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European electricity revenues generated from lignite are now three times as high as from hard coal, boosted by a collapse in the price of carbon permits, undermining Europe's ambition to cut greenhouse gas emissions. The money will be welcome to German utilities, which are seeing their revenues squeezed by the government's 2011 decision to speed up its nuclear power exit, and by natural gas prices that are so high that electricity generated from the fuel is unprofitable. While they undermine the European Union's target to decarbonise its energy sector by 2050, these price developments could be welcome news to the German government which is trying to find ways to reduce the spiralling costs of its renewable energy subsidies. -- Andrew Allan and Henning Gloystein, Reuters, 12 August 2013

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Eon, the German utility, reiterated that it would consider shutting or mothballing fossil power plants in Europe in response to what it describes as “interventionist” energy policies and regulations that subsidise and prioritise renewable energy. Weak demand linked to recession in Europe has caused wholesale power prices to fall. Meanwhile, the prioritisation of solar and wind energy in the grid has lessened demand for coal and gas power generation outside peak load periods, meaning some plants must operate at a loss, or face closure. --Chris Bryant, Financial Times, 13 August 2013 A coal plant run by E.On of Germany. E.On and other European utilities have announced plans to shut down less-polluting natural gas-fired plants that have been undercut by dirtier coal-burning generators. Environmental campaigners and green policy-makers are blocking shale developments in most European countries. As a result, Europe has failed to join the shale revolution that has swept the US. Instead of benefiting from cheap shale gas, lower CO2 emissions, new industries and hundreds of thousands of new jobs, Europe is constraining itself with self-imposed green limits to growth. The green lobby's shale gas blockade together with its opposition to nuclear energy has led to a renaissance of coal. Germany's green energy transition was supposed to produce environmentally friendly electricity. As it turns out, the power gap, created by the shutdown of eight nuclear power stations, will be largely filled by coal. –Benny Peiser, Public Service Europe, 29 August 2012 Germany’s green energy revolution appears to be losing steam. The government’s shift in energy policy is now facing mounting resistance. One out of two Germans has grown critical of the policy change, according to a recent survey by German pollster Forsa. Even though two-thirds of the population acknowledge the benefits for the environment, some 40 percent disagree with how the government has been handling the transformation to renewables. They cite rising electricity prices resulting from preferential treatment of renewable energy generators as a main reason for their anger. --Johanna Schmeller, Deutsche Welle, 12 August 2013 Across Europe and some of the U.S., utilities that a decade ago dominated markets now struggle to cope with lower prices exacerbated by subsidized renewables that don’t pay fuel costs. The pain is most acute in Germany, which led the world installing solar farms and has the largest offshore wind plans. Clean energy also has preference over fossil fuels in European wholesale markets, a job killer at traditional utilities. EON of Dusseldorf and Essen-based RWE are considering halting coal and gas plants with capacity exceeding 20,000 megawatts and can supply 21 cities the size of Cologne, risking some of the combined workforce of more than 10,000. Chancellor Angela Merkel’s government has said it wants to reform the country’s clean-energy subsidy law after the Sept. 22 elections and also rework the design of the country’s power market. The German renewable boom has caused “huge problems for the system,” Merkel said June 12 in Berlin. --Tino Andresen, Bloomberg, 12 August 2013

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