by Pim Derwort
The start of a new year is often accompanied by looking back at what happened in the past and looking forward to the year ahead. While it will take a while for the final numbers to be released, in Germany the Energiewende appears to have come along strongly in 2017. Initial estimates show that the share of renewable energies in gross energy consumption grew to more than 36 per cent, up considerably from the 31.6 per cent in the previous year. Early in the morning of New Year’s Day, for a brief period, Germany was even powered entirely by renewable energy, the first time in modern history.
However, despite the growing share of renewables, coal remained the most important energy source for German electricity production, with around 37 per cent of gross electricity generation coming from coal (with lignite and hard coal accounting for 22.6% and 14.4% respectively) (source: AG Energiebilanzen). The lack of progress in reducing CO2 emissions has led some to openly cast doubt on the country’s ability to meet its climate ambitions and increased calls to reduce the use of coal in electricity production.
In the following post, I briefly discuss the outlook for a coal phase-out in Germany, arguing that the federal elections of September 2017 provided a short policy window for such reform, which rapidly closed with the collapse of initial coalition discussions. At the start of 2018, it remains unclear whether the incoming government will take up the challenge of phasing out the use of coal in electricity production.
A recent report by Carbon Tracker further concluded that coal in Europe is in a “death spiral”, with more than half of Europe’s coal-fired power plants losing money, and losing 20 per cent of their value since 2010. According to the report, Germany has the largest number of unprofitable coal plants, with RWE and Uniper – the fossil fuel division formerly separated from E.ON – particularly exposed. There is, therefore, a strong economic argument behind calls to actively manage this decline and phase-out coal in electricity generation.
Rogge & Johnstone (2017: 129) argue that, “despite being generally rare and politically challenging to enact, phase out policies are becoming a growing political reality in the context of greater urgency in reducing greenhouse gas emissions”. Indeed, in the aftermath of the 2011 Fukushima earthquake and nuclear disaster, the German government decided to speed up the phase-out of nuclear energy, phasing-out all nuclear-fired power plants in Germany by 2022. And in 2007, the country’s Christian Democratic Union/Christian Social Union (CDU/CSU) and Social Democratic Party (SPD) coalition agreed to phase-out hard-coal mining by 2018.
Nevertheless, calls to rapidly phase out coal in energy generation have not universally been met with enthusiasm. In a televised interview, Reiner Haseloff (CDU, Prime Minister of the formerly East-German state of Sachsen-Anhalt) ruled out an immediate date, stating that there are currently no alternatives for the energy supply, reasonable prices, and the number of jobs associated with the industry. The same sentiment was voiced by Sigmar Gabriel (SPD) who, when serving as Federal Minister for Economic Affairs and Energy in 2016, stated to be unwilling to discuss more rapid phase-out scenario’s without simultaneously talking about realistic scenarios for the creation of sustainable and decently rewarded replacement employment opportunities for those affected by job losses.
So how many jobs are in fact at risk? With respect to the lignite industry, a 2017 study by Arepo Consult, commissioned by the Green Party (Die Grünen) fraction in the German Bundestag, found that the highly mechanised industry accounted for around 20,000 direct jobs in 2016, down from 115,000 in 1991 (see Fig. 1). Over the same period, employment in the hard coal mining industry dropped from around 123,000 to less than 8,000 jobs, with the last mines set to close this year. Another 50,000 indirect jobs are estimated to be generated in the supply chain and supporting industries (see Fig.1 for a development of employment in the sector between 1989 and 2015.
The opening and closing of a Policy Window in 2017
On September 24, 2017, Germany held federal elections to elect a new government. Following Kingdon’s (1984) Multiple Streams Framework, elections often constitute a routine and predictable ‘policy window’ (Howlett, 1998), allowing policy entrepreneurs to move an item onto the formal government agenda. The outcome of these elections provided supporters of a coal phase-out with some hope.
While the sitting CDU/CSU and SPD coalition managed to hold on to a majority of seats in Parliament, both parties experienced a considerable drop in support from the German electorate. As a result, the SPD – under the leadership of Martin Schultz – concluded it could no longer take part in a Grand Coalition and would instead return to the opposition. This left Merkel’s CDU/CSU with only one credible option to form a majority government: a coalition with the liberal Free Democratic Party (FDP) and Green Party (Die Grünen). Formal discussions started on October 18, 2017.
One of the core themes during the discussions was climate policy. While all parties were committed to achieving both German climate ambitions as set out in the 2010 Energy Concept, as well as its international obligations, how these are to be achieved remained a contentious topic. During the negotiations, the Greens demanded the closure of the 20 most CO2-intensive coal-fired power plants by 2020, with the final closure of all remaining ones by 2030. According to reports on the discussions, Merkel countered by offering to withdraw 7GW of coal-generated power from the electricity grid, equating to around fourteen larger coal-fired power plants. On the subject of a coal phase-out, Merkel remained reluctant – due both to the high share of coal in the energy mix and the large number of jobs dependent on it – and the term ‘Kohleausstieg’ was to be avoided.
Unfortunately, it is impossible to know whether the negotiating parties would have been able to overcome their differences and agree on a compromise. Preliminary talks between the parties collapsed on November 20 after the FDP withdrew from the discussions, citing fundamental differences in political convictions and lack of trust, thereby closing the policy window.
The Outlook for 2018 and beyond
In what is widely regarded as a last-ditch attempt to avoid new general elections, and despite earlier misgivings, SPD and CDU/CSU started preliminary talks to form a new coalition on January 7, 2018.
There is some evidence to suggest the formulation of a policy to achieve a coal phase-out may yet be possible. The SPD Manifesto, made public before the general elections, states that the structural change in the energy industry will continue, with special challenges for the regions hitherto dominated by lignite. It argues, therefore, that regional economic structures must be established and developed to promote employment together with the states, affected regions, trade unions, business and citizens, using federal funds to bring together the new economic activities in the affected regions. Furthermore, at an event in Berlin in early December, the leader of the SPD, Martin Schulz, spoke out in favour of a coal phase-out, whilst taking into account employment in the sector.
Nevertheless, there appears to be some disunity within the party, as reported by Greenpeace Magazine one week later. Whilst Minister for the Environment Barbara Hendricks would like to see a coal phase-out within the next 20 to 25 years (2037-2042), others within the party favour a longer timeframe of 30 to 40 years, thus potentially continuing the use of coal into the second half of the twenty-first century. Furthermore, initial reports coming out of the coalition discussions indicate that the involved parties intend to give up on the country’s 2020 Climate Goals, in an admittance that they are unlikely to be met.
Should coalition talks between CDU/CSU and SPD succeed – as looks likely at the time of writing – the country will almost certainly give up on its 2020 targets, a fact that does not bode well for the formulation of a more ambitious coal phase-out strategy in 2018. In the long run, political will on both sides of the isle will be required for more reflected reforms and a managed decay of the coal industry. With fewer and fewer jobs in the sector at risk, and renewables accounting for an ever greater share of electricity production, another policy window will undoubtedly be available for someone willing to go through it.
Pim Derwort is a scientific researcher at PhD candidate at Leuphana University. As a member of the Leverage Points project and research group ‘Governance, Participation and Sustainability’, his research focuses on the institutional dynamics in sustainability transformations from a policy and governance perspective, particularly on the productive potential of failure and decline.