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EU ETS to deliver German coal exit: FDP

22 Jun 2017 13:58 (+01:00 GMT)
EU ETS to deliver German coal exit: FDP

London, 22 June (Argus) — Germany's FDP party expects the EU Emissions Trading Scheme (EU ETS) to deliver a slow exit from coal-fired power generation while the Green Party said its manifesto pledge of closing 20 power plants within the next four years could be a red line in any potential coalition talks.

The FDP's Christian Lindner and the Green Party's Cem Ozdemir discussed their parties' energy policy positions ahead of general elections on 24 September, at German energy and water association BDEW's congress in Berlin today.

Lindner reiterated his position that fossil fuel fired plants, including lignite and coal, will be needed as bridge technologies until renewable energy in combination with storage solutions and an electricity grid fit for purpose for small-scale decentralized power generation can deliver security of supply in a cost-efficient way.

The EU ETS will be able to force lignite and coal plants out of the system, albeit slowly but in time to meet goals of being virtually carbon neutral by 2050, Lindner said. But the FDP candidate for Germany's general elections dismissed a proposal by French president Emmanuel Macron, made in his manifesto pledge before the recent elections, to introduce an EU-wide carbon floor price.

Given the high share of low-carbon emitting nuclear power in the French electricity generation the proposal had little to do with climate protection efforts and more with trying to reduce Germany's trade surplus, Lindner said.

The Green Party in its election manifesto included plans to immediately retire 20 of Germany's highest emitting lignite and coal power plant and phase-out the remaining plants within 20 years. Should the party form part of Germany's next coalition government, it would focus on the next four years and on its pledge to close the country's 20 dirtiest plans by 2021, Ozdemir said. "We also would have to start the phase out process of lignite and coal in the next four years which we would push forward in the next decade, should we get another mandate".

Plans to force individual coal and lignite-fired plants into retirement within the next four years would raise legal difficulties and open up the new government to compensation claims by plant operators for restricting property rights, Lindner said, referring to compensation pay-outs in relation to the German nuclear phase-out decision.

Recent regional elections in the north German state of Schleswig Holstein earlier this month resulted in a three-year coalition between the CDU, the senior coalition partner, the FDP and the Green Party. This so-called Jamaica coalition is widely seen as a test for a potential national link-up between the three parties should Chancellor Angela Merkel's CDU-CSU union, which is currently leading in the polls, fail to secure a majority for a coalition with the FDP and would seek to avoid a repeat of a big coalition with the SPD party.

Peter Altmaier, from the CDU party and head of the chancellery after serving as environment minister in the previous government, said he cannot make a statement on the future of the German electricity generation mix.

But the current market environment with slightly recovering wholesale power prices means that gas-fired plant operators are "starting to hope again", Altmaier said. And Germany's target, embedded in the renewable energy act (EEG), for renewable energy to meet 40-45pc of the country's gross power demand in 2025 and 55-60pc by 2035, compared with around 32pc last year, inevitably means a dwindling market share for fossil fuels in the power generation sector, he said.

In other sectors such as transport, Germany has to make a decision soon on which technologies to use to decarbonise and start rolling it out on a large scale, Altmaier said.