While it wrestles with Greece’s Prime Minister Alexis Tsipras and his approach to his country’s €320 billion ($474.24 billion) debt mountain, Germany does not seem to know where it stands on energy – as a dogged bastion of clean energy or a pragmatic realist.
KPMG’s report Energy – Quo Vadis? – which analysed scenarios for tomorrow’s energy sector out to 2035 – issued last week said Germany was a prime example of contradictory goals posing the “greatest challenges” in the energy sector.
“In Germany, CO2 reduction and climate protection targets conflict with the objectives of phasing out the use of nuclear energy and replacing it with alternative energy sources: replacing nuclear energy with coal-generated power would increase greenhouse gas emissions,” KPMG said.
“Security of supply conflicts with affordability, because the supply must remain stable despite fluctuations in the production of renewable energies, even when prices increase dramatically.
“These and other conflicts constitute a multidimensional area of tension with explosive potential and varying degrees of importance. During peak moments of crisis, the security of supply is extremely important for citizens.
“As the crisis cools down, the affordability of energy becomes the highest priority. What will the focus of attention be tomorrow? In the 1960s, the Stability Act in Germany ensured clarity in the relationship between four interdependent goals: employment, price levels, balance of trade, and growth – the so-called ‘magical square’.
“Unfortunately, a similar ‘magic’ cannot be detected for the energy sector, despite comparable urgency.”
On the one hand, Germany’s Environment Ministry is pushing to reduce its CO2 emissions by 40% by 2020 – just five short years away – from 1990 levels, which Der Spiegel said would mean shutting down 15 to 20 coal-fired power plants.
This, in a country where energy supply is already under serious pressure.
At the end of last month, the government reportedly ordered several coal-fired power plants to be shut down to reach those ambitious 2020 goals. Under the plan, power stations producing some 2.7 gigawatts of power from brown coal will be closed by 2017.
However, the latest update given at the end of last month on Germany’s “climate action plan” by Chancellor Angela Merkel’s number two, Economics Minister Sigmar Gabriel, was in fact something of a bombshell.
Gabriel, who is earning a reputation for seeing things with a sober reality, essentially ensured the German coal industry would survive and that, in fact, Germany would probably keep sourcing most of its power generation from coal for at least another decade.
He announced he would drop the proposed levy on all coal-fired power stations, and even some of those aforementioned power stations to be closed would be kept as a reserve source of supply for at least four years after 2017 as a back-up for solar and wind supplies which, while growing, were intermittent.
In fact, those coal stations will be kept in a state of continuous readiness for such an event, meaning a full workforce will need to be maintained.
The levy was designed to cut lignite emissions by 22 million tonnes of CO2 annually.
Under the new plan, lignite closures will save roughly half that, with the remainder being made up through other measures – a compromise that was, of course, welcomed by mining unions.
However, critics say the plan will achieve less and cost consumers more.
IG BCE, the trade union for mining, chemicals and energy industries which co-authored the coal proposal that politicians agreed on, said the decision was “good for the climate, as well as for jobs and industrial locations”
“That is a balanced outcome and deserves respect and support,” union head Michael Vassiliadis said.
“Now we have the chance to manage the gradual closure of a few power plants without redundancies in the energy sector in a socially acceptable manner. It’s important that companies now have planning security and there will be no structural ruptures in regions where lignite is being mined.”
Gabriel said the agreement marked a historical moment for “new prosperity” where all the “loose ends” of the country’s energy transformation or Energiewende were finally tied together.
"Imagine the reactions, had I come out with the proposal of permanent closures first,” he said.
“We were convinced the coal levy would not have led to permanent closures, but only pauses at times of low electricity prices."
Gabriel even said he would introduce payments for RWE, one of Europe’s five largest utilities, and Swedish giant Vattenfall to maintain those stations’ capacity.
The reality is that coal provided some 44% of Germany’s generated electricity last year, and the plants being shut down represented just 13% of current lignite capacity and 6% of total coal capacity, according to Carbon Brief, which said the country’s Energiewende had become a “national obsession”
While this obsession could become a blueprint for other industrialised nations seeking to decarbonise their economy – if it succeeds – the result of Germany’s decision to phase out nuclear power is that it has led to burning more coal.
Der Spiegel quoted Gabriel saying: “It is an illusion to believe that Germany could exit both nuclear energy and coal at the same time.”
Carbon Brief said there had, in fact, been a small jump in coal power generation since the nuclear phase out was announced in 2011, leading to rising emissions.
Meanwhile, the International Energy Agency said coal would provide about a fifth of Germany’s electricity generation by 2030.
That is a significant decline from now, where it is responsible for almost 50%.