Government coal subsidies must be stopped

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Protestors against government coal subsidies in Lima, Peru [adoptnegotiator1/Flickr]

 If the EU and its member states are to achieve their climate targets, they need to make decisive efforts to completely eliminate the use of coal. A vital first step would be to immediately stop fossil fuel subsidies to the coal industry, writes Wendel Trio.

Wendel Trio is director of Climate Action Network Europe.

Germany has invested significant time and money to secure its leadership on climate change. However, due to its increased use of coal, the country is walking a fine line between missing its 2020 climate target and staying on track to achieve it. Its struggle shows that only a complete phase out of coal, and the huge subsidies that support coal and other fossil fuels, can go in line with climate ambitions of the EU and its member states.

Without additional efforts, Germany would miss its 2020 climate target of a 40% reduction in CO2 emissions (compared to 1990) by at least 7%, equivalent to 87 million tonnes of CO2. Therefore the German governments newly agreed Climate Action Plan, announced this Wednesday, is a positive step. It spells out new measures that will help to meet the target, including compelling the power sector to reduce emissions by at least 22 million tonnes, which equals shutting down the first few coal power plants.

This announcement breaks the seeming immunity from change that the German coal industry has experienced up to now. However, it is only a declaration and must be translated into law next year. Worryingly, the plan lacks concrete details as to how it will be implemented.

Germany’s greenhouse gas emissions have risen over the last four years due to an increase in electricity generation from coal. Though Germany is speaking out in favour of climate action, it produces the highest overall amount of electricity from burning coal than any other EU country.

It also has some of the continent’s dirtiest coal power plants. Due to the relatively low price of coal and of CO2 emission allowances in the last years, many of the country’s coal-fired plants, especially lignite ones, are now running at or near full capacity. Contrary to the popular myth, the increase of coal-based generation is not linked to the nuclear phase out.

Cheap coal energy an illusion

Cheap energy from coal is an expensive illusion. Market forces ignore both the costs of damage to environment and peoples’ health caused by the mining and burning of coal, and the public finance needed to support to coal industry. The recent report we produced with CIDSE on fossil fuel subsidies in Europe, suggests that cumulatively for the 13 years between 1999 and 2011, Germany allocated at least €47.5bn to fossil fuel production subsidies, out of which vast majority, approximately €30bn was spent on coal.

Germany is by no means the only guilty party. The richest ten EU Member States have poured at least €78 billion euro into this dirty business. A lack of transparency and obligatory reporting on fossil fuel subsidies means this number is likely well below the reality.

If the EU and its member states are to achieve their climate targets, they need to make decisive efforts to completely eliminate the use of coal. One of the key actions to achieve this goal is to immediately phase out all financial subsidies provided to the coal industry.

Coal has no place in our future energy mix. The rapid development of renewables means that in many countries new solar and wind farms are cheaper than fossil fuels and that by mid-century clean technologies can completely power our society. By moving away from coal, countries will not only be securing a safer future, but also embracing a wide range of benefits, regarding competitiveness, energy security, jobs and public health.

The announcement by the German government coincides with global climate negotiations in Lima, Peru, where progress needs to be made in the negotiations on a new international climate agreement, that will enable us to avoid dangerous climate change. It will focus on actions to be taken after 2020, but for it to be a success, more steps are needed to increase climate action prior to 2020. In order to stay below the agreed threshold of a maximum global temperature rise of 2ºC, current efforts needs to be drastically increased.

The German announcement is a good first step, but more needs to be done in Germany and elsewhere. European governments can start with phasing out polluting fossil fuel subsidies. They can also take further measures to ensure they achieve the long agreed target for reducing energy consumption by 20% by 2020. They can start dealing with the failing emissions trading scheme, well before 2020. 

Climate Action Network

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