual and the community as a whole," says Mrs Schulz-Hopfner.

Fuelling the future

"Every single decision we make is affected by it."

And the residents of Atterwasch are not alone.

In the eastern German region of Lausitz, nine villages are under threat, where up to 3,000 people could lose their homes to make way for five new lignite mines that are fuelling the country's renewed thirst for coal. Two further mines are under consideration.

Immediate impact

The mines are needed to power a new generation of coal power plants.

Two new lignite plants were opened in 2012, with a further two in the pipeline. Another two hard coal plants also opened last year, with a further five opening this year or next, with two more awaiting licences.

The effects are already being felt. Lignite production in 2012 hit its highest level for almost 20 years, while initial estimates suggest this brown coal was used to generate 162bn kWh of electricity last year, more than in any year since 1990. The use of hard coal also increased, meaning the two energy sources accounted for 46% of Germany's overall energy production.

German energy production

The impact on CO2 emissions has been immediate. "There has been an increase of between 5%-7% in CO2 in the past two years," says Prof Claudia Kemfert, head of energy at the German Institute for Economic Research.

And this in a country that aims to reduce emissions by 40% from 1990 levels by 2020.

As Prof Christian Hey, secretary general of the German Advisory Council for the Environment, says: "Germany has a coal problem."

'Failure'

There are many reasons why.

One is the low cost of carbon. "Due to the failure of the emissions trading system, the price of CO2 permits is very low," says Prof Hey. "The EU has failed to address this issue."

Garzweiler open-pit coal mine The opencast lignite mines in Germany cover tens of square kilometres

Oversupply and a fall in demand for energy - and therefore permits - during the economic downturn means the price now stands at around three euros per tonne of CO2. If everything had gone to plan, the price would be more than 10 times that by now.

Overcapacity has also pushed the price of coal lower, while the lignite industry has benefited to the tune of 60 million euros from being exempt from supporting the renewables industry, says Prof Hey.

This means the fossil fuel has moved down what is called the merit order curve. This was introduced in Germany in the 1990s, and determines the order in which energy sources are used to satisfy demand. The cheapest source is used first, the second cheapest second, and so on.

What is lignite?

  • Over time, peat is converted into lignite, which is then, due to heat, pressure and chemical changes over millions of years, converted into hard coal
  • The energy intensity of lignite is the lowest of all forms of coal, making it the least efficient
  • Because it is less dense, lignite burns much faster than hard coal
  • Lignite is extracted from opencast mines, which cover a far greater area than the deep mines used to extract hard coal
  • Lignite contains less carbon but more sulphur than hard coal

Source: World Coal Association, Store Norske

Renewables are currently the cheapest, followed by nuclear. Lignite comes next, followed by hard coal. And as the government has resolved to phase out nuclear power by 2022, lignite will move further down the curve.

Until the carbon price rises, then, lignite is set to remain at the heart of German energy production.

"This is one of the biggest inconsistencies of the energy transition, and if the government wanted to address it, it could," says Prof Hey.

"To address this paradox, the government needs to adopt a regulatory approach on coal. It is relying on the market, rather than regulation, and this is key to the problem."

Or as Prof Kemfert puts it: "The government isn't doing anything."

In fact, the new coalition has said that all fossil fuel power sources are equally important for the security of supply for the foreseeable future.

'No appetite'

But despite government inaction, there are some reasons to believe the growing use of lignite may not last.

All the new coal plants built in recent years, together with those that are due to open this year and next, were given the go-ahead about 10 years ago, when energy prices were much higher than now. Some argue that such massive investments are simply not viable in today's economic climate.

German energy production Campaigners want to stop new coal mines and the expansion of older mines

As Mariana Heinrich at Poyry Managing Consulting says, these plants "represent the end of a business cycle and not a longer term trend".

More importantly perhaps, "there is no public or political appetite for building [new coal plants] for the next 30-40 years," argues Lars Waldmann, senior associate at the Agora Energiewende think tank.

And he says that lignite is not needed to fill the gap that will be left by phasing out nuclear power, a decision taken as far back as 2000.

"We hope and think that gas will fill the gap, as there is enough installed capacity," says Mr Waldmann. This capacity is largely dormant right now due to the cheap price of coal, and the rising price of gas.

Monika Schulz-Höpfner Mrs Schulz-Hopfner wants to see more renewables, not lignite

"From the economic side, renewables and gas can be the cheapest way to cover all demand."

Mrs Schulz-Hopfner will take little comfort in that.

"It is idiotic. We don't need more and more lignite because we are using more renewable energy," she says. "If we Germans truly want the Energiewende (energy transition), then no more villages should be demolished."

But the new generation of coal plants means the fossil fuel will remain a key component of Germany's energy mix.

The fact that lignite will always be cheap to produce, allied with a powerful pro-coal lobby in German politics, means the temptation to rely on this dirty fuel will remain strong as long as the carbon price remains low.

For a country that, in so many respects, is a leader in clean energy, not to mention committed to stringent carbon dioxide emissions reductions, this contradiction seems odd to say the least.

This article is part of a series of features on the future of energy. The next, published on Monday 14 April, will look at attempts to mine coal more cleanly.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Business Live

  1.  
    09:32: Bank of England lending data

    Mortgage approvals rose in December for the first time since June, the Bank of England said. This could mean that a steady reduction in home loans could be ending. There were 60,275 mortgage approvals last month, up from 58,956 in November.

     
  2.  
    Via Twitter Richard Westcott BBC transport correspondent

    tweets: BBC News - Crossrail makes tunnel breakthrough under Liverpool Street Station

     
  3.  
    09:12: Plane order
    ana

    All Nippon Airways has placed an order with a list price of $2.2bn (£1.46bn) for 15 planes from Boeing and Airbus. The Japanese flag carrier is looking to expand routes at Tokyo's central Haneda airport. The airline said it would acquire eight planes from US-based Boeing and seven from fellow duopolist Airbus.

     
  4.  
    08:54: Eurozone crisis
    Alexis Tsipras

    Watch out for Greek fire. Or, continuing the Greek theme, maybe we'll see the golden mean. The prime minister who heads the nation's new anti-austerity government, Alexis Tsipras, has it in his diary to meet Jeroen Dijsselbloem, the current head of the eurozone group of finance ministers today to discuss the conditions of Greece's massive bailout.

     
  5.  
    BT results 08:37: Via Twitter Rory Cellan-Jones Technology correspondent

    tweets: BT says ultrafast coming within a decade - but will it look that fast in 2025?

     
  6.  
    08:29: Honda
    honda

    Honda cut its annual operating profit forecast by 6.5%. It has set aside more cash to cover its recall of cars to replace potentially faulty air bags. It now expects an operating profit of 720 billion yen (£4.1bn) for the year to March 31. It previously forecast 770 billion yen.

     
  7.  
    08:16: Paper review
    papers

    The Guardian splashes on a report from the Institute for Fiscal Studies which claims young workers have been hit hardest by a squeeze in standards of living. The FT digests Shell and US rival ConocoPhillips's investment cancellations. The Wall St Journal says bets against currency pegs, like Denmark's krone with the euro, are on the rise following Switzerland abandoning theirs. The Telegraph reports on a likely windfall for gas companies as wholesale costs drop.

     
  8.  
    Google results Via Twitter Stephen Shankland Senior writer at CNET News

    tweets: Google's capital expenditures jumped $1.13 billion sequentially to $3.55 billion in 4Q2014. Data centers ain't cheap.

     
  9.  
    07:50: Market update

    Japan's Nikkei index added about 0.4%, clawing back some of the 1.1% lost yesterday, while the Hong Kong Hang Seng index dropped 0.1%, to 24,570.01. Japanese factory output rose 1% from the previous month, below forecasts, while household spending fell more than expected, down 3.4% on a year ago.

     
  10.  
    07:33: PPI investigation

    The Financial Conduct Authority, the City watchdog, is planning to "gather evidence on current trends in complaints on payment protection insurance," it says. It could then decide to do an advertising campaign, a time limit on complaints or keep things as they are.

     
  11.  
    07:25: BT results

    BT have updated everyone on their pension fund situation and how they will deal with a £7bn deficit. BT will pay £1.5bn into the fund by the end of April 2015. This will be followed by £250m in each of the years to March 2016 and March 2017. Low interest rates have hit the fund.

     
  12.  
    07:16: Qatar Airways
    Qatar Airways plane

    Qatar Airways has acquired stake of just less than 10% in BA and Iberia-owner IAG. There's a cap on non-EU ownership of European airlines, but Qatar Airways might up its stake in future, it says.

     
  13.  
    07:05: BT results

    BT says third-quarter earnings before tax and interests costs rose 2% to £1.57bn. Gavin Patterson, chief executive says: "All the major communications providers are responding to the strong market demand for fibre broadband, helping to drive take-up in what is already a very competitive market."

     
  14.  
    06:57: US growth data BBC Radio 4

    US growth figures will be reported later on. What's the likely result, Today asks Ewen Cameron Watt of Blackrock? "The rate of growth is slowing a little bit but not enough to raise serious concerns," he says. Expect a "stable but robust rate of growth."

     
  15.  
    06:45: Greece Radio 5 live
    Greece

    Guntram Wolff is the director of European think tank Bruegel, and he's on 5 live, talking about Greece. "It was a mistake that Greece joined the euro, but it would now be a mistake for it to leave," he says. "We will have to come to a deal that will have a lower burden on Greece. I essentially think you will keep the nominal amount [owed to bond investors] but you will increase the maturity.. from 30 to 40 or 50 years."

     
  16.  
    06:30: Amazon results Radio 5 live

    More from Ewen Cameron Watt of investment manager Blackrock on 5 live. He is giving his views on US results overnight. "Amazon and Google both essentially reported that underlying demand over Christmas was pretty decent," he says. After tax, margins at Amazon are below 1%, he says.

     
  17.  
    06:20: Trademark news Radio 5 live
    swift

    The phrases "this sick beat" and "nice to meet you, where you been" have been trademarked by singer Taylor Swift, 5 live reports. Laura Harper of law firm Shoosmiths says she is trying to stop other people making money by putting the phrases on a t-shirt or other merchandise. She will have to prove the phrases are "synonymous" with her, she says.

     
  18.  
    06:09: Shell results Radio 5 live
    shell

    Ewen Cameron Watt of Blackrock is the markets guest on 5 live, talking about yesterday's results from Shell. "These are very historic results because they reflect an average price of $75" per barrel of oil, he says. Bearing in mind oil is below $50 today, "the pain is yet to come," he adds. The firm has cut $15bn of investments. The longer the price remains at this level, the more likely more investment cuts will come, he says.

     
  19.  
    06:01: House building Radio 5 live

    Figures from the National House Building Council show there was a 9% rise in homes built last year to 145,174, but the rise missed the government's 200,000 home target. Peter Vella of Countryside Properties is on 5 live. NHBC's figures don't take into account all homes started or built, so the industry could be closer to the target than thought.

     
  20.  
    06:00: Howard Mustoe Business reporter

    Good morning all. Overnight, online retail giant Amazon has reported weaker profits for the busy Christmas period. Stay tuned for the best business and economics news and get in touch via email bizlivepage@bbc.co.uk or on twitter @BBCBusiness

     

Features

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.