German nuclear cull to add 40 million tones CO2 per year

LONDON Tue May 31, 2011 9:10am EDT

An aerial view shows steam billowing from the cooling towers of a coal power plant in the western town of Neurath December 4, 2009. REUTERS/Ina Fassbender

An aerial view shows steam billowing from the cooling towers of a coal power plant in the western town of Neurath December 4, 2009.

Credit: Reuters/Ina Fassbender

LONDON (Reuters) - Germany's plan to shut all its nuclear power plants by 2022 will add up to 40 million tones of carbon dioxide emissions annually as the country turns to fossil fuels, analysts said on Tuesday.

The extra emissions would increase demand for carbon permits under the European Union's trading scheme, thereby adding a little to carbon prices and pollution costs for EU industry.

"We will see a pick-up in German coal burn," said Barclays Capital analyst Amrita Sen. "Longer term, they will be using more renewables and gas but this year and next, we should see a lot of support for coal burn."

The phase-out is seen as more political than technical as German Chancellor Angela Merkel tries to capture anti-nuclear sentiment in the aftermath of Japan's Fukushima crisis.

Environmentalists welcomed the shift, although some demanded a faster phase-out, hoping it would spur a shift to renewable energy which they view as less harmful by avoiding radioactive waste.

But analysts say the move will also see an increase in planet-warming greenhouse gases equivalent to the annual emissions of Slovakia, as Germany uses gas and coal to plug a power generation gap, both of which are more carbon-emitting than nuclear power.

That calculation implied some skepticism with the coalition's assertion it would cut power demand and expand the use of renewables such as wind and solar power.

Deutsche Bank analysts estimated an extra 370 million tones of carbon dioxide (CO2) emissions through 2020, compared with Societe Generale's extra 406 million tones.

Matteo Mazzoni, analyst at Italy's Nomisma Energia, estimated an extra 20-29 million extra tones of CO2 per year.

"This is not likely to drive prices much higher in the medium term, unless the price of power comes under pressure," Mazzoni said, referring to the price of emissions permits called EU allowances (EUAs).

Socgen analyst Emmanuel Fages increased his third quarter 2011 EUA price forecast by a modest 0.5 cents to 17 euros per tone, and would reassess other prices.

The benchmark EUA contract for December 2011 delivery was trading at 17.24 euros ($24.63) per tone Tuesday lunchtime, up 35 cents or 2 percent on the day.

"Carbon prices should obviously also get an uplift due to the sentiment born from the decision, but it will be limited and temporary," Fages said, adding "The market remains largely oversupplied (EUAs) for two years to come, capping any significant price increase in the short run."

The EU trading scheme is meant to limit industrial emissions by allocating a fixed quota of EUAs to some 12,600 factories and power plants but recession in 2009 left a glut of permits.

(Writing by Gerard Wynn; editing by James Jukwey)

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Comments (2)
Wrong wrote:
Thats it Germany return to the real danger.

May 31, 2011 10:14am EDT  --  Report as abuse
JasonGom wrote:
Chancelor merkel is an idiot. Already SWEDEN declared such a deactivation process, but at least they outlined a plan to move toward wind, water, and solar renewable energy sources. Merkel is suggesting that Germany go back to fossil fuels, which is outrageous. Environmentalists should be the one opposing such action, yet they support her. WAKE UP GREENIES! The millions of CO2 emissions will further deteriorate the environment and Germany will increase the already soaring gas prices that is causing rampant economic stagnancies across the globe.
Nuclear power is a very environmentally friendly source of power. Of course the dangers associated with nuclear power are immense, yet the cause of FUKISHIMAs blow out was not the tsunami alone. It was shoddy engineering on the part of Daiichi. Who the freak puts backup generators on low ground?
Even if all that is excusable, Merkel’s move is wholly political. Selfish political parties trying to position themselves in a more advantageous spot at the cost of the country and the world. How typical…

May 31, 2011 10:55am EDT  --  Report as abuse
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