Reactions to the coal commission6 June 2019
A hard-fought compromise worthy of respect.
“What the members of the coal commission accomplished – namely, working together constructively to reach a compromise – deserves respect”, said Eckhardt Rümmler, Uniper’s chief operating officer, speaking at the company’s 2019 annual results press conference in Düsseldorf on 12 March. “A coal phaseout in Germany would profoundly affect a large number of people in federal states that differ in terms of their starting point, regions, companies (those affected directly and indirectly), industry, and trade unions. As such, it was clear from the outset that no solution would please everyone.” The coal phaseout plan presented the coal commission “is therefore all the more remarkable.”
He stressed it was now important for the German federal government to implement the coal compromise as quickly as possible by transposing it into legislation. “Otherwise, there’s a danger that the hard-won compromise will be lost in endless debate or that segments of the public will distance themselves from it. Germany needs to maintain the momentum of agreement.” But it was also important for Uniper to be able to continue its business. “I get asked by employees at our power stations almost every day what their future holds. They have the right to know how long policymakers have decided that their jobs will last. That’s why it’s important for the German federal government to act swiftly and find a solution in consultation with the companies involved, as the coal commission proposes.”
The Datteln 4 question
One issue particularly important for Uniper was the coal commission’s proposal that negotiations take place regarding compensation for “coal-fired power plants currently under construction.” This formulation obviously refers to Datteln 4 (Uniper’s much delayed 1100 MW hard coal power plant, the only remaining German plant under construction, now due to enter operation in 2020), Eckhardt Rümmler noted. “I consider it absurd from an energy- and climate-policy standpoint to prevent Germany’s most technologically advanced power plant from entering service and instead allowing older and significantly more carbon-intensive plants to continue to operate. Regardless of this, we’ve always said that we want to play a constructive role in the energy transition if the policy environment makes sense. The ultimate decision is a different matter. But it’s important for us to be consulted soon instead of just being talked about. Because every day about 500 people work with commitment, passion, and under significant pressure to make Datteln 4 operational, and the project is making good progress.”
But “we’re not the only ones to have noted this passage in the commission’s report”, said Rümmler. “We’ve received an increasing number of enquiries from contractors, customers, and investors about whether we intend to move forward with Datteln and whether this even makes sense. These enquiries are readily understandable. But our answer is just as simple and straightforward: barring indications to the contrary, we’ll continue to work hard to bring the power plant online.” Datteln 4 is of “great significance for our corporate planning” and “in view of this project’s enormous investments and contractual obligations, substantial negotiations would be required, including with the customers that have contracted energy from the plant.
He therefore appealed to the German federal government: “If Datteln 4 is part of its coal- phaseout plans, then it should speak to us immediately to prevent this issue...from causing collateral damage to employees, customers, investors, and our company as a whole.”
On the other hand if the coal compromise proves successful then “perhaps it will also point the way for our European neighbours.” What the coal commission has already achieved for Germany “has not yet been achieved by other countries that want to end coal-fired power generation: namely, a dialogue that results in specific proposals that attempt to consider all interest groups. Countries like the Netherlands and France have long stated that they want to phase out coal. But so far they haven’t said how they intend to do it.”
On the issue of Germany’s future energy supply, Rümmler observed that the coal commission came to a conclusion that, for Uniper, wasn’t surprising: “If Germany’s transition to a predominantly renewable energy system is to succeed and if the country intends to phase out both nuclear and coal-fired power generation simultaneously and in the near future, then gas will be a key energy source, at least for a transitional period.”
Energy trade association BDEW has also expressed concern about an impending energy supply/demand gap developing, around 2023, due to the phase out of nuclear power and the winding down of coal. “New capacity joining the market is not sufficient to compensate for what is disappearing in the successive exits from coal and nuclear”, says Stefan Kapferer, BDEW managing director. “The bottom line is that we must build, build, build.”
RWE remains the single biggest player in German coal fired power (owning around 47% of the country’s lignite installed capacity and some 10% of the hard coal capacity) but managed to avoid referring to the coal commission in its recent announcement that it is finally cancelling its BoAplus lignite project and plans no further investment in coal or lignite generation (see 'RWE cancels BoAplus and exits coal new build' below).
What about Paris commitments?
Meanwhile, environmentalists, eg think tank Climate Analytics, have pointed out that the 2038 phase out date is incompatible with Paris Agreement 1.5°C limit goals, which amount to all OECD countries phasing out coal by 2030. Climate Analytics also notes that adoption of the 2038 recommendation would make Germany the only EU country with a coal exit date after 2030 (see diagram below), and put it “behind other leading European economies including France and the United Kingdom, both members of the Powering Past Coal Alliance, which is pledged to phase out coal by 2030.
RWE cancels BoAplus and exits coal new build
RWE says its future focus will be on electricity generation from renewables and consequently the company will no longer invest in new build coal-fired power stations. Plans for the 1100 MWe BOAplus project, a lignite power station at the company’s site in Niederaussem – under development since 2012 – have been cancelled. The idea was to replace existing lignite units at the site with a more efficient power plant. But market conditions in recent years, “did not allow the project to be realised.”
Rolf Martin Schmitz, CEO of RWE, said: “New coal-fired power stations no longer have a place in our future-oriented strategy. Following the completion of the [ongoing asset swap] transaction with E.ON, RWE will be one of the world’s leading renewable energy players.”
Given that renewables currently contribute about 40% to the German electricity generation fuel mix, RWE says it is nevertheless convinced that existing coal-fired power stations will be needed to provide backup capacity, although their share in the mix will decline gradually. “New power stations and storage will be required in order to ensure long-term security of supply for an industrial hotspot such as Germany. To this end, the company will invest in renewable energies, storage technologies and low-carbon technologies such as gas- fired power stations if market conditions allow for it.”