Released July 10, 2015 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany's coalition government has abandoned controversial plans to impose a levy on coal-fired power plants in order to meet its ambitious climate goals by 2020.
After much internal wrangling with coalition partners, power utilities and workers' unions, the government has instead opted for an alternative plan that will see the closure of brown coal-fired plants with a combined capacity of 2.7 gigawatts (GW). The plants will be gradually placed in reserve for four years to be used only in emergency power situations. They will be closed for good by 2020.
Coal remains Germany's largest source of power. In 2014, lignite and hard coal accounted for approximately 44% of generated electricity, followed by renewables on almost 26% and nuclear with just less than 16%. Germany, however, has some of the most aggressive renewable energy and climate change goals in Europe and is in the process of exiting the nuclear power sector.
The original levy plan proposed stricter carbon dioxide (CO2) emissions limits, which would have forced utilities to cut emissions at their most polluting plants or face heavy fines. For additional information, see March 26, 2015, article - Germany Targets Coal-Fired Power.
The industry claimed the move would have threatened up to 100,000 jobs in the power and mining sectors as a large number of coal-fired plants would have been forced to shut down. Tens of thousands of workers have taken to the streets of key cities in protest over the past few months.
Germany's economy minister, Sigmar Gabriel, explained: "We remain fully on track with the schedule set out in our 10-Point Energy Agenda as we implement the energy transition. After long negotiations, we succeeded last night in cutting through the Gordian knot as we take the forthcoming, urgently needed decisions. We will therefore move lignite-fired power plants into a capacity reserve and then gradually close them down. We will orient combined heat and power (CHP) to the goals of the energy transition, promote the substitution of coal-fired by gas-fired CHP, and open up prospects for moderate expansion."
The decision is good news for the two most affected companies, Germany's second-largest utility RWE AG (OTC:RWEOY) (Essen, Germany) and Sweden's state-owned Vattenfall AB (Stockholm, Sweden). Shares in RWE jumped markedly on the news.
The original levy would have hampered plans by Vattenfall to sell its German coal-fired plants and coal mines. The company wants to sell off 9,000 megawatts (MW) of lignite coal-fired power plants in the eastern part of the country. For additional information, see November 10, 2014, article - Vattenfall to Sell German Coal Operations.
Vattenfall Chief Executive Officer Magnus Hall said: "Abandoning the plans on a levy is positive in the sense that it takes away a lot of uncertainty around how much capacity would finally become uneconomic and would need to be shut down. When the details of the new legislation are ready, we will have a firm plan for the future operations of our lignite assets. The agreement provides also more clarity for potential buyers and the selling process can be continued. I am convinced that we have an attractive asset portfolio to offer."
IG BCE, Germany's mining, chemical and energy workers union, welcomed the new plan. Chairman Michael Vassiliadis said: "After a long and contentious debate, this is a viable solution that is good for the environment, jobs and industrial sectors. It combines the emissions targets of the federal government with economic reason and social responsibility. This is balanced and worthy of respect and support."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
After much internal wrangling with coalition partners, power utilities and workers' unions, the government has instead opted for an alternative plan that will see the closure of brown coal-fired plants with a combined capacity of 2.7 gigawatts (GW). The plants will be gradually placed in reserve for four years to be used only in emergency power situations. They will be closed for good by 2020.
Coal remains Germany's largest source of power. In 2014, lignite and hard coal accounted for approximately 44% of generated electricity, followed by renewables on almost 26% and nuclear with just less than 16%. Germany, however, has some of the most aggressive renewable energy and climate change goals in Europe and is in the process of exiting the nuclear power sector.
The original levy plan proposed stricter carbon dioxide (CO2) emissions limits, which would have forced utilities to cut emissions at their most polluting plants or face heavy fines. For additional information, see March 26, 2015, article - Germany Targets Coal-Fired Power.
The industry claimed the move would have threatened up to 100,000 jobs in the power and mining sectors as a large number of coal-fired plants would have been forced to shut down. Tens of thousands of workers have taken to the streets of key cities in protest over the past few months.
Germany's economy minister, Sigmar Gabriel, explained: "We remain fully on track with the schedule set out in our 10-Point Energy Agenda as we implement the energy transition. After long negotiations, we succeeded last night in cutting through the Gordian knot as we take the forthcoming, urgently needed decisions. We will therefore move lignite-fired power plants into a capacity reserve and then gradually close them down. We will orient combined heat and power (CHP) to the goals of the energy transition, promote the substitution of coal-fired by gas-fired CHP, and open up prospects for moderate expansion."
The decision is good news for the two most affected companies, Germany's second-largest utility RWE AG (OTC:RWEOY) (Essen, Germany) and Sweden's state-owned Vattenfall AB (Stockholm, Sweden). Shares in RWE jumped markedly on the news.
The original levy would have hampered plans by Vattenfall to sell its German coal-fired plants and coal mines. The company wants to sell off 9,000 megawatts (MW) of lignite coal-fired power plants in the eastern part of the country. For additional information, see November 10, 2014, article - Vattenfall to Sell German Coal Operations.
Vattenfall Chief Executive Officer Magnus Hall said: "Abandoning the plans on a levy is positive in the sense that it takes away a lot of uncertainty around how much capacity would finally become uneconomic and would need to be shut down. When the details of the new legislation are ready, we will have a firm plan for the future operations of our lignite assets. The agreement provides also more clarity for potential buyers and the selling process can be continued. I am convinced that we have an attractive asset portfolio to offer."
IG BCE, Germany's mining, chemical and energy workers union, welcomed the new plan. Chairman Michael Vassiliadis said: "After a long and contentious debate, this is a viable solution that is good for the environment, jobs and industrial sectors. It combines the emissions targets of the federal government with economic reason and social responsibility. This is balanced and worthy of respect and support."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
