In this section, we presented and analyzed implications of a coal-exit on German and European electricity generation, trade accounts and its contribution to greenhouse gas emission reduction.
3.1. Generation, Trade and Emissions in Germany
In the 2010s, a significant part of Germany’s domestically generated electricity was exported. The net export surplus amounted to 53.7 TWh in 2016 [24
]. Model results show that closing coal power plants ahead of their technical lifetime was likely to consolidate the German trade balance, as illustrated in Figure 2
. In 2020 (Figure 2
a), gross generation in Germany totals 669 TWh without additional energy policies, with 95 TWh net exports. When limiting the annual operating time of older coal power plants (REF-flh), total generation from coal power plants decreased by some 100 TWh, which was equally shared between hard coal and lignite power plants. This was partially offset by a higher gas output and strongly diminished net exports. The retirement of lignite-fired power plants in the MODERATE and RAPID exit scenario yielded a reduction of lignite generation of 35 and 65 TWh, respectively. This translated into a slight increase in gas generation and a significant decrease of net exports to neighboring countries at just below the same amount. When limiting the annual operational time of aged coal power plants, a fuel switch from coal to gas occurred. This is feasible, since, in the base case (REF), low-cost coal-based electricity pushed more cost-intensive gas power pants out of market. This result is in line with previous research [13
]. For instance, in the MODERATE-flh scenario, lignite and hard coal generation lowered by 67 and 56 TWh, respectively, which was partially compensated by a higher output of otherwise idle gas-fired generation capacities in the order of 25 TWh. Similar fuel switches were observable in other coal-reliant countries, such as the United Kingdom [13
]. Additionally, German electricity trade account consolidates as exports diminished by almost 100 TWh. The proportion of variable renewable electricity generation from wind and photovoltaics in Germany will increase, as assumed across all scenarios. Note that, due to our slight overestimation of available coal capacities in AT, DK and the UK, gas generation and net exports in Germany might increase slightly, yet not to a significant extent.
Due to the age-based culling of plants, the complete phase-out of nuclear power, and the switching off of coal-fired power plants in accordance with the phase-out paths, output from conventional generation will continue to decline in Germany in 2030 (Figure 2
b). While under the base case assumptions Germany remains a net exporter of electricity, in all other investigated coal-exit pathways, Germany becomes a net importer of electricity. The more ambitious the coal-exit, the greater Germany’s net imports, totaling a maximum of 55 TWh. This equals the amount of net exports in 2016. Apart from the REF-flh scenario, all lignite power plants were assumed to be retired by 2030. Besides triggering higher net imports, gas and hard coal partially replace the eliminated lignite generation. The more stringent the coal-exit, the less generation from hard coal. Besides these impacts on conventional technologies, a coal-exit also facilitated the expansion of renewable energy sources: In any of the investigated coal-exit scenarios generation from wind increases by 2.5 TWh, such that the proportion of variable renewable electricity generation from wind and photovoltaics in Germany would increase by 2030. Intriguingly, this proportion was equally distributed across all coal-exit scenarios. However, net imports rose with the ambition level of the German coal-exit, which is further discussed in the next chapter. Although differing significantly in 2020, results of the scenarios MODERATE-flh and RAPID exit aligned closely in 2030. While in the former the reduction in generation from hard coal power plants was 4.5 TWh higher than in the latter, the increase of imports was stronger by 4.1 TWh (changes were compared to the base case, respectively). This finding revealed that, in terms of reduction of coal generation, the limitation of the annual operation time in conjunction with the retirement of coal power plants was more effective than the mere command and control approach, although this difference was almost fully compensated by higher imports.
illustrates the capacity expansion pathways for Germany under the RAPID scenario (due to our slight overestimation of available coal capacities in AT, DK and the UK the expansion of renewable energy sources might increase slightly, yet not to a significant extent). Despite the retirement of coal capacity, model results show no capacity additions in 2020. Considering the consolidating effect on the German electricity trade account, this finding suggests that there were structural overcapacities in the German electricity sector. In the short-run, these would be reduced by a German coal-exit.
In contrast, retiring coal capacities before they reach the end of their technical lifetime would affect the cost-efficient mix of generation technologies in 2030. Instead of continued coal-based electricity, the energy system will expand toward renewable energy sources. Wind capacities are expanded by additional 2.5 GW in 2030 in all coal-exit scenarios, while, compared to today’s available power plants stack, none of the coal-exit pathways foresaw an expansion of thermal power plants. Consequently, the ratio of variable renewable capacity to dispatchable conventional capacity increased. This incentivizes the cost-optimal potential of load management. Except from the REF-flh scenario, the value of flexibility in the electricity system to accommodate renewable energy rose, resulting in an expansion of facilities that provided demand-side flexibility (demand-side management) by around 2 GW.
The model results show that a German coal-exit was an appropriate measure to decrease greenhouse gases emitted by the German electricity sector (with biomass being perceived as carbon-neutral). However, Figure 4
illustrates that not all investigated phase-out pathways were effective at meeting Germany’s climate obligations (note that due to our slight overestimation of available coal capacities in AT, DK and the UK the usage of gas-fired power plants in Germany might increase slightly, thus also emissions, yet not to a significant extent). In fact, the sectoral 2020 target could only be achieved in the MODERATE-flh scenario. In this case, a surpass of the carbon savings target in the electricity sector, at just below 4 Mt CO2
equivalents, would be realized and could compensate for conceivable shortfalls in other energy-intensive sectors, such as transport. The mere command and control approach, or the reduction of full load hours only, will not suffice in the short-run; even though reducing full load hours appears to be more efficient in terms of emission reductions. While there are substantial emission reductions in either case, both the MODERATE and RAPID exit cases would miss the 2020 mark by 30% and 16%, respectively. Emission reductions in the REF-flh lag only 7.5%. behind. This finding shows that, in the short run, aged coal-fired power plants are one major driver of German greenhouse gas emissions and that limiting their operations is an efficient means to achieve carbon savings.
In the beginning of the middle of March 2020, societal and economic restrictions were imposed by the German government to limit the spread of the corona virus COVID-19. Economic sectors suffering from these restrictions are numerous: exhibitions, hotel industry, retail sector, manufacturing industries and airlines, just to name a few. Consequently, the economic activity in Germany partially came to a halt, significantly reducing electricity demand from affected sectors, thus also electricity provision from fossil fuels. Foreseeable short-terms effects in terms of Germany’s climate performance amount to additional carbon savings of 5 Mt CO2
equivalents for the period between mid of March to mid of April 2020 [25
]. Long-term effects are highly uncertain as they strongly hinge upon the time it takes until the coronavirus is under control, such that the restrictions can be eased and a resumption of economic activity becomes possible. Additionally, it remains uncertain whether there will be a persistent level shift of electricity demand due to economic effects, or whether it will rise up to pre-COVID-19 levels, or perhaps even beyond due to economic catch-up effects. Initial projections of potential additional carbon savings range from 15 to 35 Mt CO2
equivalents in 2020 (note that the figures for carbon savings due to the economic effects of COVID-19 are not a result of our model-based analysis, but are estimates detailed in [25
Based on the German climate action plan, the admissible sectoral emission budget for 2030 totals 141 Mt CO2
equivalents; in Figure 5
, the dashed line marks this. Difficulties arising in the decarbonization of other carbon- and energy-intensive sectors could yield tremendous reduction deficits in the German emission account. For example, current forecasts predict a short fall of 40–50 Mt of CO2
equivalents by 2030 in the transport sector [26
]. For the sake of illustration of sector target flexibility, Figure 5
displays conditions surrounding an 80% emission reduction in the electricity generation, with the admissible budget totaling 72 Mt CO2
equivalents. The resulting “flexibility corridor” represents emission reductions between 61% and 80% in the electricity sector. Similar to 2020, Germany’s 2030 target can only be reached by intensifying the coal phase-out. Without any additional energy and environmental or climate policies, it will be missed by about 80 Mt CO2
equivalents, which is more than half of the available carbon budget. An ambitious energy policy could realize extensive emission reductions and put Germany on track to achieving its climate targets. Although there would be a slight increase in emissions from gas- and waste-fueled generation in the order of in the order of in total 4.6 Mt CO2
equivalents, the overall net reduction effect is positive: carbon savings could surpass the 2030 target by approximately 25% or 35 Mt CO2
equivalents in the most stringent coal-exit scenarios. Notably, this holds true for both the moderate exit under full load hour restriction (MODERATE-flh) and the mere retirements in the RAPID exit. If lignite power plants were completely phased out, along with some hard coal plants retired (MODERATE), the objective will be exceeded by 10 Mt CO2
equivalents. The German climate targets, however, will have to be adjusted due to the planned increase of the European climate target of −40% to −50%–55% by 2030 (compared to 1990) [27
]. It is to be expected that the moderate exit (MODERATE) would in that case not meet these more stringent targets. The limitation of the operational full load hours only is not even sufficient for meeting Germany’s current 2030 climate targets. Note that, due to our slight underestimation of available coal-based generation capacities in AT, DK and the UK, the usage of gas-fired power plants in Germany might increase slightly, thus also emissions, yet not to a significant extent.
The greenhouse gas effect is a stock-flow problem, requiring a budgetary approach. That is, the total stock of greenhouse gases in the atmosphere is driving the effect, not the annual flow into the atmosphere. Potential carbon savings beyond the sector’s target could offset excess emissions from earlier years 2010–2020. If, contrary to expectations, Germany’s electricity sector also manages to comply with its climate targets in the short-run, a more stringent coal-exit coal could compensate for a lack of emission reductions in other sectors, providing flexibility for Germany’s overall decarbonization at high cost efficiency. This implies that, in the medium-run, phasing out carbon-intensive lignite power plants could pave the way for compliance with Germany’s climate policy targets.
Over the entire modeling horizon (2020–2050), the overall German emission reduction was tremendous, compared to total emissions in the baseline (REF). It ranged from 330 Mt CO2 equivalents, or 29%, in the case of the REF-flh scenario, to more than 460 Mt CO2 equivalents in both the MODERATE-flh and the RAPID scenario, equivalent to over 40% of total emissions in Germany during the period 2020–2050.
3.2. Generation, Trade and Emissions in Europe
As previously mentioned, a substantial part of Germany’s electricity is exported. Domestic power plants in purchasing countries, generating at higher variable cost than the price of the imported electricity, are pushed out of market by Germany’s excess generation according to the merit-order principle and remain idle. However, such imports are only economically viable if the imported electricity cannot be generated domestically at a lower cost. This is why German exports do not compete with domestic nuclear or lignite power plants located in importing countries, which are very likely to have lower variable cost than price of the imported electricity from Germany, thus being cost-competitive relative to German coal-fired power plants. Instead, German exports primarily displace lower-emission power plants (both domestically and abroad), such as gas [29
]. Figure 6
illustrates the shift in generation within and outside Germany that would follow a decline in German coal-fired generation in 2020 (Figure 6
a) and 2030 (Figure 6
b). Figure 7
shows the corresponding shift in trade patterns of Germany and its neighbors, likewise in comparison to the base case (REF) in 2020 (Figure 7
a) and 2030 (Figure 7
b). Three effects become apparent: First, across all coal-exit scenarios there is a fuel switch from high-emission coal generation to technologies incurring lower or zero emissions (see Figure 6
). Idle (and new) capacities entering the market are mainly gas power plants that otherwise would have remained pushed out of market both within and outside Germany, enabling higher net imports in Germany. Note that we conservatively accounted for direct emissions from the provision of electricity, that is, emissions from the combustion of conventional natural gas. Due to our slight overestimation of available coal capacities in AT, DK and the UK, the decrease of coal-based generation would decrease slightly, while gas generation would increase to a similar extent. The overall dynamics illustrated here, however, remain the same.
Second, reduced German coal generation lowers German exports significantly in both 2020 and 2030 (see Figure 7
a,b), as discussed in Section 3.1
. This allows for increased electricity generation of otherwise idle and new capacities outside and within Germany generating at higher marginal cost as well as exports of neighboring countries. The amplitude of this effect is strongly correlated with the extent of the reduction of generation of coal power plants in Germany. In 2020, the effect primarily occurred under full load restriction of aged German coal power plants. This is plausible, as in the command and control approach, power plants with a capacity of only 5 (MODERATE) or 9 (RAPID) GW were assumed to leave the market. All remaining power plants could be operated consistently at an unchanged high capacity factor throughout the year. However, in 2030 the command and control approach appeared to be more effective in consolidating Germany’s trade account than the limitation of the annual operational time of aged power plants alone. Many of the restricted aged power plants dispatching in 2020 would have reached the end of their technical lifetime by 2030. Thus, retiring the latest coal power plants vintage would exert a stronger influence on Germany’s, as well as its neighbor’s, generation and net exports. Due to our slight overestimation of available coal capacities in AT, DK and the UK, the export capacities of these countries might slightly decrease, such that their trade accounts would decrease to a similar extent. The overall dynamics illustrated here, however, remain the same.
Third, there is an extra incentive for expanding renewable energy because the option of cheap imported German coal-fired electricity would no longer be available, thus a German coal-exit enhances European decarbonization by advancing renewable energy sources. In 2020, this is primarily onshore wind in Denmark and Norway, which due to underlying spatially differentiated feed-in characteristics have a comparative cost advantage over Germany. In 2030 this is both solar PV primarily in Italy and wind primarily in the Nordic countries, which, again benefit from beneficial feed-in characteristics compared to Germany (see Figure 6
b). Gerbaulet and Lorenz in [11
] elaborate on this effect. Concerns regarding a German coal phase-out shifting electricity generation to other controversial technologies in neighboring countries—such as French nuclear power or Polish lignite—are unfounded. In fact, nuclear power plants in France already run at full capacity. Our model results show that, in the short-run, there was hardly any change in the French energy mix, with minor gas capacity additions of about 500 MW. In 2030, the expansion of wind power on the order of four to five GW was incentivized. Concomitant, to accommodate the increasing variability induced by these variable generation technology, additional storage facilities holding about two GW were likely to be built. As the capacity factor of the French nuclear power plant fleet remained unchanged, slightly increasing French exports were driven by higher wind output. The same held true for Polish lignite and hard coal power plants, which, at almost 30 GW capacity, represented around half of the coal capacity in Eastern Europe. Due to their economic advantage over other technologies, like gas and imported electricity from Germany, they ran at full capacity in any considered scenario. In contrast, in the short-run, idle gas power plants switched online, which is in line with previous research [13
]. Ten years after, additional investments in 1–3 GW of gas capacity were incentivized by a German coal-exit, presumably slightly increasing Polish net exports. Intriguingly, a more ambitious German coal-exit rather incentivized gas capacity additions, not wind. This effect is plausible for two reasons: First, coal combustion provides more than 70% of today’s electricity in Poland. The majority of Polish coal power plants are older than 30 years, i.e., by 2030 older than 40 years [23
], calling for replacement with a dispatchable technology. Second, decommissioned dispatchable coal capacity in Germany is partially replaced with low-carbon dispatchable gas power plants outside of Germany. Further additional gas capacity additions are likely to occur in the Netherlands and Belgium at the order of 2–3 GW between 2020 and 2030, which dispatch at times with low renewable energy sources availability. On a European level, our model results show that a German coal-exit would advance renewable energy sources. In 2030, additions across Europe total 15–20 GW of Solar PV, 8–10 GW wind and, concomitant, 5–6 GW of storage.
Germany, the largest European economy, is the main polluter within Europe. In 2017, Germany emitted 936 Mt CO2
equivalents, over 20% of European’s overall emissions [30
]. Our model results show that, without any additional policy measures, emissions from Germany’s electricity sector will be higher than the emissions of Germany’s neighboring countries electricity provision altogether in 2020 and 2030. This stresses the relevance of decarbonizing the German electricity sector. Figure 8
shows the effect on emissions from the power sector on Europe relative to the base case scenario (REF), differentiated by fuel type (due to our slight overestimation of available coal capacities in AT, DK and the UK emissions from coal-based generation in these countries might marginally decrease, compensated partially by higher emissions from gas generation. Yet, these changes do not change the overall dynamics illustrated here). Across all coal-exit scenarios, there is fuel switch effect from coal to gas in Germany and other European countries in both 2020 (Figure 8
a) and 2030 (Figure 8
b). Carbon savings associated with a German coal-exit by far outweigh additional emissions from power plants—mostly gas—that partially compensate for decommissioned coal generation. This principally occurs in Belgium, France, Italy, the Netherlands and Poland. Consequently, following dynELMOD’s determination of the most cost-efficient power plant portfolio, a German coal-exit could tremendously benefit Europe’s decarbonization, potentially contributing to achieving Europe’s climate targets.
In the short-term, the strongest net reduction of almost 80 Mt CO2 equivalents could be realized by both imposing a limit on the full load hours of aged power plants and retiring lignite power plants. More precisely, due to the fuel switch, emissions from the power sector outside Germany rose by 29 Mt CO2 equivalents, yet were overcompensated by the 107 Mt CO2 equivalents of carbon savings within Germany. Considering the instruments separately, the limitation of the annual operating time appeared to incentivize a stronger fuel switch, going from coal to gas, with a stronger net effect on European emissions than the command and control approach: the carbon savings totaled 7% and 8% in the REF-flh and MODERATE-flh scenarios, respectively. In the MODERATE and RAPID exit scenarios, savings of 3% and 6% could be achieved.
In 2030, a German coal-exit could even yield stronger reductions, with the following simple relation: The more ambitious the coal-exit, the greater the achieved carbon savings. Both the moderate exit under full load hour restriction (MODERATE-flh) and the RAPID exit pathway could yield emission reductions on the order of 85 Mt CO2
equivalents, which equaled a total reduction of European emissions in the power sector of 17.5%. To provide further perspective, 85 Mt CO2
equivalents equaled Austria’s entire emissions in 2017 [30
]. In both scenarios, additional emissions due to displaced generation outside Germany amounted to approximately 30 Mt CO2
equivalents. However, as these displaced additional emissions were more than recovered by about 115 Mt CO2
equivalents savings within Germany there was a positive net effect for all of Europe. In general, emission transfers did not exceed 7% of the total emissions coming from power provision in Europe; again, being tremendously overcompensated by German savings across all investigated scenarios. In Germany, the greater part of the emission reductions was due to the completed phase-out of lignite. The same holds true at the European level, as the lion’s share of generation from conventional energy sources was reduced in Germany.
For the entire optimization period (2020–2050), the overall net climate impact was immense in all coal-exit scenarios. Compared to total emissions in the baseline (REF), it ranged from 193 Mt CO2 equivalents in the MODERATE scenario to more than 267 Mt CO2 equivalents in the most ambitious scenarios MODERATE-flh and RAPID. The latter was equivalent to an overall European decrease of roughly 9% compared to the baseline during the period 2020–2050.