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Germany's dash for coal: Exploring drivers and factors

  • Pahle, Michael
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    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.

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    File URL: http://www.sciencedirect.com/science/article/B6V2W-4YJ6N3J-1/2/b1485e2cf13eab8ce499770526d2ff8d
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    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 38 (2010)
    Issue (Month): 7 (July)
    Pages: 3431-3442

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    Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3431-3442
    Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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    1. Hadjilambrinos, Constantine, 2000. "Understanding technology choice in electricity industries: a comparative study of France and Denmark," Energy Policy, Elsevier, vol. 28(15), pages 1111-1126, December.
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    5. Sijm, J. & Neuhoff, K. & Chen, Y., 2006. "CO2 cost pass through and windfall profits in the power sector," Cambridge Working Papers in Economics 0639, Faculty of Economics, University of Cambridge.
    6. Karsten Neuhoff & Markus �hman & Regina Betz & Johanna Cludius & Federico Ferrario & Kristina Holmgren & Gabriella Pal & Michael Grubb & Felix Matthes & Karoline Rogge & Misato Sato & Joachim Schleich, 2006. "Implications of announced phase II national allocation plans for the EU ETS," Climate Policy, Taylor & Francis Journals, vol. 6(4), pages 411-422, July.
    7. Bode, Sven, 2009. "Nucs down in Germany--Prices up in Europe?," Energy Policy, Elsevier, vol. 37(7), pages 2492-2497, July.
    8. Hans-Joachim Ziesing & Felix Christian Matthes, 2003. "Energiepolitik und Energiewirtschaft vor großen Herausforderungen," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(48), pages 763-769.
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