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Newsletter August 2024

Germany – Update Power Plant Strategy, risks in financing renewables’ growth

In February, the federal government presented its “Power Plant Strategy”: the con­struc­tion of 4×25 GW fossil gas-fired power plants, which were to be converted to green hydro­gen only in the second half of the 2030s, so as to combine volatile wind and PV power generation with flexible power generation as needed for reliable power supply.

Other flex­ible power sources or a direct transition to green hydrogen power plants were exclu­ded without further justification. And alternatives are available: a simple retrofitting of existing biogas plants from base load to peak load will achieve

  • 30(!) GW of CO2-free flexible power generation – faster than fossil gas-fired power plants
  • 6 billion € lower life-cycle costs for each GW of capacity than peak fossil gas power plants converted to green hydrogen foreseen in the “power plant strategy”
  • keeping the 10% of today’s German electricity generation currently provided by bio­gas remain CO2-free (they would otherwise be retired in the coming years).

With others, including the Council of German States (Bundesrat), the German Rene­wa­ble Energy Association (BEE), the Energy Watch Group advocated using biogas power plants for peak load and including them in Germany’s power plant strategy. This included

  • publishing a short study on the power plant strategy.
  • hosting of the “Green Power Plant Summit” at the Brandenburg Gate with the energy and climate parliamentary speakers of SPD, CDU, and Die Linke and an energy policy specialist of Bündnis 90/Die Grünen.

“Renewable energy has priority! No fossil fuel power plant that could already be re­placed by renewables is legitimate. But replacement must also be feasible.” – Nina Scheer, SPD 

“Simply retrofitting the already existing biogas power plants from base load to peak load creates over 10 GW of flexible capacity. That is more cost-effective than the govern­ment’s plan for new gas-fired power plants.” – Thomas Heilman, CDU

  • Support of discussions with Minister Habeck and his team on the issues with analysis and argumentation.

Until summer, the BMWK (Federal Ministry for Economic Affairs and Climate Action) con­tinued to exclude peak load biogas power plants from its power plant strategy. Then in August, Minister Habeck declared the conversion of biogas power plants to peak load a key element of future power generation!

This is an important step towards building the flexible electricity generating capa­city necessary to match the ramp-up of wind and PV power. The next decisive steps are the implementation in legislation and peak power plant tenders.

 

Global news – an elephant in the room and encouraging trends 

In 2023, global warming reached the 1.5°C threshold. 2024 is well on track to be even warmer. Even without detailed weather modeling it is safe to say, that 1.5°C warming is here to stay – and will be exceeded with further CO2-emissions. UN Secretary-General Guterres clearly describes the current climate outlook as a “path to climate hell”, if decisive action is not taken immediately.

In other words,

  • the world’s remaining CO2-budget is zero
  • the obvious minimum con­sequence in keeping with the Paris Agreement is an imme­di­ate worldwide stop to any further invest­ment in fossil fuel production and con­sump­tion: no new or expanded fossil powered electricity gene­ra­tion, heating and cooling systems, transport or industrial processes.
  • current national plans – designed to meet the stipulations of the Paris Agreement – with a gradual reduction of CO2-emis­sions until 2040, 2045 or 2050 are mute. We need zero emissions plus carbon sinks.

So far, these facts have largely been treated as the “elephant in the room”: they have hardly been addressed in national climate policy debates, much less led to action, for fear of the political and economic “costs” an acknowledgement would have.

These “costs” would be greatly mitigated, if a majority of developed and threshold coun­tries act on them simultaneously. We wish the government representatives in the upcoming G7, G20 and COP summits the courage to take that kind of step together.

There have been multilateral steps in that direction but not whole-hearted action: at the COP26 in Glasgow 2021, 40 countries pledged to “shift away” from coal – but not to “stop” invest­ment in coal and the major coal users such as China and the USA did not sign up. Also at that COP, 21 countries including the USA, pledged to stop public financing of fossil fuel projects abroad – but neither private nor domestic financing of fossil fuel projects.

Encouraging trends in this situation are that – other than 5 or 10 years ago,

  • we see that national and regional climate policies do work: CO2-emissions in the EU have steadily been coming down since 2002, in the USA since 2007 and China’s CO2-emis­sions are expected to peak in 2024 – well before the Chinese govern­ment’s official 2030 target. The main remaining challenge is to accelerate climate action.
  • The global production capacity for PV, batteries, BEV and other clean technology getting to rapidly replace fossil fuels is in place at competitive cost. The main remaining challenge is how to quickly deploy these worldwide without incurring the politi­cal and economic costs of Chinese market domination.

Stopping all further investment in fossil fuel assets is a very effective move to make in terms of physical impact und changing mindsets. Doing this jointly with other nations greatly reduces the associated economic and political costs. That is the message EWG is conveying to policy makers as they are returning from their summer (or winter) break.