In 2014, more than a quarter of German electricity production was based on Renewable Energies (RES). At the same time the German electricity system emits still more CO2 than in recent years. In fact, carbon dioxide emissions increased in 2012 and 2013 – driven by low ETS carbon prices and low cost of electricity generation from lignite.
The effect follows simple economic principles: Electricity production based on hard coal and particularly on lignite is characterized by significantly lower marginal costs than gas-based electricity. The situation exacerbated in recent years because of sinking costs for hard coal on the world market and a permanently low CO2-certificate-price. Additionally, steadily sinking wholesale power prices led to increasing electricity exports from Germany and consequently in higher CO2-emissions on the German climate account.
However, if Germany is to meet its reduction target of -40% greenhouse gas emissions in 2020 versus 1990 levels, a strategy towards a stepwise decrease of generation using lignite and hard coal is indispensable. More and more stakeholders in the climate debate do no longer believe that emission targets can be achieved under the EU-Emission Trading System (ETS) alone. They are pledging for additional instruments, in particular to reduce CO2 emissions from lignite and hard coal fired power plants.
The long-term perspective is even more challenging: Under the EU 2030 target of at least -40% reduction, this requires Germany to reduce its greenhouse gas emissions by roughly 55% by 2030 – implying a massive fuel switch from coal to gas and RES.
Agora’s role to address the so called “Energiewendeparadox” can be to help negotiate a public consensus on how to phase out coal in a socially acceptable way.