Strategy for power plants: the traffic light is quietly and secretly burying an important climate goal for Europe

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Thursday, February 8, 2024, 1:23 p.m.

The key points of the power plant strategy leave many questions unanswered. Experts doubt whether international obligations are met. And the economy continues to wait for the security of investments.

Key points of a power plant strategy unveiled by the federal government cast doubt on the internationally agreed goal of a largely carbon-free power sector by the middle of the next decade. “The transition to green hydrogen requires practical experience,” says Simon Müller, director of the Agora Energiewende think tank in Germany, in an interview with Table.Media.

However, the federal government does not want to decide until 2032 when, within five years from 2035, newly built gas power plants will have to convert to hydrogen. “Determining when gas power plants will convert to hydrogen in eight years would be too late for a climate-neutral electricity system in 2035.”

The federal government plans to tender this year a total of ten gigawatts of capacity for so-called H2-ready gas power plants, which will replace coal plants until 2030. There is also 0.5 gigawatts for pure hydrogen blocks. The reactors are needed to replace electricity from renewable energy during the dark periods of winter.

Müller also doubts whether there is sufficient capacity for the planned phase-out of coal-fired power generation within six years, as the government claimed citing the Federal Network Agency.

“First natural gas, then hydrogen”

Almost two years ago, at the summit in Elmau, Bavaria, the G7 heads of state and government agreed to “achieve a fully or predominantly decarbonized electricity sector by 2035.” Politicians justified this demand with the UN goal of achieving a maximum global warming of 1.5 degrees Celsius due to greenhouse gases.

Robert Busch, CEO of the Federal New Energy Industry Association, criticized that “the motto of the power plant strategy is: first natural gas, then hydrogen.” Plant operators were given too much time to switch fuel: “In the worst case scenario, the power sector will not be fully decarbonized until 2040.” Sascha Müller-Kraenner, federal director general of German Environmental Aid, considers this to be “an economic stimulus program for the gas lobby.”

“Technological opening” and electricity imports

According to government circles, for the sake of “technological openness”, power plant operators do not necessarily have to use green hydrogen produced in a climate-neutral way. Only hydrogen produced by nuclear energy is excluded. However, any other hydrogen can be used, i.e. produced by natural gas, methane or waste incineration.

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Under current technology, its greenhouse gases can only be partially captured through costly carbon capture and storage (CCS). The government now wants to promote CCS as part of the power plant strategy, rather than, as previously planned, only for the inevitable residual amounts of CO₂ from industrial production.

It was also said in government circles that there would still be a need to import electricity from abroad, which could also mean that nuclear and coal power could end up on the German grid. However, it is claimed in government circles that the steering effect of the CO₂ price gives hope for market-controlled decarbonisation.

Press release instead of strategy

Overall, the government only presented a press release rather than a fully developed power plant strategy, which could further delay investment planning and industry security.

On the one hand, many associations and companies were cautiously optimistic. Kerstin Maria Rippel, CEO of the Steel Association, welcomed the “pragmatic proposal” which offers manufacturers more security of energy supply for the decarbonisation of metals production. Kerstin Andreae, chairwoman of the executive board of the Federal Association of Energy and Water Industries (BDEW), described H2-Ready power plants as “important customers and therefore a relevant component for safety planning in the framework of the central hydrogen network”.

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Unanswered questions delay investment decisions

On the other hand, economic actors and opposition politicians emphasize the many questions that remain unanswered as time becomes increasingly scarce. It was stated in the circles of power plant manufacturers that a conversion of H2-ready power plants from gas to hydrogen would be feasible within the indicated period.

However, the CEO of turbine manufacturer Siemens Energy, Christian Bruch, stressed: “The remaining questions on the content should now be clarified as quickly as possible, as the implementation of the strategy will take time due to high global demand and the associated capacity. use among providers.

Among these open questions is the design of the first tenders and the capacity mechanism planned from 2028, which aims to regulate state financing. The coalition wants to reach an agreement on this before the summer and clarify state aid issues with the EU Commission.

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“More dogmatic than in any other country”

Andreas Jung, federal deputy chairman of the CDU and spokesman for the parliamentary group of the Union for Climate Protection, criticized the “match” on the location issue in an interview with Table.Media: “It is not clear whether it will also be guaranteed that power plants are being built in the industrial centers of the south.” In general, the climate objective, security of supply and the location of companies are at risk. He invited the coalition to dialogue “with a view to possible future constellations”, “in a spirit of planning reliability and security.” So far, the capacity mechanism has been developed “to the exclusion of the opposition.”

The Federation of German Industries (BDI) was especially critical. Holger Lösch, Deputy Director General, called for “a clarification and implementation as quickly as possible” and “a very rapid clarification of outstanding issues”, but at the same time welcomed “technological openness” and pragmatism. Meanwhile, in the Financial Times, BDI president Siegfried Russwurm called traffic light energy policy “absolutely toxic” and the German climate agenda “more dogmatic than in any other country I know.”

The original of this article “The traffic light is quietly burying an important climate goal for Europe” comes from Table.Media.