Lützerath Reveals the Dilemma of German Climate Policy


ZEW President Prof. Achim Wambach, PhD

To prevent coal mining, climate activists had occupied the German village of Lützerath. Scientists for Future demanded a moratorium on coal mining in an open letter, saying that Lützerath had become a symbol: it’s about “sending a clear signal for the necessary departure from the fossil age”. But the question of “whether” a turn away from the fossil age is necessary has long been answered – instead it is a question of “how”. And this is where Lützerath reveals the dilemma of German climate policy.

Minister for Economic Affairs and Climate Action Habeck justified the eviction as a crisis policy measure necessary for ensuring security of supply this year and next winter. In a recent remark on heute journal (ZDF), he also indirectly addressed the dilemma of German climate policy: “The argument that certificate trading makes it [coal-fired power generation] unattractive is astonishing, because it would mean that we no longer need to talk about coal phase-out dates at all.”

However, this is precisely the point at the European level: European emissions trading, which is to be further tightened as part of the European Green Deal, ensures with its cap and trade logic that an increase in coal consumption in Germany today automatically leads to less emissions elsewhere or at another time. Companies in the power generation, industrial and intra-European aviation sectors must purchase certificates for the CO2 pollution they cause. The number of certificates to be purchased is capped until 2030. If companies from these sectors need more certificates, they will have to buy them extra. These certificates will then no longer be available to other companies. Europe’s overall CO2 emissions will not change as a result; nor will they change whether the coal under Lützerath is converted into electricity or not.

The situation changes, however, if one takes a purely German perspective. How much coal is burned in Germany is relevant for achieving Germany’s climate targets. Leaving the coal under Lützerath in the ground would help to meet these goals. This contrast between the German and the European perspective is also evident in the coal phase-out date to which Habeck refers.

Let’s take a look back at 2020: The federal and state governments agreed to phase out coal in Germany by 2038 at the latest; they are aiming for an earlier phase-out, ideally by 2030. At the same time, they agreed on aid worth 40 billion euros for the coal regions and compensation for the power plant operators amounting to over 4.35 billion euros. This is quite understandable from a regional economic perspective, as the coal regions are particularly affected by the energy transition and alternative employment opportunities must be created. From a climate policy perspective, the coal phase-out agreement is more ambivalent. Since coal-fired power generation is covered by European certificate trading, here too a coal phase-out reduces the need for certificates in Germany, which are then used elsewhere. Total emissions in Europe will then not go down. But those in Germany will.

This does not mean that European climate policy, without an explicit coal phase-out, would lead to a perpetuation of coal-fired power generation – quite the opposite. Emissions trading makes it more expensive to generate electricity from coal, and before the war in Ukraine it could be assumed that with current CO2 prices, electricity generation from coal would become unprofitable by 2030. Now gas has become more expensive and will remain so due to the increased purchase of liquefied gas. This makes a market-based phase-out of coal by 2030 less likely.

The dilemma of German climate policy becomes apparent in this focus on German targets. With emissions trading, the EU has created an instrument that makes European emissions targets achievable in a market-based way. And in doing so, it is on the right track, as shown by the savings made so far and the simulations for future savings in the sectors concerned. The EU now wants to set up a second emissions trading system for the buildings and transport sectors, i.e. for areas where very little has been done so far. This is a step in the right direction. Germany already has its own certificate trading system for these sectors, which is slowly ramping up. But Germany also has its own emissions targets. As long as these go beyond the targets set by European emissions trading, separate agreements and requirements will be necessary.

When it comes to the question of whether and how to achieve the 1.5 to 2 degree target, even the European perspective is too narrow. The EU is responsible for only 10% of global emissions. Nevertheless, European climate policy measures can serve as a leading example if they are adopted by the rest of the world. Emissions trading, for example, has been copied by a number of countries. The impressive technological progress already made in the field of electricity generation from renewable energies also makes an important contribution. As measures in Europe accelerate this progress, they also help countries outside Europe to lower emissions.

The controversy surrounding Lützerath is a symbol for a German climate policy that focuses on national goals and promotes them with national measures. It would be helpful to take a more European and global perspective.