Brussels against coal subsidies

The Energy and Climate Weekly: Of dearly held coal subsidies, Chinese emissions and dependencies, organic solar cells and African wind farms

Somehow it is a bit strange with the coal mining industry. Only around 33.000 people find their livelihood in the Ruhr and Saar collieries. And yet everyone seems to be hanging on, at least in the two federal states concerned, the small Saarland and the rough North Rhine-Westphalia: the CDU, the traditional wing of the Left Party, the SPD, the Social Democrats, and the Social Democrats. Depending on party-political tastes, mining somehow seems to be the epitome of proletarian culture or the soul of an entire region.

Of course, this is nothing artificial, but has to do with social inertia. The politicians are merely picking up on a basic sentiment among the population, whose everyday culture has been shaped for generations by mining and the steel industry, and with the decline of these former pillars of German capitalism it is clear that this influence will continue to have an impact for a long time to come.

That’s why there has to be a bit of a hullabaloo now, because Brussels is threatening to end the subsidy mess in the coal industry. Since 1974, billions have been spent year after year to keep the German coal industry alive. Initially as a coal penny, until the Federal Constitutional Court put an end to it in 1994. Then directly from federal and state budgets, financed since 1999 by the electricity tax, which charges private customers about two cents per kilowatt hour, but industry only 1.23 cents/kWh.

In the eight years between 1998 and 2005, some 26 billion euros flowed to the mining companies involved under the Coal Subsidies Act, i.e., primarily to the state-owned RAG, whose silverware was spun off at the same time and is currently being floated on the stock market as evonik.

If the EU Commission has its way, this subsidy economy will be the 1. The end of the childbearing period will be in October 2014, and not in 2018 or even later, as was negotiated between the federal and state governments in 2007. In the context of the decisions made at that time, about another ten billion euros in subsidies were paid over the next eight years. In 2012, a further round of negotiations was to be held to decide whether the agreement would really end in 2018 or whether some mines would be kept open beyond that date, as demanded by the SPD in North Rhine-Westphalia, for example.

Die Kommission fordert nun, dass unrentable Zechen – betroffen waren vor allem die deutschen Gruben, aber auch einige spanische und eine rumanische – ab Oktober 2014 nicht mehr von der offentlichen Hand bezuschusst werden durfen. Subsidies have to be degressive (decreasing) until then and linked to a decommissioning plan. If the subsidized mines are operated beyond 2014, the subsidies must be repaid.

The Commission’s decision is not yet legally binding, but has to be approved by the member governments in the Council of Ministers. In this case, a so-called qualified majority is enough. Both the majority of member states and the weighted votes must be in favor. Germany has 29 votes, Spain 27 and Romania 14; too few to prevent a qualified majority. With Poland’s 27 votes it was enough for a blockade, but the mines there can apparently manage without subsidies.

China’s hunger for energy

China’s hunger for energy makes headlines once again. At the beginning of last week, the International Energy Agency in Paris announced that the Middle Kingdom had overtaken the USA and was the world’s largest energy consumer. Converted to the population, however, there is still a long way to go. The 300 million US burgers are still far ahead of the 1.3 billion Chinese.

However, if economic performance is used as a yardstick, the People’s Republic does not come off particularly well: although its gross national product is only a good third of that of the U.S., it now apparently consumes just as much or slightly more energy. To a lesser extent, this can be explained by the fact that the export share of the Chinese economy is higher than that of the U.S. economy. Another factor is that the country is developing very strongly and is investing a much larger share of its national product in the energy-intensive expansion of its infrastructure than is usual in the old industrialized countries.

But China’s high energy consumption is certainly also a sign that many plants and industrial processes are still very wasteful with energy and await modernization. The energy policy there therefore also includes the systematic decommissioning of inefficient old plants by the central economic authorities. As a result, the average efficiency of Chinese coal-fired power plants, for example, already exceeds that of U.S. plants.

Brussel against coal subsidies

Comparison of energy consumption trends in the USA (blue) and China (red). Left scale: Consumption in absolute values; right: per capita. All energy carriers have been converted to olein units. Image: IEA

The government in Beijing (Peking), by the way, immediately denied the IEA data. The Wall Street Journal quotes a spokesman for the Chinese Energy Agency, who still considers the U.S. to be number one. IEA did not understand the Chinese energy industry and energy saving programs properly. The agency, founded by the OECD in the 1970s to collect reliable information on energy markets, complains about the poor quality of Chinese data.

In the end, however, the difference between the Chinese and the IEA figures is not particularly great. From Beijing’s point of view, the People’s Republic is only one percent below US consumption. So it is only a matter of a year or so before China is also number one from its own perspective. The new targets, according to which the emission intensity of the economy, i.e. the amount of CO2 emitted per unit of gross national product, is to be reduced by 40 to 45 percent by 2020 compared with the 2005 level, will probably not change this.

Modernization

In its statement, the IEA also points out the major efforts that the People’s Republic has already made in this field. According to the IEA, energy consumption has doubled since 2000, but gross national product has almost quadrupled in the same period. Thus, without the aggressive modernization of the industrial infrastructure, consumption, and with it the various highly problematic power plant emissions, would have increased even more dramatically.

Paris-based energy market observers also praise the People’s Republic for its massive expansion of renewable energy sources. China has doubled the amount of newly installed wind power capacity several times in a row in recent years. In 2009, around 13.000 megawatts were added to the grid in 2009, and this year the figure is expected to be well over 18.000 MW (see also Growth of growth). If it continues at this pace, the country will install as much new wind power each year as Germany has done in the last 20 years, when about 25 percent of its wind power was installed.000 MW.

Sun for China

Other sectors are also progressing at the breathtaking pace typical of China. Just three or four years ago, the People’s Republic led the world in the production of photovoltaic systems and was already the world’s largest user of solar thermal energy for heating, but it had no experience or industrial know-how in the field of solar thermal power plants. These concentrate the sunlight with mirrors to generate steam, which then drives a turbine.

In the USA, a similar power plant has been in operation since the 1980s, and in Spain, various such plants have been built in recent years, sometimes with parabolic troughs, sometimes with coarse mirror arrays. The difference lies primarily in the operating temperature. Such power plants will also be built in various North African countries in the near future.

Now China is getting into this business and wants to make a big splash: According to the Central Reform and Development Commission, by 2015, 1.500 MW will be installed in the near future, although the first pilot plants of a few MW have so far only existed on the friction board. And photovoltaic production is no longer completely exported, as it was two years ago, but is increasingly finding domestic customers, such as the railroads in Shanghai.

Only the beginning



But all this seems to be only the beginning. In the next ten years, five trillion yuan (572 billion euros) will be invested in the development "clean energies" The English-language Chinese newspaper Global Times reports that the expansion of biogas production from fakery and agricultural waste will play a certain role in the People’s Republic.

However, the sum also includes the expansion of nuclear energy use, which in official announcements from Beijing is often referred to as the "nuclear power plant" "alternative energy" and the development of power plants with CO2 capture. No details were given on the breakdown of the money, but aming 20 to 30 new nuclear power plants in the next ten years, there will still be 400 billion euros to be invested in wind, solar and clean energy Co. .

In the People’s Republic, a certain role is also played by the expansion of biogas production from facies and agricultural waste. In the matter of ethanol and diesel from plants, after an initial euphoria, one is rather cautious because of the tendency towards a difficult food situation.

More imported coal

But all this does not mean that the Middle Kingdom can do without fossil fuels. The goal is to reduce the share of coal in electricity production from the current 70 percent to 63 percent by 2015. However, as the demand for electrical energy is likely to continue to increase – growth in 2009 was just over six percent – coal consumption will also continue to rise initially.

As a result, the world’s largest coal producer (over 40 percent of global demand) became a net importer in 2009. At just under 71 million tons, net imports in the first half of the year were higher than in the first half of 2009. Coal imports doubled in the first half of 2009, according to SteelOrbis, an industry information service. For the government in Beijing, this will be one more reason to push the development of renewable energy sources, because even before environmental protection, its most important motive is to diversify dependencies and keep them as small as possible in view of the growing competition for the last storage locations.

Organic solar cells

In the meantime, the technical development of renewable energy carriers continues apace. Especially in photovoltaics, there is still a lot of room for improvement, which could make electricity from solar cells even more favorable. In the industry, everyone expects that at some point in this decade, solar power will be able to compete directly with fossil fuels. The looming rise in the price of coal makes that date even closer.

At the University of Southern California, scientists have recently made a rough step that brings us closer to this goal. In a press release they inform about the development of flexible thin-film cells, which are bendable. Tufts hopes to print solar cells in the future to significantly reduce manufacturing costs. According to their data, however, the efficiency is a factor of ten lower than that of conventional solar cells.

More wind energy

The spread of the new technology is also spreading. From Sud Africa, project developers report 6.000 MW of new plants that could be built at any time. The only thing missing is the contracts for the purchase of the generated electricity. However, much will depend on the government’s plans for the next few years, which will be presented soon. Among other things, the construction of new nuclear power plants is being considered in the Cape of Good Hope.

Accelerated expansion of wind energy is also reported in other emerging markets. In Chile, which recently has a wind farm with a capacity of 120 MW, Vestas will deliver turbines with a capacity of 500 MW in the next few years, which will be built north of the capital Santiago de Chile. If everything goes according to plan, the first 120 MW will be connected to the grid as early as next year. A similar order of magnitude can be found in Egypt, where in the next ten years 7.200 MW are planned, and the promising start-up of wind farms and solar power plants in Morocco has already been reported on Telepolis.