Business Day: Germany to limit coal and rely more on natural gas

Germany is turning against coal as a fuel for generating electricity, a move that will boost its reliance on natural gas from Russia.

Alarmed that curtailing nuclear power has prompted utilities to burn the most coal in six years, Chancellor Angela Merkel’s government is working on a plan to reinforce Germany’s commitment to reduce fossil fuel emissions. The Economy Ministry published a paper last week laying the groundwork for the strictest steps yet to limit coal in Europe.

The shift, if implemented, would force Germany to tap Russia for additional supplies, to import power from neighbours and to further subsidise renewables such as solar and wind. That would swell the country’s €100bn annual fuel import bill and may boost the cost of electricity paid by consumers, already the second-highest in the European Union (EU). It would also run counter to efforts by the US and EU to isolate Russia economically.

"The importance of gas, and with that the dependence on Russia, will increase," said an analyst at B Metzler Seel Sohn & Co, Guido Hoymann. Cross-border exchanges of electricity would rise, too, helping the nuclear plants just outside Germany’s border, he said.
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