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Climate notes: Coal Power Overshadowed by the Energy Turnaround

Benjamin Häusinger, Julian Dieler, Jana Lippelt
ifo Institut, München, 2012

ifo Schnelldienst, 2012, 65, Nr. 22, 34-40

In December 2011 a campaign was launched by the German Federal Ministry of the under the motto "Power stations? Yes, please!". New coal and gas-fired power stations are indispensable to securing the continued provision of cheap electricity in the wake of the energy policy turnaround and the phase-out of nuclear power. This edition of "climate notes" offers an overview of the situation of coal-powered energy in Germany and examines its role in the energy turnaround more closely. It emerges that, as far as power generation in Germany is concerned, the role of coal in the foreseeable future should not be underestimated. This will result in correspondingly high CO2 emissions and should thus endanger Germany's climate goals. In addition to the achievement of climate goals, the target of gaining 80% of the electricity mix from renewable energy by 2050 is also threatened. To date, however, politicians have done nothing to promote investment in reserve capacities. According to the current state of knowledge and technology, gas-fired power stations are the only stations that can supply such flexible capacity, and they are not profitable under current conditions. Incentives to invest in such power stations are consequently needed urgently.

JEL Classification: Q320, Q380, Q540

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ifo Institut, München, 2012