After energy crisis: Germany no longer knows what to do with all the coal

Two units of the Niederaussem power plant were shut down in 2020/21 and restarted on June 22 to replace gas-fired power plants in the 2022 energy crisis. © imago/Jochen Tack

Germany got through the winter well and needed significantly less coal this year than in the same period last year. So what to do with the mountains of coal?

The greenhouse gases such as CO₂ released by the combustion of gas, oil and coal are the main cause of global warming and its fatal consequences such as droughts, heat waves, hurricanes and floods. In this respect, a report from the Federal Ministry of Economics is good news. "In the first five months of the year, significantly less coal was burned for electricity production than in the previous year," the ministry said on Twitter. But there is a flip side to the coin: Germany is sitting on mountains of coal that it now has to get rid of.

So far, Germany has used around 2023 percent less hard coal for electricity production in 20

One-fifth less hard coal and 15 percent less lignite were needed compared to the same period last year, the Ministry of Economics said on Twitter. According to the ministry, the reasons for the lower coal consumption were mild weather, savings in private households and industry, and fewer electricity exports to Europe.

Although Russian President Vladimir Putin turned off the gas tap, Germany got through the winter well. Coal had gained in importance as the most important energy source for electricity production in Germany last year and compensated for the decline in electricity production from natural gas and nuclear energy. 8.4 percent more coal-fired electricity was fed into the grid in Germany in 2022 than in 2021.

By 2038 at the latest, the last coal-fired power plant in this country is to be shut down. The current downward trend plays into this goal. As a result of the energy crisis, however, coal-fired power plants had to be brought back online from retirement. For the Green Minister of Economic Affairs Robert Habeck, this decision was "bitter" and "a sin in terms of climate policy". In the spring of 2024, the power plants are to go back into reserve. So they would still be available for next winter.

Germany remains sitting on mountains of coal

But there is also the other side of the coin: Germany and other European countries bought large quantities of coal as a result of the energy crisis as a precaution. According to the Federal Statistical Office, Germany imported 35 million tonnes of hard coal in 2022 - and at record prices. Despite the war in Ukraine, Russia initially remained the most important supplier of hard coal.

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Despite forecasts to the contrary, Germany did not fully need the large quantities of the raw material: Germany also increased the import of liquefied natural gas by means of the LNG Acceleration Act, and the mild winter in turn helped to reduce coal consumption. The European Union has burned around eleven percent less coal compared to the previous winter, estimates the British think tank Ember.

Europe is now sitting on these mountains of coal and is apparently trying to get rid of them on the export market as quickly as possible. Habeck expects that the reactivated power plants will probably also be partially needed next winter. However, due to lack of space, hard coal is usually stored outdoors, not ideal for a long shelf life.

Import of hard coal for the years 2018 to 2022 according to the Federal Statistical Office

Germany tries to get rid of coal mountains: analysts also see risk

"An oversupply of coal stocks in Europe has caused coal exports from Western European ports to rise by about 85 percent year-on-year, with some shipments going to North Africa and even India, shipping data showed on Monday," Montel analysts commented on the development on June 5. "It's very unusual to see flows from the Netherlands to Morocco and from Spain to India," Alex Claude, CEO of London-based analyst DBX Commodities, told Bloomberg. This is a sign that demand is lower along the Rhine and greater outside Europe, Claude said.

According to current commodity indices, prices per ton are 90 US dollars (about 84 euros) - less than a quarter of what Germany paid last year. The peak at the end of February 2022 was over 430 US dollars per tonne (about 402 euros). According to analysts, the great haste with which they want to get rid of coal in this country also carries a risk. After all, the emergency solution of nuclear power plants can no longer be used in the coming winter after the final nuclear phase-out. "People have to be careful not to get too carried away," Guillaume Perret, a coal market analyst with Bloomberg, told Bloomberg. "We don't know what's going to happen next winter." Germany may have to buy coal again at higher prices.

After all, the trend of developments seems to be right: The share of renewable energies in global electricity production reached a new record last year, according to the Global Electricity Review 2023 by the think tank Ember. According to this, fossil fuels will be in decline in the future. In addition, Germany became less dependent on Russia. Total imports, but also imports of energy products such as coal, fell by about 90 percent year-on-year in February. (BME)