Germany is about to break its coal addiction. Last year, the government created a 28-member “coal commission” — comprising scientists, politicians, environmental campaigners, trade unions, and utilities representatives — with the unenviable mandate of deciding when the country would get clean. Balancing pragmatic considerations with recognition of the reality of climate change, the commission has now set 2038 as the deadline for reaching zero coal, with the withdrawal beginning immediately.
The Wall Street Journal calls it the “world’s dumbest energy policy.” In fact, Germany’s shift is vital and long overdue. The real question is whether it will be enough to support meaningful progress in the global effort to mitigate climate change.
It is scientifically well established that if the world is to keep the average increase in global temperature “well below” 2°C relative to pre-industrial levels — the “safe” limit enshrined in the 2015 Paris climate agreement — no more than another 500 billion to 800 billion tonnes of carbon dioxide can be emitted. On current trends, this would take just 12-20 years.
Instead, the world needs to follow a trajectory called the “carbon law,” which requires reducing carbon dioxide emissions by half each decade until, 30-40 years from now, we have achieved a carbon-free global economy. Growing evidence shows that adhering to the carbon law is technologically feasible and economically attractive. In this process, coal — the most polluting energy source — must be the first to go, exiting the global energy mix entirely by 2030-2035.
This will be particularly challenging for Germany, which, despite its reputation as a climate leader, has long had a dirty secret: the most polluting type of coal — lignite — remains the country’s single biggest source of electricity. Although renewables have penetrated 40 percent of the electricity market, coal still accounts for 38 percent.
A decision to phase out nuclear power, spurred by the 2011 Fukushima disaster, left Germany with a significant energy gap, filled partly by coal. Germany has built 10 new coal-fired power plants since 2011, bringing its total to about 120. As a result, it is set to miss its 2020 emissions goal (a 40 percent reduction, compared to 1990), and, barring decisive action, it could miss its 2030 target (a 55 percent reduction) as well.
The coal commission’s plan — which still needs to be turned into legislation by Chancellor Angela Merkel and the Bundestag — would reduce Germany’s coal emissions from 42 gigawatts today to 30GW by 2022, and to 17GW by 2030. This is a cut of more than 50 percent over one decade, making it even more ambitious than the carbon law trajectory — but only if coal is not replaced by natural gas. Indeed, if the coal phase-out is going to work, it will need to happen alongside a rising carbon price.
In any case, 2038 is still a long way off. A sluggish exit from coal by Germany — the world’s fourth-largest economy — could send a signal to other coal-dependent EU countries that there is no rush. Countries like Hungary, Poland, and the Baltic states may even pursue a coal renaissance. This would further weaken the EU’s climate leadership and its ability to reform its carbon-trading system. Confident that coal will continue to be burned in the long term, investors would keep the money flowing.