Why Germany Should Abandon Coal

On January 31st, Germany’s Coal Commission debuted its recommendations to phase out coal-fired power generation by 2038. The plan, derided by some as "dumb" is hardly that. This plan is not perfect, but it confronts two important challenges: healthcare cost containment and greenhouse gas reduction.

Without equivocation, coal is harmful to society.  Between coal dust inhaled by miners that causes lung cancer to air pollutants released from coal-burning facilities, the economic calculus is clearly negative.  Containing healthcare costs requires a market-based solution and it starts with either capturing the negative consequences of an economic action or prohibitive legislation or both.

For example, Canada has employed a successful revenue-neutral carbon tax since 2008 in British Columbia.  The revenue-neutral carbon tax shifted the taxation burden from ‘desirables’ such as taxing income or sales to ‘undesirables’ such as greenhouse gas emissions.  Further, the policy was shown to have a negligible effect on economic growth and led to a 15% reduction on provincial emissions. Simply put, if Germany does not move forward with the precedent established by Energiewende (Ammendment to the EEG) and the Erneuerbare-Energien-Gesetz (EEG or German Renewable Energy Act), the society will absorb the cost through increased healthcare taxes or less healthy citizens.  

Germany’s plan to address climate change, a critical threat to the environment, starts with the reduction of fossil fuel emissions.  It is universally well-known that climate change is linked, inextricably, to fossil fuel consumption. Emissions release greenhouse gases into the atmosphere, increase carbon dioxide levels, trap heat, and raise temperatures.  

Further, the failure to shift away from an archaic and inefficient energy source is speculated to lead to dire results.  In a U.N. report, higher temperatures are predicted to cause life-threatening heat waves, water shortages, coastal flooding, and mass migration. Germany is well-equipped to rely more in renewable energy resources. In 2018, 40% of Germany’s electricity mix came from renewable sources of energy, such as wind, solar, biomass, and hydropower. Coal-fired plants release more greenhouse gases per unit of energy than any other energy source, according to Green America, an energy advocacy group whose mission is to harness economic power to create a “socially just and environmentally sustainable society”.

Over the next 20 years, members of the Coal Commission, private sector, and other government officials will be able to curtail dependence on coal.  Chancellor Merkel would be wise to adopt the commission’s recommendations.

This article was co-written by Matthew Minor and Ryan Harden.

China's Belt and Road Initiative

China Unveiled Its Belt and Road Initiative (BRI) Five Years Ago.

Since then, countries hailed it as a transformative tool for soft power. Many compared the BRI to the Marshall Plan and welcomed the new idea believing it would expand markets and stabilize the region. Despite the profound potential to promote connectivity and increase commerce, the associated risks are severe and the catastrophic implications -- as it relates to climate change -- threaten the ecosystem of our entire planet.

China’s Belt and Road Initiative is a project of enormous scale and reach. Considered a gargantuan development project, the purpose of the BRI is to improve China’s trade and transport links to the rest of the world through large-scale infrastructure projects. Chinese President Xi Jinping launched the $150 billion a year spending project in 2013 in an attempt to create a 21st-century version of the famed Silk Road. This also includes the estimated $900 billion of loans that China underwrote in 71 countries.

However, the Initiative relies heavily on coal. This emphasis is especially worrying. CoalSwarm, an environmental NGO, estimated Chinese firms are involved in the construction, ownership, or financing of at least 16 percent of all coal-fired power stations under development outside China. By the end of 2016, China was involved in 240 coal-fired power projects in 25 of the 65 countries collaborating with China on BRI projects.

“Chinese banks’ and companies’ investments in coal abroad are a cause of major concern because of their potential to lock in more climate warming emissions in our carbon-constrained world,” said Huang Wei, a climate and energy campaigner at Greenpeace East Asia. “It is a complicated web of involvement, but ultimately all investments in coal, the world’s dirtiest fossil fuel, are bad for everyone involved — recipient country, China and the planet as a whole,” Huang told CNBC.

Eco-friendly policies at home, however, do not necessarily translate to green policies abroad.

In 2012, the year the Chinese Communist Party elected Xi Jinping its leader, the party listed “ecological civilization” as one of the five goals in the country's overall development plan at the 18th National Congress of the Communist Party of China. In 2016, President Xi called for the Belt and Road to be “green, healthy, intelligent and peaceful.” In a 2018 speech, President Xi urged policymakers at the National Congress of the Communist Party to promote eco-friendly policies that ensure “harmony between human and nature.” Xi continued to promote policies that ensure “green, low-carbon and circular development,” “promote afforestation,” “strengthen wetland conservation and restoration,” and “stop and punish all activities that damage the environment” — in short, “to build an ecological civilization that will benefit generations to come.”

China’s coal consumption prevents achieving goals set in the Paris Agreement because of the Belt and Road Initiative.

In the Paris Agreement, 195 countries agreed to limit the increase in global temperatures by modifying the way firms conduct business. The standout phrase is moving temperatures from pre-industrial levels to below 3.6 degrees Fahrenheit. The energy think tank, Climate Tracker, confirmed statements made by the UN’s Intergovernmental Panel on Climate Change. Both estimated at least 59% of coal power worldwide must be retired by 2030 to limit a worldwide temperature rise to 1.5°C. By achieving a temperature rise of only 1.5°C instead of 2.0°C, some of the greatest consequences are curbed.

While it is well-known that fossil fuels are the biggest single contributor to the global rise of carbon emissions, it would be inspiring to witness global actors like China to elevate green practices to a higher level and decrease reliance on the coal industry. To China’s credit, they are taking steps to promote green energy. In 2014 alone, China added 20 gigawatts (GW) of wind power capacity, 11 GW of solar and 22 GW of hydro-power capacity. The next year, reforms to the electricity market removed coal’s guaranteed hours. Further, grid operators were encouraged to give priority to renewable energy over coal. These reforms were welcomed by climate advocates, but China’s promotion of coal in BRI projects threaten to undo the global community’s efforts to combat climate change.

China may be promoting “ecological civilization” at home, but it must address the urgent climate consequences of its expansionary agenda. Now.