Germany Abandons Coal... Slowly

Source: Photographer by Michele Tantussi/Bloomberg

An employee walks past a giant wall of mined lignite, or brown coal, at Vattenfall AB's Jaenschwalde open coal mine in Cottbus, Germany. Close

An employee walks past a giant wall of mined lignite, or brown coal, at Vattenfall AB's... Read More

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Source: Photographer by Michele Tantussi/Bloomberg

An employee walks past a giant wall of mined lignite, or brown coal, at Vattenfall AB's Jaenschwalde open coal mine in Cottbus, Germany.

Renewable energy now makes up 20 percent of Germany’s energy mix, exceeding nuclear, natural gas and hard coal, an industry group reported last week.

It’s enough to encourage clean tech fans everywhere, particularly those who miss the rest of the picture: clean energy doesn’t come in first overall.

First-place distinction goes to high-carbon brown coal, which makes up 25 percent of the overall energy mix. Brown coal is an old part of Europe's energy mix, and it's not exactly fleeing the portfolio -- not in the short term. Also known as lignite, brown coal is abundant, accessible, and burns in traditional power plants that operate for decades.

RWE, one of the top five energy companies in Europe, is currently building two new 1,100-megawatt lignite-fired units in West Rhine, Westphalia.  Germany decided after the Fukushima nuclear crisis to retire its reactors in 2022. However, Germans aren’t going to abandon the need for baseload electricity, and brown coal certainly fits that purpose.

Within renewables, wind is the biggest producer, at 8 percent of the total, followed by biomass at 5 percent. Solar-friendly policies enabled Germany to deploy photovoltaics quickly the last three years. Solar and hydro are now tied at 3 percent of the overall total. Last comes the euphonious Siedlungsabfälle, the single German word meaning "municipal waste,” at 1 percent.

Germany is Europe’s bellwether for renewable energy. It is both the largest EU economy and its largest single investor in renewable energy. Germany will absorb almost a third of all EU renewable energy investment to 2030. The nation’s energy push is encouraged by feed-in tariffs, which are payments to organizations that generate electricity from renewable sources and feed it back to the power grid.

As Germany goes, so goes the EU. While not as far along as Germany, the rest of the EU has the most aggressive goals for renewable energy of any country or economic bloc in the world: 20 percent of final energy consumption by 2020. Germany is there already. The EU is on track to exceed its own directive of 20 percent renewable energy by 2020, according to Bloomberg New Energy Finance analysis, with most of the decline in fossil fuel generation coming from coal plant retirements.  By 2030, we predict that renewable energy and large hydro will be 45 percent of the energy mix in the EU-27. Coal will be barely more than 10 percent, forced down as more renewables and natural gas power plants are built and carbon emissions standards tighten.

The power industry plans in decades, not years. The German numbers released last week should be read in that context. Coal, despite multibillion-dollar new builds like RWE's, is on its way out.

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