Rising German Coal Use Imperils European Emissions Deal

Photographer: Krisztian Bocsi/Bloomberg

Germany, Europe’s largest economy, boosted consumption of coal by 13 percent in the past four years. Close

Germany, Europe’s largest economy, boosted consumption of coal by 13 percent in the past four years.

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Photographer: Krisztian Bocsi/Bloomberg

Germany, Europe’s largest economy, boosted consumption of coal by 13 percent in the past four years.

The European Union’s attempt to cap greenhouse-gas emissions over the next 16 years is threatened again as rising pollution from the bloc’s biggest economies shows even developed nations want to burn cheap coal.

Germany, Europe’s largest economy, boosted consumption of the fuel by 13 percent in the past four years, while use in Britain, No. 3 in the region economically, rose 22 percent, statistics from oil company BP Plc show. While Germany pledged to cut heat-trapping gases 55 percent by 2030 from 1990 levels, it’s managed 25 percent so far and is moving in the wrong direction, according to the European Environment Agency.

The EU is seeking to craft a deal in October that would cut greenhouse gases 40 percent by 2030 in the world’s biggest effort to combat global warming since the Kyoto climate treaty of 1997. Countries including Poland, which relies on coal to generate more than 80 percent of its power, want to guarantee their right to use the fuel before signing off on targets they say penalize lower-income nations.

Confronting Coal

“Both the U.K. and Germany are on a collision course with Poland,” Maciej Bukowski, president of the Warsaw Institute of Economic Studies, which has advised Poland on greenhouse gas cuts, said by phone June 17. “To cut emissions, it needs to spend a lot of money up front,” he said, predicting a 50 percent chance the October deadline will slip.

Energy Security

Connie Hedegaard, the EU Climate Action commissioner, sought a deal in the first quarter to bolster the EU’s standing at a United Nations world leaders’ climate summit in September. In March, EU politicians delayed agreeing on the 2030 package until October as Russia annexed Ukraine’s Crimea, boosting the bloc’s focus on energy security.

Germany’s emissions rose even as its production of intermittent wind and solar power climbed fivefold in the past decade. Utilities boosted production from profitable coal-fired plants after Chancellor Angela Merkel decided to close all 17 of the country’s nuclear plants by 2022 in the wake of the Fukushima nuclear disaster in 2011.

Next-year coal for delivery to northwest Europe is down 9 percent this year to $78.75 a metric ton, near the lowest price in five years, according to broker data compiled by Bloomberg.

The U.K. plans to retire all but one of nine atomic generators by 2023. Poland cut its greenhouse-gas output by 14 percent since 1990 as state-owned companies were shuttered during the economic transformation from the communist era.

Visegrad Group

The so-called Visegrad group of former Soviet-controlled countries -- including the Czech Republic, Hungary, Poland and Slovakia -- said in May that the EU’s plans for 2030 put a “disproportionate burden on the lower-income member states.”

The group, named after the town in Hungary where it held its first meeting, was formed in 1991 to boost cooperation among central European countries after the fall of communism. The Visegrad nations had an average annual gross domestic product per person of $15,100 as of the first quarter, compared with $42,300 for Germany and $38,900 in the U.K., data compiled by Bloomberg show.

Under the 40 percent cut proposed in January by the European Commission, the emissions cap in 2030 will be about 3.4 billion tons of carbon dioxide equivalent. Poland could cut emissions by about 25 percent in the period, the Warsaw Institute’s Bukowski said, about half the pace of Germany.

Real Pressure

German fossil-fuel emissions climbed 5.5 percent to 843 million tons in the four years through 2013, the BP data show. To meet its commitment, Germany would have to reduce its pollution by about 379 million tons, a further 45 percent. The BP statistics cover only fossil-fuel burning, which makes up about 88 percent of the nation’s greenhouse gas output.

“There’s real pressure” on German government departments to reverse the nation’s increase in emissions, Michael Schroeren, a spokesman for Germany’s environment ministry, said June 17 by phone. For example, the country is seeking to lower fossil-fuel use in transport, he said.

The nation wants an EU compromise “that allows the ambitious states to stick to the target and the others to follow later; a two-speed solution,” he said. “It’ll be very difficult. We expect Poland to submit expectations and demands that are far-reaching.”

An agreement on the 2030 strategy requires unanimity of the EU heads of state and government.

The capping exercise will “cause quite a shift in the U.K. generating capacity over a relatively short time,” U.K. Energy and Climate Secretary Ed Davey said in a June 9 interview. By law, Britain has to cut emissions 50 percent by 2025 from 1990 levels. The U.K. reduced its carbon output 18 percent, while France cut by 7.2 percent and Italy’s fell 12 percent, according to BP.

Poland’s Output

Without investment in clean energy, Poland’s emissions would rise to 15 percent of the EU’s total in 2030, compared with 8.8 percent in 2012, according to data from the Warsaw institute and the European Environment Agency in Copenhagen. Germany’s share would drop to about 17 percent under its target from 21 percent.

Joanna Jozefiak, a spokeswoman for Poland’s environment ministry, declined to comment on what the country is seeking in the negotiations.

“There’s a bit of nervousness,” though that’s not changing the October deadline, Jos Delbeke, director general for climate at the European Commission, said June 12 in an interview.

Climate Pact

Failure of the EU to reach a deal this year risks diluting the global climate agreement due to be forged in Paris in December 2015, said Robert Stavins, director of Harvard University’s Environmental Economics Program. A deal will probably attempt to link national pledges to curb greenhouse gases, based on “domestic realities,” he said.

“If it requires unanimity, it’s going to be very, very difficult,” Stavins said. “Poland is right to be concerned for its economy.”

The cost of emitting one ton of carbon dioxide in the EU’s emissions market has slumped 81 percent since 2008 as the financial crisis cut industrial demand, fueling a surplus of the pollution rights. Benchmark carbon futures for December have risen 15 percent this year to 5.69 euros ($7.71) a ton on London’s ICE Futures Europe exchange as the bloc’s policy makers debate measures to reduce the glut.

Europe needs to spend more than 2 trillion euros over the coming decades to upgrade its aging power plants and improve energy infrastructure, according to an advisory panel’s report to 14 EU ministers obtained on June 18 by Bloomberg News.

European governments handed out $57 billion in 2012 for green energy projects, more than half of the global $101 billion, according to the International Energy Agency in Paris.

“If they can agree this target in 2014, it would be a major step towards an ambitious global agreement on climate change next year,” Simon Upton, director of environment for the Organisation for Economic Cooperation and Development in Paris, said yesterday. “If they fail, it will signal a significant loss of momentum on the part of a region that has traditionally been a leader.”

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Andrew Reierson, Dan Stets

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