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Parity for all energy-policy targets

In a report published in 2001 the UN Commission on Sustainable Development stressed that while environmental aspects were a fundamental part of the global energy strategy, no-one should forget that social and economic progress was vital for the development of the third world. It is here that coal has a key role to play, especially through the application of modern combustion technologies.

In the United States the Bush administration is backing a consistent energy-technology offensive that is designed to use the economy to find the right answers to pressing energy issues – both for the present and for the future. The main objective of this policy is to restore to the US, in line with its resource situation and economic interests, the safeguards needed to give the world’s leading economic power greater stability and independence in the energy sector. Even though the Cold War finished more than ten years ago the new security environment is not risk-free and the deregulated global marketplace is still no guarantee for security of supply.

The terrible attack on America that took place on 11th September 2001 shook the world. The unimaginable potential of terrorism and the permanent vulnerability of modern nations had been displayed to horrifying effect. A State’s ability to act on its own account and to take properly targeted action is indispensable for a sustainable energy supply. This applies especially in relation to those regions of the world on which the western industrialized nations are increasingly dependent for their oil and gas supplies. A stable and reliable supply of energy and electricity also creates the best environment for economic growth, employment and social equality. In order to achieve these economic and social objectives the Bush administration wants to mobilize all available energy resources, with priority given to indigenous fuels – including coal. The US is pinning its hopes on modernizing the entire coal technology process in order to ensure that this fuel source is managed in an ecologically responsible way. New “clean coal” technologies of this type are being developed in the US – with some German assistance (RAG). These new processes are now to be backed by a forceful State R & D policy combined with financial incentives totalling US$ 2 billion up to the year 2010, assuming an equal input of private-sector investment, in order to promote coal utilisation on a sustainable level and achieve more rapid reductions in, or even the complete elimination of, environmental emissions. In a survey published in mid-2001 that outlined the current problems facing the US electricity supply system, and especially that of California, the German Institute for Economic Research (DIW) in Berlin established that in spite of the major differences between the American and European energy situations the process of deregulation could also increase the supply risk on this side of the Atlantic in the medium term. In fact the “risk of temporary disruptions to supply without accompanying measures”  was thought to be even greater. According to the DIW it was therefore essential to lay down certain mandatory safety margins for the electricity sector and to set up a risk contingency plan.

In Germany there is a broad consensus that a reliable and environmentally-compatible energy supply system with long-term viability can best be achieved by a balanced energy mix. In this context technology offensives and modernisation are the key to creating a sustainable energy supply base.

Inside the EU Germany’s commitment to reduce its trace-gas emissions is greater than the combined commitment undertaken by all the other EU Member States. A strong set of nationally vested interests elsewhere has created a very unequal situation which the German economy will probably overcome through its own efforts and more particularly by an exceptional process of restructuring in eastern Germany. Probably no other branch of activity has contributed more to this achievement than the German coal industry. Given the highly competitive situation existing in Germany any further raising of the environmental targets would be counterproductive. The Federal Minister for Economic Affairs, Dr. Müller, was therefore justified when, in a paper presented at the Centre for European Economic Research in Mannheim in the summer of 2001, he referred to the climate objectives as being over-ambitious and one-sided. Dr Müller went on to expose the consequences of the current environmental policy, which he said posed a threat to economic growth - a factor that was essential for a number of reasons:

• in order to cut unemployment figures, which were much too high, and to finance the social security system
• in order to ensure a healthy national budget and an intact infrastructure – which would also benefit future generations
• in order to be able to promote environmental measures in an innovative way.

Purely national climate objectives that are not supported by other States will jeopardize the competitiveness of the German economy without any improvement in the global CO₂ balance. Such a situation will only stifle any further opportunities that may exist for selling new energy technologies in overseas markets. One-sided climate objectives will also affect security of energy supply and Europe’s dependence on imported oil and gas will further increase. The high price risk associated with oil and gas, which has persisted since 1990-2000, may well damage the prospects for economic growth. One-sided ecological targets, such as reducing CO₂ emissions by 40% from 1990 levels by the year 2020, would necessarily mean a drastic reduction in German coal consumption, as confirmed by current model calculations from PROGNOS/EWI. The role of coal – and especially German coal - in the balanced energy mix that has existed to date would be seriously threatened. Even the most ambitious German climate plan could only help eliminate a fairly small proportion of the global increase in CO₂ emissions expected over the next 20 years. The Economic Minister concluded as follows:

Unreasonable climate objectives are economically irrational. Such targets cannot really be justified in energy-policy terms and do not produce the claimed environmental benefits. It is important to respect the general consensus on the fundamental questions of energy policy. As well as efficient energy utilization and advances in the use of renewables, this consensus includes maintaining a base for indigenous energy generation using mainly home-produced coal. This will create the best framework for taking advantage of Germany’s current lead in the development of new energy and coal-combustion technologies. Such a policy will benefit the global environment just as much as it will serve the German national economy.

 

Source: German Coal Producers’ Association (GVSt) Annual Report 2001