Coal is Displacing Natural Gas, Undermining the Benefits of Renewable Energy Expansion

To Achieve Climate Protection Goals, an Energy Transition is Needed in the Heating and Transportation Sectors, as well as a National "Consensus on Coal"

Press release

Berlin, 11.04.2014

Germany is experiencing an "energy transition paradox": greenhouse gas emissions are on the rise, despite an increasing share of power generation from renewables. Just ahead of the publication of the IPCC's report on climate change mitigation, an analysis released today by Agora Energiewende comes to the following conclusion: Rising emissions in Germany are not attributable to the country's decision to phase-out nuclear power. Instead, this rise is caused by the increasing generation of electricity from lignite and hard coal, instead of natural gas, as well as a lack of CO2 emission reductions in the heating, transportation, and industrial sectors.

While greenhouse gas emissions fell continuously in Germany between 1990 and 2010, they have been on the rise since 2011. This trend applies to overall greenhouse gas emissions as well as to the energy sector. There are two factors behind this trend, as shown in an analysis released today by Agora Energiewende, an initiative of the Mercator Foundation and the European Climate Foundation. Although the decline in electricity generation from nuclear after the Fukushima disaster was more than offset by the expansion of renewable energy, and while electricity consumption fell in general, at the same time, however, the electricity market witnessed a shift toward lignite and hard coal power plants, and away from natural gas power plants (which produce fewer emissions). Furthermore, electricity exports increased. This increasing reliance on coal has been driven by price declines in the European market for CO2 certificates as well as high natural gas and falling coal prices.

Stalled Progress in Reducing CO2 Emissions in the Building, Transportation, and Industrial Sectors
Furthermore, while significant reductions were achieved in past years in other areas – namely, in the building, transportation, and industrial sectors – progress here has come to a halt. The increase in CO2 emissions in the household and commercial sectors seen in 2013 over the previous year is attributable first and foremost to the cold and long winter experienced at the beginning of 2013. Yet slow progress in the insulation of Germany's building stock is responsible for the lasting negative influence that this cold winter has had on the country's CO2 scorecard. In the industrial sector, greenhouse gas emissions have remained relatively constant for years when one discounts fluctuations related to the business cycle.

Töpfer: We Need an Energy Transition in the Transportation and Heating Sectors as well
"The findings of the analysis are little cause for surprise when one considers that the debate over energy and climate policy in Germany is focused almost exclusively on the renewables surcharge,” says Klaus Töpfer, executive director of IASS in Potsdam. "But our efforts to transform the energy economy should not be restricted to the electricity sector. We need to start taking action with regard to heating and transportation as well. This is the only way for Germany to achieve its climate protection goal of a 40 % reduction in greenhouse gas emissions by 2020. Furthermore, action is necessary if we want to preserve our role as an international leader in climate policy,” Töpfer, who is the former head of the UN Environment Programme (UNEP) and the current president of the Council of Agora Energiewende, added.

Graichen Calls for a "Consensus on Coal"
"The effort to complete the energy transition in the electricity sector involves more than just the expansion of renewables and the phasing out of nuclear energy. We need to determine the future role of coal and natural gas," says Patrick Graichen, director of Agora Energiewende. In the context of the energy concept, advisors of the German government have calculated that the share of electricity produced from coal must fall from 45% to 19% by 2030 if the government's mid-term climate protection goals are to be reached, Graichen states. According to Graichen, Germany needs a comprehensive transformation strategy for its coal sector – that is, a "consensus on coal." "A national consensus on coal would bring together the government, electricity producers, unions, and environmental groups to find ways to jointly shape a gradual process of change," Graichen says. "There is precious little space in the atmosphere for additional emissions. Most of world's coal reserves must remain underground if we are to avoid uncontrolled climate change. The actions that Germany does or does not take have a worldwide signaling function that is more important than emissions reductions themselves," Töpfer notes.

Background: The "Energy Transition Paradox"
CO2 emissions in the German electricity sector have been on the rise despite a climbing share of renewable energy. As the decline in electricity production from nuclear has been more than offset by the expansion of renewables, this paradox is not the result of Germany's decision to phase-out nuclear power. Rather, it is caused by very low CO2 certificate prices in combination with high natural gas and low coal prices. As a consequence, coal is increasingly supplanting natural gas as a source of combustion energy in the electricity sector. As there is a common electricity market in Central Europe, this shift from low-emission natural gas to coal also occurred in the Netherlands and Austria by the importation of abundant electricity from Germany. This is one reason for the record electricity export surplus achieved by Germany in 2013.

Press contact:

Lars Waldmann
Agora Energiewende
Tel: +49 30/ 2844 901-03, mobile: +49 151/ 2765 6190
lars.waldmann@remove-this.agora-energiewende.de

Carel Mohn
European Climate Foundation
Tel: +49 30/ 8471 211-91, mobile: +49 172/ 313 6154
Carel.Mohn@remove-this.europeanclimate.org