EnVal: Germany turning the hour glass for the Coal Transition Plan

As we reported in the June EnVal, the German Energy Ministry’s “Special Commission on Growth, Structural Economic Change and Employment” – or the Coal Commission — was tasked to devise a gradual coal exit plan to be presented before the UNFCCC Conference in Katowice (COP24), taking place at the beginning of December.

At the end of November, however, the German government announced that the Coal Commission will not meet the deadline for delivering the coal exit report in time for COP24, as the specially appointed commission needs more time to discuss the necessary structural changes in coal dependent regions before moving forward with a plan for a coal phase-out. The new date announced for delivering the coal exit strategy is February 2019.

Germany is not only Europe’s, but the world’s largest burner of lignite. Despite the tremendous efforts and achievements realised so far through the Energiewende (energy transition), the German economy is still running roughly 25% on coal.

Knowing that Germany will likely miss its self-imposed 2020 greenhouse gas emissions reduction target, the country will have to gradually shift away from coal-to-power production over the next decade if it wants to meet the ambitious climate goals for 2030.

The task of closing down all coal-fired power plants is ever more challenging considering that Germany also announced it is planning to shutdown all remaining nuclear power stations by 2022. Together, coal-fired plants and nuclear power plants generate almost half of Germany’s electricity, and most of the country’s baseload production. 

This dual shift from fossil fuels and nuclear power to a renewables-based energy system will be a challenge, as intermittent renewables will not be able to replace all the lost baseload production at a reasonable cost for the taxpayer. The cost of the Energiewende for German consumers is already around €25 billion per year, at the current level of 15% renewables of the country’s overall energy mix. Doubling this target to over 30% within a decade would mean that the effort of the taxpayers would also skyrocket. 

The recent announcement that the Coal Commission needs more time to come-up with a concrete proposal and transition plan for coal phase-out is an indication that the challenges ahead are great, yet the German Government is determined to find a solution acceptable to all stakeholders — reconciling economic feasibility with the timely reduction of greenhouse gas emissions. A possibility which cannot be excluded is that in its energy transition process, Germany could keep both nuclear and coal power in the energy mix beyond the ambitious phase-out dates.

This is an excerpt of our newsletter focusing on energy geopolitics in Europe, the EnVal.  To get it in your inbox, every two weeks, register here – it’s free!