German coal industry underpins renewable push

There is a strong anti-coal movement in Germany Germany is an enlightened leader in the global battle to reduce CO2 emissions, a pioneer in renewable energy and community power projects and a champion of energy efficiency. Or so the common narrative goes. But try telling that to Monika Schulz-Hopfner. She and her husband, along with 250 other residents of Atterwasch, a quiet village near the Polish border, face eviction from their home of 30 years to make way for the Janschwalde-Nord coal mine. And not just any old coal, but lignite, the dirtiest form of this ancient fossil fuel that is mined in vast opencast pits. If the plans go ahead, the village, parts of which date back more than 700 years, will be demolished. "Since the plans for the mine were unveiled in 2007, we have lived with this constant threat, which has taken over the lives of every individual and the community as a whole," says Mrs Schulz-Hopfner. How American energy independence could change the world Shale industry faces reality check "Every single decision we make is affected by it." And the residents of Atterwasch are not alone. In the eastern German region of Lausitz, nine villages are under threat, where up to 3,000 people could lose their homes to make way for five new lignite mines that are fuelling the country's renewed thirst for coal. Two further mines are under consideration. Immediate impact The mines are needed to power a new generation of coal power plants. Two new lignite plants were opened in 2012, with a further two in the pipeline. Another two hard coal plants also opened last year, with a further five opening this year or next, with two more awaiting licences. The effects are already being felt. Lignite production in 2012 hit its highest level for almost 20 years, while initial estimates suggest this brown coal was used to generate 162bn kWh of electricity last year, more than in any year since 1990. The use of hard coal also increased, meaning the two energy sources accounted for 46% of Germany's overall energy production. The impact on CO2 emissions has been immediate. "There has been an increase of between 5%-7% in CO2 in the past two years," says Prof Claudia Kemfert, head of energy at the German Institute for Economic Research. And this in a country that aims to reduce emissions by 40% from 1990 levels by 2020. As Prof Christian Hey, secretary general of the German Advisory Council for the Environment, says: "Germany has a coal problem." 'Failure' There are many reasons why. One is the low cost of carbon. "Due to the failure of the emissions trading system, the price of CO2 permits is very low," says Prof Hey. "The EU has failed to address this issue." The opencast lignite mines in Germany cover tens of square kilometres Oversupply and a fall in demand for energy - and therefore permits - during the economic downturn means the price now stands at around three euros per tonne of CO2. If everything had gone to plan, the price would be more than 10 times that by now. Overcapacity has also pushed the price of coal lower, while the lignite industry has benefited to the tune of 60 million euros from being exempt from supporting the renewables industry, says Prof Hey. This means the fossil fuel has moved down what is called the merit order curve. This was introduced in Germany in the 1990s, and determines the order in which energy sources are used to satisfy demand. The cheapest source is used first, the second cheapest second, and so on. What is lignite? *. Over time, peat is converted into lignite, which is then, due to heat, pressure and chemical changes over millions of years, converted into hard coal *. The energy intensity of lignite is the lowest of all forms of coal, making it the least efficient *. Because it is less dense, lignite burns much faster than hard coal *. Lignite is extracted from opencast mines, which cover a far greater area than the deep mines used to extract hard coal *. Lignite contains less carbon but more sulphur than hard coal Source: World Coal Association, Store Norske Renewables are currently the cheapest, followed by nuclear. Lignite comes next, followed by hard coal. And as the government has resolved to phase out nuclear power by 2022, lignite will move further down the curve. Until the carbon price rises, then, lignite is set to remain at the heart of German energy production. "This is one of the biggest inconsistencies of the energy transition, and if the government wanted to address it, it could," says Prof Hey. "To address this paradox, the government needs to adopt a regulatory approach on coal. It is relying on the market, rather than regulation, and this is key to the problem." Or as Prof Kemfert puts it: "The government isn't doing anything." In fact, the new coalition has said that all fossil fuel power sources are equally important for the security of supply for the foreseeable future.