VGB POWERTECH 7 (2021) - International Journal for Generation and Storage of Electricity and Heat

VGB PowerTech 7 l 2021 White Paper: German coal phase-out 360°
and committed to the decisions of an international
union. The challenges of the coal
phase-out are techno-economical, as well
as political.
In this article, the pushing and pulling forces
on the coal phase-out are discussed relative
to the current state-of-affairs.
Challenge
Germany has a long history of coal which
drove the growth of one of the most powerful
industries of the world for decades and
is a significant industrial sector in its own
right once employing ~1million people.
Coal is strongly entrenched to the systems,
including economic and politic, and the
withdrawal will be by no means easy. After
the take-off of Energiewende (German Energy
Transition) in 2000 and the structural
change of EU Emissions Trading Scheme in
2013, fossil fuel powered technologies
slowly shrank in the fuel mix, yet as of 2020
they are still strongly present in the fuel
mix with Lignite (17 %), Hard Coal (7 %)
and Gas (12 %) (F i g u r e 1 ).
On 5th of May 2021, German government
has announced its new proposal for pulling
carbon neutrality target earlier, to 2045.
For the time being, the court approved climate
neutrality target is 2050 with intermediary
milestones agreed at EU level.
German climate protection law (KSG, Bundes-Klimaschutzgesetz)
came into force at
the end of 2019 and sets the annual limits
of emissions for each sector until 2030. The
first target of reduction of greenhouse gases
40 % compared to 1990 levels was met,
with a 2 % overshoot in 2020. The medium-term
target is to cut greenhouse gas
emissions in Germany by at least 55 % by
2030 and therefore, the coal phase-out is
on the table. The emission allowances formerly
allocated to power plants that close
will be removed from the EU ETS and will
not be available to transfer or sell to other
parties.
Coal phase-out fact check:
Emissions: Considering state-of-the-art
coal power plant technology and coal
types used, coal fired power plants cause
the highest net CO 2 equivalent emissions
per kWhe.
Technology: Coal fired power plants
have lifetime of about 50 years and can
run for long hours at a stable output, yet
it usually takes hours-days to start-up.
Economics: Coal was once the major
baseload fuel of many countries. Nowadays
it is economically unfeasible for
many coal power plants to run continuously,
driven out-of-merit by ever increasing
carbon prices versus gas assets
and renewables.
Decarbonization in the power sector is progressing
relatively faster in Germany,
which reflects on the success of the grand
sum. On the other hand, it is important to
consider that progress is not equally successful
in all sectors. The heating and
transport sectors are likely to fail to meet
the 2021 targets short by over 5 million ton
CO 2 equivalent, ~2 % overshoot in total for
heating and transport sectors, according to
2020 trends.
It makes sense to address the coal plants
for reducing the emissions on the midterm.
Heating accounts for 40 % of the energy-related
emissions and strongly relies
on fossil fuels, including oil. Oil still has a
share of 25 % due to a tax benefit in place
for heating buildings.
As free carbon allowances allocated for the
heating sector decreases within the Phase 4
of EU ETS, more rapid decarbonization in
the sector is expected. This will result in
higher electricity demand due to electrification
and PtX based solutions.
Another influence is the extension of heat
and power coupling law (KWKG) providing
subsidies for CHP technologies to 2029.
This is intended to incentivize new builds
and modifications for younger power
plants, favouring retrofitting over decommissioning
premiums.
The German approach
German government is being highly criticized
for the phase-out plan being too slow,
but also for rushing the phase-out. The ultimate
deadline for the complete coal
phase-out is set as the end of 2038, with
the aim of pulling it forward to 2035. Current
schedule and already committed decommissions
in accordance with the coal
phase-out law (KVBG), introduced in August
2020, can be seen in F i g u r e 2 .
2022 and 2030 are the most important
milestones for the target reductions. Lignite
capacity is aimed to be reduced to
15 GW and 9 GW, whereas hard-coal capacity
is to be reduced to 15 GW and 8 GW by
the end of 2022 and 2030, respectively.
The phase-out will unfold on two fronts:
hard-coal and small lignite power plants on
one side, big lignite power plants
(>150 MW) on the other.
For the hard coal and small lignite power
plants, a tender system was designed to acquire
phase-out premium (€/MW) in accordance
with the reduction target volumes
and dates. The first two tender volumes
were already set in the coal phase-out
law (KVBG, Kohleverstromungsbeendi-
80
25
Yearly average gemeration and demand in GW
70
60
50
40
30
20
10
0
20
15
10
5
0
Yearly average EU ETS C allowance price in €/te
Other conventional
Geothermal
Waste
Biomass
Photovoltaics
Offshore wind
Onshore wind
Hydro
Oil
Natural gas
Hard coal
Lignite
Nuclear
Net export
Demand
Carbon price (€/te)
-10
Other Conventional
-5
*EU ETS Carbon prices were provided since 2013, since before there was an oversupply issues in the system whose impact on the prices was recovered with the
restructuring in 2013.
Fig. 1. Share of primary energy sources in the German electricity generation mix from 1991 to 2020.
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