Montel Magazine 4 - 2020 - Page 34

Last word

Walking while chewing

Many have argued Germany could not ditch nuclear and coal at the same time . The conventional wisdom in the columns of the business press has been ubiquitous : Germany ’ s decision to close all nuclear reactors by 2022 made it dependent on coal . Its enormous power exports were just a reflection of the renewable energy it had to offload . The nuclear exit was a folly that locked in the high coal burn of the last decade .
This year proved these arguments exaggerated . German coal generation has collapsed by nearly a third in 2020 . The three main reasons are : rising carbon costs , low gas prices and renewable energy growth . Renewables now meet roughly half of German power demand , coal about a fifth . The reason coal burn was stubbornly high for much of the past decade was because two of the three factors above were absent . Carbon was cheap , gas expensive . This gave German coal an advantage over other countries ’ power mixes . So lignite plants ran around the clock and German power exports boomed . That is no longer the case . Germany still exports more electricity than it imports – but the surplus has shrunk to a fraction of its 2017 peak .
Coal got pushed this year to the right of the supply curve . That meant it bore the brunt of the coronavirus slump in demand . There is no reason it could not have been pushed there earlier . Supply remains secure and the country is still a net exporter – proving Germany was not nearly as coal dependent as some made out . It was simply arbitraging its surplus capacity with its neighbours all along .
Berlin could exit coal more swiftly – and it should . It certainly should have done more to date . But we probably won ’ t have to wait until this year ’ s legislated date of 2038 for the last coal plant to close : their prospects look worse by the year – and ours on a warming planet too . Public demands to end coal will only intensify . There ’ s no reason Germany can ’ t walk and chew gum at the same time .
By Nathan Witkop
Montel Magazine 4 – 2020