What does it take to backstop electricity generation from renewables?

By: Josie Le Blond

Article originally published in European Energy by the Financial Times on October 13, 2015. It can be found here: http://www.ft.com/intl/cms/s/0/719ea15e-68fa-11e5-a57f-21b88f7d973f.html#axzz3pJcEjACC  

Germany has long led the way in global green energy innovation. But ahead of UN climate talks this December, some say the country’s new reliance on coal means it has lost the moral high ground on emissions.

Europe’s leading economy still flaunts its virtuous climate track-record abroad. It was on show during recent state visits by Angela Merkel, the chancellor, to Brazil and India, two of the world’s biggest greenhouse gas emitters.

Yet back at home, observers warn Germany’s powerful coal lobby is frittering away the nation’s reputation as a green Wunderkind.

“The coal problem must be solved if Germany wants to be celebrated once again as a leading voice on climate change,” says Claudia Kemfert, head of the energy, transportation and environment department at the German institute for economic research.

Germany’s dilemma dates back to its pledge to shift from nuclear power to other forms of renewable energy following Japan’s Fukushima disaster. The nuclear phase-out has resulted in the country falling back on one of the most polluting forms of fuel, coal. This goes against the grain of Germany’s Energiewende, part of the intention of which is to cut the use of fossil fuels.

Panicked by the disaster in Japan, German politicians began shutting down the country’s oldest nuclear plants in 2011, with a view to going completely uranium-free by 2022. The plan is for renewables eventually to take centre stage in Germany’s energy mix. However, coal, in particular carbon-intensive lignite, has been filling the gap.

Germany generated 44 per cent of its electricity from coal last year, more than any other EU member state. That compares with 26 per cent from renewables and 16 per cent from its eight remaining nuclear plants. This coal renaissance is undermining the government’s efforts to reduce greenhouse gas emissions and casting doubt on Germany’s green credentials. In 2013, German emissions rose by 1.2 per cent, defying a decade-long downward trend.

“In Germany we’re living with a paradox resulting from the energy transition,” says Ms Kemfert. On the one hand, the country is investing in renewable energy helping to bring emissions down, while on the other the increased use of coal acts to force them up.

Germany now looks set to miss its voluntary target of a 40 per cent reduction in emissions on 1990 levels by 2020. Ministers point out Germany has already met its binding Kyoto target of a 20 per cent reduction. However, that achievement predates the decision to abandon nuclear.

Even before the recent Volkswagen emissions scandal sent Germany into a flurry of soul-searching, policymakers were desperately looking for ways forward to meet the 40 per cent target and re-establishing the country at the top of the international pecking order on climate change.

But Ms Merkel’s government had not reckoned with the power of the coal lobby. Plans this year to slap a levy on emissions from the dirtiest plants powered by lignite had to be abandoned after they met opposition from industry, unions and local politicians.

This coalition, led by RWE, Germany’s second biggest power provider and the operator of most of the country’s lignite plants, said the levy would threaten 100,000 jobs in industrial regions and would push up costs to industry and consumers.

Talks in July led to a compromise. Sigmar Gabriel, Germany’s energy minister, promised to compensate RWE and others for gradually retiring a number of the oldest lignite plants as “reserve capacity”.

“Since our plans affect many jobs, we altered course,” the energy minister said.

The compromise demonstrates the kind of tensions that exist between Germany’s coal-dependent energy providers and the state’s declared environmental goals. Politicians in Germany and beyond, however, need eventually to resolve such tensions in order to achieve a carbon-neutral economy by the end of the century — a goal activists hope will be accepted for all countries in a binding agreement at the December climate talks in Paris.

As Barbara Hendricks, German environment minister, said last month: Germans “cannot go around heralding the climate neutral global economy and at the same time act as if that does not apply to the coal regions in our own country”.