2021-02-25
Its OK to have aspirations for net zero emissions but to be credible it is necessary to define a pathway to get there. Germany has done this.
By Sabine Golombek, Kirchen, Germany
[Preamble by Chris Johansen
For over two centuries the German economy has been powered by burning coal. The German Government, as strongly as any government, realises the need to reduce greenhouse gas emissions. They are intent on replacing coal with renewable energy, despite their relatively low (cf. WA) resources of insolation and inland wind, and despite their ongoing phase-out of nuclear energy. Having lived in Germany during 1971-73 I have an abiding respect for their governmental system and have remained intrigued as to their response to climate change vis-à-vis coal. In 1972, while visiting a distant relative in Bochum, in the heart of the industrial and coal mining region of the Ruhr, we went for a walk down the street where he lived. He identified his neighbours by the proportion of their lungs they had left – he has half a lung, he just a quarter, etc. In Christmas greetings from a long-time colleague in agricultural research, Dr Sabine Golombek, she indicated she was now working on rehabilitation of coal mining sites in Rheinisches Revier. So, I asked her how Germany was progressing in its transfer from coal dependence to renewable energy, and her response is below. It appears that Germany has a legislated pathway to exit coal, as distinct from Australian state and federal governments who still refuse to lay down such pathways.]
The German parliament adopted a coal exit law, the ‘Act on the Reduction and Termination of Coal-fired Power Generation and on the Amendment of Other Acts’, in July 2020, which regulates the phase-out of coal and the associated support for the affected regions. Additionally, the ‘Structural Aid Act for Coal Regions’ regulates the structural change in the affected regions to strengthen the economic structure, create new, high-value jobs, promote environment protection and to prevent social disadvantages. It should ensure the economic competitiveness of these regions in future.
The ‘Act on the Reduction and Termination of Coal-fired Power Generation and on the Amendment of Other Acts’ regulates the timetable for the coal exit, as well as the associated conditions and compensation for power plant operators. The exit will happen in three stages:
The capacity of coal-fired power stations of 37 gigawatt (GW) in 2020 will be reduced to 15 GW hard coal (anthracite) and 15 GW lignite (brown coal) capacity by the end of 2022. Up to 2030 the capacities will be reduced to 8 GW hard coal and 9 GW lignite and 2038 or earlier all coal-fired power stations will be shut down. For lignite-fired power plants, there are already block-specific shutdown dates.
The CO2-emission certificates that become free during the phase-out will be cancelled, so that the coal exit really benefits the climate.
The effects of the phase-out of the coal-fired power capacity on the energy supply will be regularly reviewed. In the years 2026, 2029 and 2032 the German Government will examine whether the dates for the shutdowns of the power plants, which are planned from 2030 onwards, could brought forward by three years. Therefore already by 2035 Germany might have completely achieved the exit from coal-fired power generation. Additionally, the exit from nuclear power will be completed in 2022. In the medium term the power should be supplied solely by renewable energy. The coal exit law determines that in 2030 renewable energies should account for 65% of the gross electricity consumption.
The operators of the brown coal power plants get a compensation of EUR 4.36 billion. For hard coal-fired units, auctions are organised in which the operators can tender which capacity they want to reduce for how much money. A maximum value will be set for the compensation. If the operators of the power plants do not voluntarily offer their systems for decommissioning, a ‘statutory reduction’ should take effect. Older and less efficient hard power plants are under pressure, since the prices for emission certificates per tonne of carbon dioxide rose to almost 30 euros. Therefore, their electricity generation is more expensive.
The German Greens criticize that the compensations for the brown coal operators are too high, because several of them are old and become uneconomic. The government argues that the power plant operators in return waived complaints against the shutdown of their power plants and operational dismissals. A further and more important criticism of the German Greens is the too slow phase-out to pursue the goal of the Paris agreement to limit the increase in global average temperature to 1.5°C. The present coal exit law would make an earlier exit difficult, also because of the high compensations.
Employees who lose their jobs in a power plant or open-cast mine due to the coal exit and are at least 58 years old can receive an adjustment allowance for up to five years until retirement. An amount of around EUR 4.8 billion is estimated for this measure; two-thirds will be paid by the Federal Government and one third by the federal states.
The ‘Structural Aid Act for Coal Regions’ regulates the financial support for structural change in the regions affected by the coal phase-out with up to EUR 40 billion. Out of this amount 14 billion euros are intended for particularly significant investments in the lignite mining areas. They can be used by the federal states to invest in business-related infrastructure, local public transport, broadband and mobility infrastructure or environmental protection and landscape conservation. The federal states should co-finance these projects with ten percent.
With the other 26 billion euros, the federal government is directly supporting the affected regions. This involves expanding the infrastructure for rail and road transport as well as establishing and strengthening numerous research institutions. The settlement of federal institutions until 2028 will create or maintain up to 5,000 jobs. Additionally, the federal government will fundamentally expand its funding programs and support the energy policy. Finally, the federal government will establish the lignite mining areas as model regions for greenhouse-neutral, resource-efficient and sustainable development. For this purpose also funding programmes are advertised for various target groups and themes.
In the case the coal phase-out increases the electricity prices, relief should be provided for companies with high energy consumption that are in international competition and for consumers. Starting in 2023, a ‘reasonable subsidy’ should reduce the electricity grid fees.
Header photo: A German lignite open-cut mine. Credit: M. Blanke
[Opinions expressed are those of the author and not official policy of Greens WA]