(Bloomberg) – Germany will increase its reliance on coal as it battles an unprecedented energy crisis — even at the expense of its ambitious climate targets.
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Europe’s largest economy is burning up fossil fuels at its fastest pace in at least six years, data compiled by Bloomberg shows. It is also poised to become one of the few nations to increase coal imports next year.
On Thursday, energy supplier Uniper SE announced that it would extend the commercial operation of two of its coal-fired power plants in Germany until March 2024 at the latest in order to save on natural gas in the coming winters.
Around the world, highly polluting – and relatively cheap – coal is making a comeback as countries try to prevent rising energy costs from triggering an economic collapse. The crisis is acute in Europe after Russia cut 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 longer-term goal of net-zero emissions by 2045.
“Everyone meets their climate targets, but it’s true, if you’re faced with the dilemma of leaving the lights on or cutting carbon emissions, you need to leave the lights on,” said Carlos Fernandez Alvarez, acting head of gas, coal and power at the International Energy Agency.
Germany plans to phase out coal by 2038, but the governing coalition is pushing for an even earlier target by 2030. To weather the current crisis, the country has temporarily brought back some idle power plants.
A limited amount of capacity will be brought back into service in most countries. “Only in Germany, with 10 gigawatts, is the turnaround on a significant scale,” says a report by the IEA. According to Bloomberg estimates, this is enough to power around 5 million homes.
The story goes on
According to the Federal Statistical Office Destatis, Germany now generates more than a third of its electricity from coal-fired power plants. In the third quarter, fuel flow was 13.3% higher than the same period last year, the agency said.
“The exit from coal, ideally by 2030, is out of the question,” said a spokeswoman for the Federal Ministry of Economics in a statement. “Against the background of the crisis situation, the most important thing is that we apparently managed to consume significantly less energy in 2022, especially natural gas.”
Germany’s interventions in the electricity market, which have led to a rise in emissions, are temporary and the country has accelerated the expansion of renewable energy, she said.
The Origins of Revival
The revival of German coal has two main drivers: the fuel shift away from expensive natural gas and increasing demand for electricity from France, where power generation has been hampered by nuclear reactor failures.
European gas prices rose to record levels over the summer and remain about double the five-year average for this time of year. Earlier this year, companies including power generator Steag GmbH reduced coal capacity due to rising gas prices. Automaker Volkswagen AG has also shelved a plan to move away from coal at its Wolfsburg plant.
While both gas and coal prices have fallen recently, it’s still more profitable to burn the dirtier fuel to generate electricity.
“Coal is coming back as a baseload generator,” said Guillaume Perret, who runs energy consultancy Perret Associates Ltd. “We believe it will be less seasonal than it has been so far – with more coal burning in the summer, spring and fall as long as coal stays so much in the money relative to gas and there continue to be gas shortages.”
It’s possible Germany’s emergency coal stations could remain online until December 2024, nine months after the government’s planned closure date, Perret added. He noted that the European Union and Turkey are the only major global energy consumers expected to increase coal imports in 2023 compared to 2022.
According to Destatis, Germany is also likely to be a net exporter of electricity to France this year, the first time this has happened on record since at least 1990.
According to Electricity Maps, an app that aggregates grid data, German electricity at times this month became as polluting as electricity produced in South Africa and India, after lower wind speeds choked renewable generation and coal consumption skyrocketed.
way forward
There are some bright spots for Europe that could help avoid burning coal. Gas prices have tumbled as previously mild weather delayed the start of the heating season, and the region has seen record levels of LNG imports lately. Gas stocks also remain above the seasonal average.
In addition, nuclear power in France has started to return. While some delays persist, reactor availability is now around 68%, grid data shows. This compares to about 50% in early November. Germany also plans to keep its three remaining nuclear power plants online beyond the original shutdown date by mid-April at the latest.
While Europe’s coal imports are expected to increase, it’s unpredictable how much of it will actually be burned to generate electricity, especially if hydropower increases in the region. According to Destatis, Germany also increased its electricity generation from renewable energies by 2.9% on an annual basis in the third quarter of this year.
“Accelerating the expansion of renewable energies is the lynchpin for both achieving energy sovereignty in the middle of this decade and for our climate targets for 2030,” said Fabian Hein, project manager for EU policy at the think tank Agora Energiewende.
–Assisted by Carolynn Look, Olivia Fletcher, Brian E. Wall, Petra Sorge, and Vanessa Dezem.
(Updates with Uniper’s plans in third paragraph.)
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