American coal companies such as Arch Coal (NYSE: ACI), Peabody Energy (OTC:BTU), and Alpha Natural Resources (NYSE: ANR) have been run out of town by cheap and abundant natural gas. That's not to say coal won't continue to make up an important part of America's energy future. The Energy Information Administration estimates that coal use will grow 3.9% in 2014 and continue to produce a steady chunk (link opens PDF) of American electricity for decades to come. But with renewables making significant progress, and next-generation nuclear technology around the corner, it's difficult to put much faith in long-term energy predictions. The EIA predicted a slow-growing natural gas industry in a report a little over one decade ago, after all.
Apparently, Germany has a similar level of faith in its long-term energy predictions.
While the goal is to produce 80% of the nation's electricity from renewable sources by 2050 -- up from 25% today -- the abandonment of nuclear power has forced the economic superpower to turn to coal-fired power plants of the dirtiest kind. In fact, Germany produced more energy from brown coal last year than in any year since the Berlin Wall was destroyed in 1990. As if burning coal that produces 33% more carbon dioxide emissions than hard coal wasn't bad enough, the country's massive brown coal reserves are being pursued at all costs. In some cases, that means relocating entire towns to strip mine the rolling countryside in an attempt to feed the grid. The disturbing practice is completely legal thanks to a law passed by Nazi Germany in 1937.
Is your town worth less than 250 million tons of brown coal?
Atterwasch is a small town of roughly 900 people. Some families have owned and resided on their lands for nearly 500 years. Unfortunately, that run may come to an end in the near future. Atterwasch and the surrounding area, which includes two other villages, sit on top of an estimated 250 million tons of brown coal. To access the reserves, utility company Vattenfall has promised to relocate the town to another, unidentified location and give residents plots of land representing equal size and value.
A similar proposal by Arch Coal, Peabody Energy, or Alpha Natural Resources would be unimaginable in the United States (German residents are protesting relocation), but the German coal industry has every right to the nation's reserves. A law passed in 1937 by the Nazi regime declared that mining natural resources was a "national priority" and made protesting the mining industry punishable with jail time. It made sense at the time (well, the former part, anyway): Germany was furiously developing technologies that would make it as self-sufficient as possible. Fischer-Tropsch processes commercialized in 1936 that transformed coal and woody biomass into liquid fuel accounted for 9% of fuel used in World War II by Nazi forces, and one-quarter of automobile fuel for German citizens.
Things are quite a bit different now. Germany's production of renewable energy has tripled in the last 10 years -- and is even giving fossil fuel generators a run for their money. Unfortunately, it just isn't possible for renewable technologies to grow fast enough to replace the immediate gap left by shuttered nuclear reactors, which accounted for 23% of electricity generation before 2011. Natural gas won't be of much help, either. European gas reserves and prices are vastly different from those in the American market. In fact, natural gas generation is down 23% since 2011, compared to just 10% for nuclear power. Coal has gained 9% over the same period.
Is a coal-powered future right for Germany?
While there may be a lack of options for Germany's immediate energy picture, is strip-mining the countryside and relocating nearly 10,000 citizens really the best solution? Aside from importing costlier sources of energy, cutting massive checks for additional renewable capacity, or halting the shutdown of the nation's nuclear fleet, I don't see many ways for the government and energy industry to appease angry citizens in the short term. Besides, Germany exported a record 33 billion kilowatt hours of coal-generated electricity in 2013, or roughly 20% of production. Are coal power plants and the massive energy export revenues they generate the bridge to reaching the 80% watermark for renewables by 2050? I'm not so sure, but I know I'm glad we don't face the same tough energy questions in the United States.