ANALYSIS-Germany's coal power plans threaten EU climate goal
14 May 2007 10:13:35 GMT Source: Reuters
By Vera Eckert FRANKFURT, May 14 (Reuters) - Germany is at the forefront of growth of European coal power, with plans to build 15 new coal-fired plants that run counter to the EU's battle against dirty fuel. The European Union aspires to be the world's first low carbon economy and its emissions trading scheme is designed to limit production of carbon dioxide (CO2), which is emitted in large quantities by burning coal. But Germany, the world's sixth largest greenhouse gas emitter, is planning 15 new coal plants by 2012 because it is cheaper to burn coal than more environmentally-friendly gas, even with the added cost of offsetting emissions of CO2, a gas that contributes to global warming. "Only if the price of CO2 emission allowances went up to 45 euros ($60.64) a tonne would coal generation become so unattractive as to tip the balance in favour of gas," said Walter Wintersteller of consultancy Booz Allen. The carbon cost of coal burning is now just over 20 euros a tonne. "Our figures clearly support decisions in favour of coal-based generation," said Stephan Wulf, analyst at private German bank Sal Oppenheim. Gas-fired power plants produce only about half of the CO2 emitted by coal units and are cheaper and quicker to build. But in Germany, gas feedstock is currently 45 percent more expensive than coal, Oppenheim bank said. Power companies and European policy makers are also wary of being overly dependent on imported Russian gas and of the rising cost of gas, which is linked to high oil prices. "It would not make sense to put in gas turbines when this increases the dependence on Russian gas," Wulf said. Whereas the European Union imports a quarter of its gas from Russia, coal is available from a variety of sources across the globe, meaning supplies are less vulnerable to disruption. Germany's preference for coal also stems from strong political opposition to nuclear power, which provides a third of all electricity but under current laws must be phased out by the early 2020s. As Germany can draw on domestic brown coal and also better-quality, cleaner-burning imported hard coal to fire its plants, coal is a logical alternative. OTHER WESTERN EU COUNTRIES ALSO LOOK TO COAL Germany is not alone in looking to build new coal plants. The Netherlands and Britain, for instance, are also considering more coal-fired power stations. (For a table on planned coal plants, please click on [ID:nL10735100]) Currently around 50 percent of Germany's electricity comes from coal, some of which is produced by very polluting plants. A report from the global conservation organisation WWF, entitled "Dirty Thirty", last week said Germany and Britain were each home to 10 of the most polluting coal plants in the EU. [ID:nL10396592] Whereas Germany is showing a strong attachment to coal, Britain is increasingly turning to gas for power generation after new import pipelines lowered its price. But the country needs so much new generation capacity to replace ageing plants that there is still interest in new coal-fired power stations, especially those with carbon capture and storage technology (CCS), which involves pumping CO2 into storage underground or under the sea. The complex technology could also reduce Germany's emissions significantly, but is in its infancy and will only become commercially competitive at carbon prices of above $30 per tonne, analysts say. If it really wants to stem the growth of polluting coal, the EU must take a tougher line. "Coal in power generation use could grow by one percent per annum in the next 25 years in Europe's OECD countries," said coal analyst Brian Ricketts at the International Energy Agency. "But if environmental controls are strict there will be no growth at first, then we will see a decline." (Additional reporting by Muriel Boselli in Paris and Jackie Cowhig, Daniel Fineren and Gerard Wynn in London)
