Germany is poised to increase its reliance on coal as it battles an unprecedented energy crisis, even at the expense of its ambitious climate goals.
Europe’s largest economy is burning fossil fuel for electricity at the fastest rate in at least six years, data compiled by Bloomberg show. It is also poised to be one of the few nations to increase coal imports next year.
Around the world, highly polluting, and relatively cheap, coal is making a comeback as countries seek to prevent rising energy costs from triggering an economic collapse. In Europe, the crisis is acute, after Russia curbed natural gas supplies in the aftermath of its war in Ukraine. Germany is now trying to balance the short-term priority of strengthening energy security with the long-term goal of net-zero emissions.
“Everyone is maintaining their climate goals, but it’s true that when you’re faced with the dilemma of keeping the lights on or decreasing carbon emissions, the option is to keep the lights on,” said Carlos Fernandez Alvarez, acting head of gas, coal, and energy at the International Energy Agency.
Germany plans to phase out coal use by 2038, but the ruling coalition is pushing for an even earlier 2030 target. To weather the current crisis, the country has temporarily recovered some offline coal plants. In most countries, a limited amount of coal power capacity is returning to service. “In Germany alone, with 10 gigawatts, the reversal is on a significant scale,” the IEA said in a report.
Germany now generates more than a third of its electricity from coal-fired power plants, according to Destatis, the federal statistical office. In the third quarter, its electricity from coal-fired generation was 13.3% higher than in the same period a year earlier, the agency said.
“The phase-out of coal ideally by 2030 is not in question,” a spokeswoman for the German Economy Ministry said in a statement. “In the context of the crisis, the most important thing is that we have managed to consume significantly less energy in 2022, especially natural gas.”
Interventions in Germany’s energy market that have led to an increase in emissions are limited in time, and the country has accelerated the development of renewable energy, he said.
Origins of the Renaissance
The renaissance of German coal has two main causes: the shift of fuel from expensive natural gas and growing energy demand from France, where electricity generation has been hampered by disruptions to nuclear reactors.
European gas prices soared to record levels over the summer and remain about double the five-year average for the time of year. Earlier this year, companies such as the power generator Steag GmbH regained coal capacity due to rising gas prices. Automaker Volkswagen AG also shelved a plan to move away from coal at its Wolfsburg facility in Germany.
While gas and coal prices have declined recently, it is still more profitable to burn dirtier fuel to produce electricity.
“Coal is coming back as a baseload generator,” said Guillaume Perret, who runs energy consultancy Perret Associates Ltd. “We think it will be less seasonal than it has been, with more coal burning in summer, spring and fall, as long as coal remains as much money compared to gas and there remains a gas shortage.”
It’s possible that Germany’s emergency coal stations could be kept online until December 2024, nine months after the government’s planned shutdown date, Perret added. He noted that the European Union and Turkey are the only major energy users worldwide that coal imports are expected to increase in 2023 compared to 2022.
This year, Germany will also likely be a net exporter of electricity to France, the first time that has happened in record-keeping since at least 1990, according to Destatis.
Sometimes this month, German electricity became as polluting as energy produced in South Africa and India, after lower wind speeds slowed renewable generation and coal consumption soared, according to Electricity Maps, an app that aggregates grid data.
The Way Forward
There are some bright spots for Europe that can help prevent burning coal. Gas prices have plummeted as previously mild weather delayed the start of the heating season, and the region has seen record levels of liquefied natural gas imports recently. Gas inventories remain above the seasonal average.
In addition, nuclear power in France has begun to return. While some delays continue, reactor availability is now around 68%, network data shows. That compares with about 50% in early November. Germany also plans to keep its three remaining nuclear plants online until mid-April, no later than mid-April, beyond their original retirement date.
While Europe’s coal imports are likely to increase, it is unpredictable exactly how much is burned for energy production, especially if hydropower increases in the region. Germany also increased its renewable energy generation by 2.9% annually in the third quarter of this year, according to Destatis.
“Accelerating the deployment of renewables is the linchpin both for achieving energy sovereignty by the middle of this decade and for our 2030 climate goals,” said Fabian Hein, project manager for EU policy at think tank Agora Energiewende.
Source: Bloomberg
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