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Germany's dash for coal: Exploring drivers and factors

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  • Pahle, Michael

Abstract

The German electricity sector has recently seen extensive planning and construction of new coal-fired power plants. Within a period of only a few years, new investments amounting to around 15% of the total sector capacity were brought on the way, and plans for a multitude of additional projects are pending. This 'dash for coal' in Germany has raised considerable public concern, especially as it risks to undermine recent political attempts to combat global warming. Yet, the question of why the dash for coal has emerged has not yet been addressed in a thorough analysis. This article attempts to close this research gap, while at the same time contributing as a case study to the general understanding of investment patterns in liberalized electricity markets. It finds that the main reasons for the dash have been (1) replacement requirements due to the nuclear phase out, (2) the onset of a new investment cycle in the power market, (3) favorable economic and technological prospects for coal compared with natural gas in the long run, (4) a status-quo bias of investors in regard to future renewable deployment, (5) explicit political support for coal, and (6) the ineffectiveness of public protest in hampering new projects.

Suggested Citation

  • Pahle, Michael, 2010. "Germany's dash for coal: Exploring drivers and factors," Energy Policy, Elsevier, vol. 38(7), pages 3431-3442, July.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3431-3442
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    Cited by:

    1. Michael Pahle, Kai Lessmann, Ottmar Edenhofer, and Nico Bauer, 2013. "Investments in Imperfect Power Markets under Carbon Pricing: A Case Study Based Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    2. Steffen, Bjarne, 2012. "Prospects for pumped-hydro storage in Germany," Energy Policy, Elsevier, vol. 45(C), pages 420-429.
    3. Cherp, Aleh & Vinichenko, Vadim & Jewell, Jessica & Suzuki, Masahiro & Antal, Miklós, 2017. "Comparing electricity transitions: A historical analysis of nuclear, wind and solar power in Germany and Japan," Energy Policy, Elsevier, vol. 101(C), pages 612-628.
    4. Fan, Lin & Norman, Catherine S. & Patt, Anthony G., 2012. "Electricity capacity investment under risk aversion: A case study of coal, gas, and concentrated solar power," Energy Economics, Elsevier, vol. 34(1), pages 54-61.
    5. Goodman, James, 2016. "The ‘climate dialectic’ in energy policy: Germany and India compared," Energy Policy, Elsevier, vol. 99(C), pages 184-193.
    6. Pahle, Michael & Fan, Lin & Schill, Wolf-Peter, 2011. "How Emission Certificate Allocations Distort Fossil Investments: The German Example," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 1975-1987.
    7. repec:dui:wpaper:1504 is not listed on IDEAS
    8. World Bank, 2011. "Climate Change and Fiscal Policy : A Report for APEC," World Bank Other Operational Studies 2734, The World Bank.
    9. George A. Gonzalez, 2016. "Transforming Energy: Solving Climate Change with Technology Policy . New York : Cambridge University Press . 360 pages. ISBN 9781107614970, $29.99 paperback. Anthony Patt , 2015 ," Review of Policy Research, Policy Studies Organization, vol. 33(1), pages 111-113, January.
    10. Geels, Frank W. & Kern, Florian & Fuchs, Gerhard & Hinderer, Nele & Kungl, Gregor & Mylan, Josephine & Neukirch, Mario & Wassermann, Sandra, 2016. "The enactment of socio-technical transition pathways: A reformulated typology and a comparative multi-level analysis of the German and UK low-carbon electricity transitions (1990–2014)," Research Policy, Elsevier, vol. 45(4), pages 896-913.
    11. Monstadt, Jochen & Scheiner, Stefan, 2014. "Allocating greenhouse gas emissions in the German federal system: Regional interests and federal climate governance," Energy Policy, Elsevier, vol. 74(C), pages 383-394.
    12. Westner, Günther & Madlener, Reinhard, 2012. "Investment in new power generation under uncertainty: Benefits of CHP vs. condensing plants in a copula-based analysis," Energy Economics, Elsevier, vol. 34(1), pages 31-44.
    13. Majidpour, Mehdi, 2012. "Heavy duty gas turbines in Iran, India and China: Do national energy policies drive the industries?," Energy Policy, Elsevier, vol. 41(C), pages 723-732.
    14. Kallabis, Thomas & Pape, Christian & Weber, Christoph, 2016. "The plunge in German electricity futures prices – Analysis using a parsimonious fundamental model," Energy Policy, Elsevier, vol. 95(C), pages 280-290.
    15. Purkus, Alexandra & Barth, Volker, 2011. "Geothermal power production in future electricity markets--A scenario analysis for Germany," Energy Policy, Elsevier, vol. 39(1), pages 349-357, January.

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