13 Feb 2015 | Kerstine Appunn

Coal in Germany

UPDATE -- The debate about the future use of coal to generate power gathered steam in Germany after the country recently saw greenhouse gas emissions rise. The government’s Climate Action Programme foresees additional emission cuts from the power sector and the federal grid planning agency now assumes there will be one third less coal in the power mix in the future. By summer 2015, the Ministry for Energy wants to present legislation that specifies how and when coal power generation has to be limited.

Power generation from coal has long served German industry, and despite Germany’s reputation as an ecological role model, the cheap, carbon-intensive, fossil fuel has recently seen a revival. After many scientists, activists and politicians, including the Environment Minister, warned that Germany would miss its target of cutting CO2 by 40 percent by 2020 (over 1990), the government adopted a plan to cut the share of coal in the mix. The Climate Action Programme stipulates that the energy sector must save an extra 22 million tonnes of CO2 by 2020. While the government has not detailed where the savings will  have to come from, it will be hard to achieve without affecting coal. 

Because of its highly political role – industry and unions alike are unhappy about the cuts – the government has not specifically outlined how much coal will need cutting. A decision on that is expected in the first half of 2015. But several recent events indicate the future direction: Besides the government standing firm on climate targets and enacting the Climate Action Plan,  the Federal Network Agency (Bundesnetzagentur) recently published future grid plans, assuming  up to seven gigawatts less lignite capacity by the year 2025. Those replaced previous assumptions that more lignite power would be added. Nevertheless, utilities like RWE, MIBRAG, Vattenfall and E.ON, as well as some trade unions, portray lignite as an essential “bridging” technology, which provides jobs in otherwise economically weak areas. They believe that recent modernisations and abundant lignite resources in Germany will enable the technology to prevail in the coming decades.  

Status of hard coal

The post-war economic boom in Germany (Wirtschaftswunder) was fuelled by hard coal mined in the states of North Rhine-Westphalia and the Saarland, which powered the industries of West Germany. But hard coal has since lost its competitive edge: Of the 83 billion tonnes of hard coal still in the ground, 36 million tonnes are considered minable, but their extremely deep and complicated geological location makes mining too costly to compete on the world market (the average cost for mining one tonne of hard coal in Germany is 180 euros; the average price for imported hard coal was 79 euros per tonne in 2013).

The output of hard coal in Germany in 2013 shrank to just 5 per cent of what it was in 1956. With 14,500 jobs still connected to the coal mining sector, the government supported hard coal mining with 1.65 billion euros in 2014. However, subsidies are planned to end by 2018 in a “socially acceptable” way. There are three remaining hard coal mines in North Rhine-Westphalia.

Only a fraction of hard coal used in German power stations is mined locally. Instead, coal is imported from Russia (29.3 percent), Columbia (21.2 percent), the United States (20.3 per cent), Australia, South Africa and Poland. In 2013, imports of hard coal increased by 15.2 percent compared to 2012.

Status of lignite

Germany has been the largest lignite producer in the world since the beginning of industrial lignite mining. It still is, followed by Australia, Russia and the United States. Lignite (also called brown or soft coal), mined in Eastern-German Lusatia (Lausitz) and Saxony-Anhalt, was indispensable for the industries of the former German Democratic Republic (GDR, East Germany). Ninety villages were lost to mining expansion in Lusatia alone. After reunification in 1990, many mines and power stations were closed within a few years as they were not profitable anymore.  Today, unlike hard coal, the remaining opencast lignite mining operations are still a profit-making business, with most of the coal being used in power stations that are close to the mines. There are four coal-mining districts where RWE, Vattenfall, E.ON and MIBRAG operate mines and/or power plants.

5.6 billion tonnes of soft coal are accessible via existing or planned opencast mining – total reserves of minable lignite amount to 34.8 billion tonnes. In 2013, 182.7 million tonnes were mined in the whole of Germany – compared to 169.8 million tonnes in 2009. Exports – mostly to other EU member states – grew by 21.6 per cent in 2012 compared to 2011 but only increased slightly in 2013. The Federal Institute for Geosciences and Natural Resources (BGR) reported 16,410 employees in the lignite mining business in Germany in 2013. The trade union IG BCE wants to sustain these jobs even if this means further exploration and destruction of villages. The government of the state of Brandenburg — home to Germany’s second largest lignite mining region — ruled in June 2014 that Vattenfall may continue mining in Welzow-Süd beyond 2026, even though 810 people will have to be relocated. But in October 2014, Vattenfall announced its intention to sell all its lignite operations in Germany, in a move to improve the company’s CO2 footprint.

In North Rhine-Westphalia (NRW) – traditionally another stronghold for coal mining in Germany – the state government decided in March 2014 to cut future lignite production by 1.3 billion tonnes, saving 1,400 people from relocation. But at the same time, the NRW government stressed that coal mining will continue until at least 2030. 

Current and future coal plants in Germany

Since 1990 investment into coal power stations in western Germany has been reduced in favour of eastern Germany, where many plants needed refurbishing. Therefore, plants in the East have longer run-times ahead. In the years between 1990 and 2010, lignite and hard coal-fired power blocks with a combined capacity of some 9.3 gigawatts (GW) came online, according to data from the grid regulator. Nearly 25 GW were retired (15.8 GW lignite; 8.3 hard coal) according to figures from the Federal Environment Agency (UBA) (based on units with a capacity of 30 megawatts or more). After 2011, when Germany decided once-and-for-all to phase out nuclear power, a total of 6.7 GW came into service while coal plants with a capacity of some 3.8 GW were retired. Since planning and construction of a coal-fired power station takes at least three years, capacity added after 2011 had been planned before the accident in Fukushima, Japan – the event that led to Germany’s final nuclear phase-out policy.

As of 2014, no new lignite-powered stations are under construction and 4.3 GW of hard coal-fired capacity is being built, while 4 GW will be retired in the next four years.

As for planned power stations: In 2013, the German Association of Energy and Water Industries (BDEW) expected 12 GW of new fossil generation capacity to go online by 2020 – most of it not coal, but gas-fired stations (8.6 GW). During the same period, added renewable capacity would amount to 29 GW, the BDEW reckons. Its latest calculations, based on information from utilities the BDEW assumes* an added fossil capacity of 17.2 GW (see Figure 1 below).

However, the BDEW points out that approved fossil fuel projects may not be built since market conditions for both gas and hard coal are not favourable. In addition, Germany’s energy market may see changes in the near future, making new investments unlikely until the new energy-economy law (EnWG) is hammered out by 2016. In fact, economic conditions for old, hard coal-fired power stations are so difficult that utilities have applied to retire 48 power plant units (as of 20 October 2014) amounting to some 8 GW of capacity. However, if deemed essential for the stability of the power system, the German grid regulator (Bundesnetzagentur) can oblige operators to keep power stations running.

See more information here.
* Planned capacity as presented by the BDEW (2014) according to their own information and press releases of utilities.

 A list of Europe’s coal power plants published by WWF and other environmental groups in July 2014 shows that nine of the thirty thermal power stations with the highest emissions operate in Germany – seven of them use lignite as a fuel and four of them rank 2nd to 5th. The report states that a rise in power generated from coal is not only a German problem but a trend across Europe, with generation from existing assets being the driver and not additional plants.

 

Why power from lignite still flourishes

Mainly due to the mild winter, Germany saw its lowest power consumption since re-unification in 2014, the AG Energiebilanzen has calculated. In 2014, the share of hard coal in power production was reduced to its second-lowest level since 1990, only in 2009, the year of the economic crisis, less hard coal was used. However, power from lignite remained at a high level, still making up 25.6 percent of German gross power production in 2014, up from 25.4 percent in 2013. (see Figure 2)

The overall power generation from lignite decreased slightly in 2014 (See Figure 3), as did the whole of Germany’s electricity production. Power consumption dropped considerably in 2014, by 3.8 percent. Lignite still enjoys a competitive advantage on the energy market mainly for two reasons:

  • It is mined very near the power stations and therefore cheap to buy/produce for utilities.
  • Prices for emission trading allowances on the European Emissions Trading System (EU ETS) are very low, i.e. making it inexpensive for power station operators to keep using this fuel which would otherwise – because of its high CO2 intensity – be more expensive.

Power prices on the wholesale markets are very low due to the influx of renewable energy with almost no running costs for fuel and operation, making electricity from lignite the only power from fossil fuel that is still profitable (See Factsheet Merit Order Effect). This helps to explain why power exports from Germany to its neighbouring countries increased in 2014.

 

(This factsheet was first published in November 2014. This update takes latest data and policy decisions into account.)

All texts created by the Clean Energy Wire are available under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)”. They can be copied, shared and made publicly accessible by users so long as they give appropriate credit, provide a link to the license, and indicate if changes were made.