Coal to stay king in German power generation

By Vera Eckert - Analysis

FRANKFURT (Reuters) - Coal, subject to much maligning for its emission of harmful gases, is set to remain the source of much of Germany's electricity thanks to cleaner technology that now beckons.

Six months after planners faced rising project costs and growing public opposition, latest plans show Germany, Europe's biggest power market must continue to focus on coal if it phases out nuclear power as planned and curbs reliance on Russian gas.

"The planners are finding coal the more attractive option as opposed to gas, price-wise and in terms of availability," said Manuel Frondel of the RWE research institute in Essen.

The coal which fires half of Germany's power output comes largely from countries which are considered reliable sources like Australia and South Africa.

One reason the coal lobby can appease environmental concerns about the climate-harming carbon dioxide from coal plants is a new remedy: carbon capture and storage (CCS).

Last week, Britain announced plans to force all new coal plants in the country to test the pioneering carbon-cutting technology, opening the door to give coal a new lease of life as an energy source in a world more conscious of climate change.

In January, the reliability of gas as an energy source was thrown into doubt when a row between Russia and Ukraine cut supplies to Europe when it was most needed.

Industry group BDEW last week showed a table with 14 German coal plant projects totaling 14,000 megawatts (MW) of capacity which are due to open by 2012.

This is nearly half the total new power generation needed up to 2020 and comes after 10 big projects were held up in 2007 and 2008 by soaring construction prices.

At least 9,000 MW more plants may be built after 2013.

CARBON CAPTURE, COSTS

Germany's cabinet this month approved a CCS draft law that paves the way for developing the technology aimed at cutting coal plant pollution and burying CO2 underground.

CCS, which is seen as the only way coal-fired power generation can continue to play a role in the energy mix, has not yet been proven on a commercial scale.

But Germany's law will not go so far as Britain's plan to force all new coal plants to test CCS technology.

Ministries led by opposing political parties overcame divisions over standards for pilot plants and CO2 repositories so as to pass the law before the summer.