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Does ditching coal come at too high a price?

ByLaura Potier

May 10, 2017

The majority of scientists and politicians agree that one of the most urgent issues we face globally is that of climate change. They profess that putting an end to coal production by the first half of the 2030s is both essential and achievable, economically and technologically. The world needs to bring down greenhouse gas (GHG) emissions to net zero, and ideally negative levels, by the mid-century if there is to be any hope of preventing temperatures from rising by more than the 2C ‘danger threshold’. For this to happen, scientists concur that up to four-fifths of all fossil fuel reserves owned by companies and governments cannot be burned, and that instead nations need to turn to renewable energy sources.

Germany responded by ushering in a new epoch of Energiewende. As the world’s fourth largest economy, Germany has taken it upon itself to promise some of the most drastic emission cuts; by 2020, it aims for a 40 per cent cut from 1990 levels, and at least an 80 per cent cut by 2050. The argument goes that if the power sector is the first to decarbonise, the other sectors will follow organically, thus the power sector became the focus of the new policy. Likewise, the G7 fossil fuel pledge was a great victory for Angela Merkel, as the leading industrial nations have agreed to cut GHG emissions by phasing out fossil fuel usage by the end of this century.

Why is Germany leading this movement towards renewable energy? Historically, the 1973 Oil Embargo had already caused Germany, with very little natural oil and gas of their own, to contemplate alternative sources of energy.

Governments and utilities had been pushing for a shift to nuclear power post-WW2, but had come up against strong opposition. A sense of rebellion and anger in the younger generation against those who had brought war and ruin to the country led to questioning of their authority, and so to opposing nuclear energy. Overall there was strong antinuclear sentiment in Germany, leading to a decision not to develop a nuclear capacity, which today means the country is heavily reliant on coal power. In fact, analysis of EU Emissions Trading System (EU ETS) has shown that German plants make up seven of the top 10 European polluters. If Germany manages to meet their targets, this could therefore mean a significant reduction in net global emissions.

Since the 2011 Fukushima disaster spurred protests for the shutdown of nuclear power plants in Germany, nine of 17 nuclear reactors have been closed, with another scheduled to close at the end of this year. The government has promised that all will be switched off by 2022. Furthermore, Germany has made substantial progress on its emissions reduction goals, realising a 27 per cent decrease between 1990 and 2014. However, meeting all set targets would require the maintenance of an average annual emission fall rate of three and a half per cent, equal to the maximal historical value as of now. Yet, these aims clash with plans by Rheinisch-Westfälisches Elektrizitätswerk (RWE), a mining company that happens to be Europe’s biggest emitter of CO2, to expand the Garzweiler and Hambach coal mines. Both produce lignite, known as brown coal, the highest producer of CO2 emissions of all fossil fuels. As the biggest user of lignite in the world, brown coal makes up a quarter of Germany’s power production, which renders coal emissions reductions yet more challenging. However, as of 2016 several of these lignite power plants have been turned into power reserves in case of emergency power shortages, and will continue to be used as such for the next four years, until they become permanently shut down, and renewable power still accounted for almost a third of consumed electricity in 2015.

Despite widespread consensus regarding the urgency of cutting down on GHG emissions, there are still those who argue against the shift to renewable energy, whether that be through claims that renewables do not lend themselves to economic growth, in terms of infrastructure, or a host of other factors that are drawn upon to excuse continued use of coal. Despite the large additions of wind and solar power to Germany’s electricity grid as of 2016, carbon emissions continued to rise. After years of decline, their carbon emissions rose slightly in 2015, largely because the country produced far more electricity than it consumed. Even if renewables can sometimes supply close to all electricity on the grid, the unpredictability of those sources pushes Germany to keep coal plants running. A solution put forward involves putting a steep tax on carbon emissions, which would accelerate the shutdown of German coal plants. Standing in the way of this however, is that Europe’s Emissions Trading System (ETS), meant to create a market for trading permits for carbon emissions, has failed, as prices for these permits were set so low that there was little enticement for power producers to shut down their plants.

Climate change scientists and economists argue that economic disruption can be minimised by undertaking a planned coal exit with all stakeholders actively participating, thereby avoiding negative impacts like mass coal miner layoffs or a bust of the coal bubble, which would lose several billions of dollars of investment and carries the potential of throwing global markets into another recession. Furthermore, energy researchers have established that transitioning to renewable energy is possible at a similar cost to coal, so long as it is approached in a business-as-usual manner. Hence the possibility of a successful Energiewende is high, but relies on the commitment of the German population. The Energiewende would make electricity more expensive for individuals, and Germany’s consumer electricity prices are already the second highest in Europe; still, 92 per cent say they still support the policy. There is great popular motivation for moving away from coal, as is shown in the fact that citizens and citizens’ associations have made up over half the country’s total investment in renewables. Only conventional utilities who continue to pressure the government are slowing things down, meaning more electricity is still received from coal than renewables.

Professor Dieter Helm, of the Energy Studies department at the University of Oxford, breaks down the policy he believes must be adopted in the future if the damage from climate change is to be curtailed: a carbon tax, to dissuade from burning fossil fuels coupled with a transitionary period for the next 15-20 years from coal to gas, which would halve emissions. According to Professor Helm, this would provide sufficient time for the last phase: the implementation of new renewable technologies.

The full transition from coal to renewable energy is possible, but political will needs to be unshakable in the face of increasing consumer prices. Coordinated action is also necessary; if Germany were to act alone in their decarbonisation, GHG emissions levels would stay the same, as industries could merely leave Germany and move elsewhere, causing no net change in global emissions. Energiewende must become a united, global movement before the damage to our planet increases further if it is to have any chance of success.


Image: Bert Kaufmann

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