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Talking point
§No prospects for German hard coal – but “clean coal” offers great potential
January 26, 2007
According to press reports the costs at RAG’s hard-coal subsidiary Deutsche Steinkohle AG (DSK) exceeded the approved subsidies by EUR 163 m in 2006. DSK says for this reason that it will not rule out shutting down a colliery by year-end if the deficit is not covered. Some 3,000 jobs would be lost as a result.
This marks a new low in the history of hard coal in Germany. Before and after World War II, coal played an important role in energy policy. After the war it was initially an advantage to have locally abundant deposits of hard coal and brown coal as a source of energy. There is no denying that domestic coal did much to shore up Germany’s energy supply during those first few decades. It provided employment and enabled the development of modern industrial structures to boost Germany as a production location.
The economic efficiency of supplying energy with coal has raised more and more questions over the years though and has regularly been the subject of bitter political conflicts – especially when it is a matter of continuing or adapting support programmes. This scarcely applies to brown coal, for it can be procured in Germany at low cost. By contrast, criticism has focused on domestic hard coal. Deposits in geologically unfavourable locations and ever deeper mines have implied very high costs by international standards. As a consequence, hard coal producers in Germany have simply been unable to match the cheap world market price. Over time, the annual subsidies have gone into the billions, sparking a political rethink. Politicians have now reduced their arguments “only” to whether it is a good idea to maintain a small domestic “hard coal base” for critical supply situations or whether it would be more practical to shut down all hard coal operations altogether. In this connection the focus is also on issues – besides regional, labour-market and social considerations – of future financing (federal states and/or federal government) and business strategy (floating Ruhrkohle on the market, for instance).
In our opinion, it would make much more sense to invest the billions in funding in the development of alternative energies, and not least in the development of “clean coal technology”. For there is no doubt that environmental objectives are the Achilles’ heel of coal. And the potential for innovative clean coal technology around the globe is immense – both in the power generation sector for CO2-free coal-fired plants and in the alternative fuel sector. Already today, 60% of the hard coal used in Germany is imported, and 100% import substitution would be possible. The imports are sourced from an adequately diversified international spectrum.
See also Technologie macht Kohle fit für Zeit nach dem Öl (soon available in English)
Josef Auer (+49) 69 910-31878
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