Coal exit in Germany until 2038 and its implications for generation and emissions until 2030

In this short article I want to present the outcomes of the coal phase-out plan of a commission in Germany tasked to work out a deal between many conflicting stakeholders. Also the effects of the phase-out of coal as envisioned by the Coal Commission in terms of electricity generation and CO2-emissions are outlined in a simplified manner.

Now it is up to the German government to draft a binding law to enforce the coal exit and to give stability to this important phase of the country’s energy transition.

Extended compromise

January 2019 was the month of the Coal Commission on the finishing line. Since August 2018, negotiations have been held in the commission on the phasing out of coal-fired power generation in Germany and providing structural aid for the affected regions.

From Friday 25th to the early morning of 26th of January, a proposal for the closure of the German coal-fired power plants (currently 42.5 GW) was worked out in a marathon meeting of the Coal Commission. According to the 300-page paper, 12.5 GW of coal-fired power capacity will be taken off the grid by 2022, containing a shutdown of 5.5 GW already being known for several months. Thus 15 GW of lignite and 15 GW of hard coal can still be online after 2022. Further power plants are to be shut down between 2023 and 2030, so that by 2030 a maximum of 9 GW of lignite and 8 GW of hard coal-fired power plants will still be on the market. The last coal-fired power plant is to be taken off the grid by 2038 at the latest, as proposed by the Commission. However, a review in 2032 could also move the shutdown forward to 2035 (source: platts).

Figure 1 depicts the general phase-out plan according to the commission, while it is not yet decided which power plants go offline at which point in time.

Coal exit plan

Figure 1: German coal phase-out in time according to coal commission (source: Author)

Effects on electricity generation and CO2-emissions – some rough calculations

Due to the interconnection and the highly volatile electricity market in Europe, making a guess on saved CO2-emissions due to the current coal phase-out plan is difficult. Many underlying assumptions, such as the expansion of renewables in Germany and surrounding countries, the extension of cross-border grid capacity, imports of electricity, the role of gas in the generation mix and the price of CO2-emissions in the European emission trading system have to be taken into account.

However based on a rough estimate of emissions from hard-coal and lignite-fired power plants and the phase-out plan some preliminary numbers can be derived. Some assumptions are necessary here:

First of all, a lignite-fired power plant in Germany emits about 1000 gCO2/kWh of generated electricity, while for hard-coal, the number is lower at roughly 780 gCO2/kWh (source: Federal Environment Agency). The average full load hours of lignite and hard-coal generation in Germany, i.e. how many hours a power plant runs on its full capacity during one year, since 2010 stand at about 6500 and 3500 hours, respectively (source: German Federation of Energy and Water).

For simplicity, let us assume that half of the lost generation from coal is taken over by renewable energy and the other half by gas generation (the two sources also have to take over the missing generation from nuclear, which is being phased out until the end of 2022). Another assumption is that the electricity consumption and generation of Germany stays the same. This might only true if electric vehicles and heat pumps do not come prevalent, or if efficiency in electricity usage increases. Otherwise consumption of electricity might rather increase. In this simple example, where consumption and generation volumes stay the same, and generation of taken over by gas and renewables, this would imply that the full load hours of the remaining coal power stations stay the same (in reality a lower capacity of coal power plants on the market and CO2-emissions prices of around 20 to 30 EUR/ton, might lead to higher full load hours of coal). Therefore the share of gas and renewable generation in the electricity mix rises. Efficient natural gas turbines emit about 375 gCO2/kWh (source: Statista).

In 2018 lignite generated 146 TWh, hard-coal 83 TWh and nuclear 76 TWh of electricity in Germany. Gas generation stood at 83 TWh , while renewables generated 230 TWh (source: AG Energiebilanzen). With the capacity reductions in coal and the full load hour assumptions from above, lignite would only generate 97.5 TWh, hard coal only 52.5 TWh and nuclear would have been phased out in 2022, meaning that both gas and renewable generation would have to increase by at least half of the difference in generation between 2018 and 2022. We do consider the offsetting of nuclear generation by gas and renewables on equal shares.

Figure 2 shows the generation of electricity of coal, gas, nuclear and renewables according to our assumption in Germany for relevant future years. While coal clearly loses due to the phase-out, generation in gas turbines and renewables increases by about 110 TWh each until 2030 to achieve more than 190 and almost 340 TWh, respectively.

Generation in Germany

Figure 2: Generation from lignite, hard coal, natural gas, renewables and nuclear in Germany in TWh under the proposed caol exit (source: Author)

Such an increase in renewable generation would be short of Germany’s goal of 65 per cent renewable electricity consumption by 2030 by 10 percentage points, however. Also, the current expansion of renewables is too slow to achieve the 65 per cent target.

This shift in generation to gas and renewables has effects on the CO2-emission of the German power sector. Clearly, the reduction in generation from lignite could reduce the emissions in the electricity sector drastically. From almost 240 mil. tonnes down to just above 150 mil. tonnes until 2030, as figure 3 shows. This of course only considers lignite, hard coal and gas generation in the electricity sector and does not take into account emissions from oil and waste power plants or district heating.

Emissions in Germany

Figure 3: CO2-emissions from lignite, hard coal and gas in Germany in mil. tonnes under the proposed coal exit (source: Author)

The target of Germany is to reduce its CO2-emissions in the energy sector to 175-183 mil tonnes by 2030, i.e. 61-62 per cent below its 1990 level of 466 mio. tonnes (source: Federal Environment Agency) With the above assumptions, which certainly do not capture the entire complexity of the electricity market, nor the interactions between the heating and transport sector and the electricity sector and therefore rather overestimates the emission reduction effects of the phase-out, the goal of reducing the country´s emissions in the energy sector until 2030 could be in reach with the current coal phase-out proposal. Other sectors such as the transport, buildings the industry or agriculture seem much more likely to miss their sectoral reduction targets, which requires an overachievement in the electricity sector.

More efforts needed

In the longer run of up to 2050, the reduction in greenhouse gas emissions also in the energy sector however has to be accelerated even further to reach the target of 80 to 95 per cent total emission reduction compared to 1990. In our above example that would mean that the reliance on gas generation has to give way to higher shares of renewables or less consumption and generation. Thus the current proposal for a coal exit until 2038 can only be the first step towards a low-carbon energy system.

A much higher expansion of renewables is therefore a necessity is Germany to come back on track of its climate protection targets of 2050. Efficiency measures have to increase as well. Decreeing lifestyle changes is generally a political no-go in Germany, however the target of lowering CO2-emissions to 80 or even 95 per cent along with climate change might necessitate a much more profound transformation of our society than only a switch from coal to gas and renewables.




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