Germany turns on coal power, France turns on green energy

In November the Bloomberg headline read, “Germany Is Turning Gas-Fired Power Plants Back On”. Yesterday, things got even stranger: “New German Coal Plant Could Threaten Merkel’s Final Climate Push”.

A new coal power plant is not exactly what climate campaigners had in mind when they idolised Germany’s Energiewende…

The narrative Germany’s government is spinning goes something like this: after Fukushima we had to shut down nuclear power. The only ready alternative was coal. Hence the increase in emissions in the short term. But by 2038, we’ll be off coal.

But 2038 is ages away…

Going off coal in 18 years’ time sounds good. But I’m not convinced it’ll satisfy the campaigners. They’ll grow up by then.

And Bloomberg’s graph shows the gas being sold as a solution in the meantime is still a heavy polluter too.

But opening a new coal power plant is absurd. It’s just the ridicule that climate change sceptics were looking for. At least everyone is happy. Well, both extremes in the debate. The campaigners get to campaign about the coal plant, regardless which way they’re campaigning – for or against.

The German government’s line on the embarrassing new coal plant specifically is a little craftier. The pitch is to close higher pollution older coal power plants as the new ones are more efficient. “There is understanding from the government that it makes sense to turn on the most efficient plant,” Uniper CEO Andreas Schierenbeck said in an interview with Bloomberg in November. Besides, the new plant will be shut down by 2038 anyway, in time for the official data Germany will go coalless. This could be the last new coal plant in Europe.

But why build one given all the alternatives available? Part of the game being played is subsidies, Bloomberg’s journalists reckon. The German government has pledged aid to the regions of Germany set to be worst hit by the coal ban. The coal companies are fighting over those subsidies by changing their business models to maximise the chance of getting their hands on some of that cash. The German government is effectively subsidising coal by helping to pay for its future decommissioning…

The new coal plant that’s in the news is being built by a listed company called Uniper. About 30% of Uniper’s power comes from coal and half from gas. The stock has almost trebled in value since it was spun off and listed in 2016. Not bad for believers in E.ON’s unwanted fossil fuel assets.

Coal and gas powered Uniper share price on fire

Source: Yahoo Finance

To summarise, Germany is about to open a coal power plant run by a fossil fuel company, whose share price has trebled since it was dumped with unwanted fossil fuel assets, because the subsidies for closing down coal power plants are so generous. And this under the much favoured Energiewende.

What a complete cockup.  

But it’s appearances that climate change campaigners care about. “It cannot be that Germany’s coal exit will be marked by the opening of one of the biggest coal-fired power stations in Europe,” said senior Green Party politician Oliver Krischer in an email to Bloomberg. But it is. That’s what you get for abandoning nuclear power.

But over in France, it’s even worse. Or better, depending on how you see things.

The country relies on nuclear for 80% of its power, defeating the purpose of Germany going nuclear free, if you ask me. They should’ve learned that from Chernobyl at least.

But it’s this statistic from my Capital & Conflict colleague Boaz Shoshan that had me coughing and spluttering. Around 80% of French cars run on diesel. Other estimates are at 70%. It depends on how you classify “car”.

French government plans to cut diesel subsidies to reflect VW’s dieselgate discoveries is causing uproar. Uproar that goes by the name of Gilet Jaunes.

This means you can trace the Gilet Jaunes protest back to misguided green energy policies of the past. Subsidising and favouring diesel for its lower CO2 emissions was a mistake. It’s the Maginot Line of green energy which the Germans just manoeuvred around to sell their diesel Volkswagens.  

But here’s the key, as far as I’m concerned: reversing that green policy when it went wrong caused a political crisis.

Who will win between the climate change campaigners and the Gilet Jaunes in France? I wouldn’t mind seeing that play out given what commuters did to Extinction Rebellion in London.

While governments in Germany and France are making a complete mess of things, the UK government is performing surprisingly well on green energy. “UK generated a record 83 days of electricity without coal in 2019” reports CityAM.

But that’s barely the beginning. Because it’s the energy which Britain is moving towards that’s truly astonishing. And our editor Eoin Treacy has been on to the story for months now. More on that tomorrow. 

Until next time,

Nick Hubble
Editor, Southbank Investment Research

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Category: Energy

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