Paris deal fuels German coal exit debate, stirs industry concerns

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The widely celebrated Paris Agreement has intensified the debate about how Germany can achieve its endangered climate targets. Most commentators and climate activists argued the results of the climate summit vindicated demands that Germany urgently needs to phase out coal. The business community was split on the future course of climate policy. Energy intensive industry groups said the deal provided no basis for more ambitious policies, and warned against dangers to competitiveness. But an alliance of major companies came forward to demand additional climate efforts.

The debate about the future of coal gathered speed immediately after the end of the summit, with commentators and NGOs ratcheting up pressure on the government. WWF, among many others, called upon Germany to put a coal exit on the agenda “more than ever before”. Greenpeace published a poll showing two thirds of Germans wanted Angela Merkel’s government to do more regarding a coal phase-out.

But it’s not only pressure from civil society that is mounting on the government. Germany was a founding member of the “high ambition coalition” in Paris, lobbying for a “strong mention” of a 1.5°C warming limit. Moreover, government advisors found in November that Germany’s climate goals 2020 were in “serious danger” if emissions weren’t cut faster in almost all sectors. Think-tank Agora Energiewende* calculated that Germany would have to reduce power production from coal by 60 percent by 2030 and would have to exit coal almost entirely by 2040 if it wanted to achieve its emission reduction targets.

Environment Minister Barabara Hendricks said on her first day back in Berlin Germany's power system has to become entirely renewable by the middle of the century. Just before the summit, she had said a coal exit should be possible within the next 20-25 years without structural ruptures. But Süddeutsche Zeitung was quick to note a “climate of disillusion” after the summit in Berlin, because neither Energy Minister Sigmar Gabriel nor other members of government came forward to lend support to Hendricks.

The government's Climate Action Plan 2050, to be adopted by cabinet in the summer, is to tackle this issue. The document will describe a pathway how Germany can reach its target of reducing greenhouse gas emissions by 80-95 percent by 2050 and increase the share of renewables in electricity consumption to 80 percent. Such a plan would have to tackle coal, the environment ministry has said in Paris, where Germany hosted a side event on the 2050 climate plan.

But industry representatives have already voiced opposition to a new climate action plan. The Federation of German Industries (BDI) demanded already before the summit, that the government “drops” the idea.

A Global Energiewende?

Many commentators said the Paris agreement vindicated Germany’s energy transition - with the exception of the vexed coal issue. Top news website Spiegel Online entitled a first analysis of the treaty  “The world has agreed an Energiewende”, and WWF called the Agreement a “signal for a global energy transition”. Hendricks also said Germany’s targets were backed up by the summit. She added opponents of the Energiewende could no longer insist Germany was alone with its ambitious climate actions.

This perception also inspired hope in some parts of the German business community that Paris would increase the world-wide demand for energy-related products ‘Made in Germany’. “The result is a success from the point of view of the German engineering federation”, said VDMA's Naemi Denz.    

A number of prominent companies involved in sustainability initiatives issued a call for ambitious policies to move ahead with ‘decarbonisation’ in Germany. The signatories, including sportswear companies Adidas and Puma, Commerzbank, major utility EnBW, Unilever and wholesaler Metro Group, among many others, said they “commit to advancing the global transformation as trailblazers.” In a statement supported by sustainability business associations Stiftung 2 Grad and B.A.U.M., as well as environmental NGO Germanwatch, the companies said they favoured an ambitious strategy to achieve Germany’s 2020 and 2050 climate targets, and a reform of the European emissions trading system.

Major utility E.ON agreed it was important to strengthen the ETS. But the company also warned: “European engagement alone is not enough. Ultimately, we need an international commitment to the reduction of subsidies for fossil fuels and a global CO2 market which advances the best technologies for reducing carbon dioxide.”

Coal mining union IG BCE and energy intensive companies warned the Paris summit must not become a justification to ratchet up national or EU ambitions, because this would endanger competitiveness and jobs. “The EU and Germany must not understand the Paris treaty as an invitation to move ahead with climate protection without regard to competitiveness”, said the association of energy intensive businesses (VIK). It said as long as there was no global level playing field, energy intensive industries had to be protected to avoid "carbon leakage", i.e. the move of carbon-intensive industries to less ambitious regions.

Union leader Michael Vassiliadis said the Energiewende must not overburden companies nor employees.  “It’s dishonest to create the impression that the whole world is automatically following the example set by Germany”, said Vassiliadis.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.

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