Germany: ifo Institute Favours Slow Lignite Phase-Out and Calls of CO2 Pricing
The ifo Institute favours the slow phase-out of lignite. "In terms of energy policy, there is much to be said for a gradual phase-out," notes ifo expert Joachim Ragnitz. He believes that a rapid phase-out could pose significant supply risks, as there are still no alternatives to secure the base load. In his view, importing coal or nuclear power from neighbouring countries is not a viable solution. According to Ragnitz, "It would be short-sighted in terms of climate policy to shut down modern lignite-fired power plants in eastern Germany, and operate outdated plants in Poland or the Czech Republic instead in order to secure Germany’s energy supply.”
"From an environmental policy point of view, however, there are many arguments in favour of a faster phase-out, as Germany has committed itself to meeting ambitious climate protection targets,” added Ragnitz. In the opinion of Karen Pittel, Director of the ifo Center for Energy, Climate and Resources: "It would also make sense to systematically price emissions like carbon dioxide, nitrogen oxide, mercury and particulate matter in all sectors. Then lignite would gradually become uneconomic." She called for a parallel fundamental reform of the levies and taxes system. "Without such a comprehensive approach, the costs of energy system turnaround will not only rise considerably, there is also a danger that the German federal government will fail to achieve its climate and energy policy goals. “In the long term, politicians should not only keep an eye on emissions from coal, but should also continue to focus on the reductions required in transport and the heating market. It is to be hoped that the results of the Coal Commission will act as a signal act as a signal encouraging politicians to make a bold new start in climate policy,” noted Pittel.
Taking a long-term view, Ragnitz noted that: "The current operating permits for the lignite-fired power plants do not expire until the 2040s, which will mark the end anyway. The labour market impact will also be lower if the phase-out takes place slowly. A large proportion of the coal workforce is over 45 years old and would be due to retire by the time a gradual phase-out was completed. There would also still be jobs in opencast mines for some time to come." This would allow many employees to gradually switch to jobs in other sectors due to demographic effects, if they were willing to be retrained. "In principle, the exit from lignite only represents a major problem for Lusatia, because in the other German regions there are enough cities with sufficient replacement jobs within a reasonable distance. A special programme outside the regular regional economic development programme would certainly make sense in Lusatia. But one should not expect too much from politics either - the state cannot build up new economic structures," warned Ragnitz.
