IF GERMANY CAN DO IT ...
Could Alberta survive without coal?
As Alberta looks to phase out coalfired electricity in the next 15 years, the success Germany has had in reducing its reliance on non-renewable resources could be instructive.
This July on a windy day, green power peaked at 78 per cent of Germany’s supply, well above the official target of 45 per cent by 2025 for a country of 80 million people. In comparison, coal-fired plants account for about 55 per cent of Alberta’s electricity supply, the highest proportion of any province in Canada.
The federal government has mandated Alberta must shut down all coal-fired electricity plants by 2030, unless they meet stricter emission standards. Last month, the provincial government said its new climate change panel will look at shutting down the plants sooner.
Officials with the Alberta government recently met with Andreas Kraemer, an expert in German energy policy, as the province prepares to attend the 2015 United Nations climate change talks in Paris.
The Journal sat down with Kraemer to find out what Alberta could learn from Germany’s experiences.
Q Germany has earned the title of the first major renewable energy economy. How did that get started?
A Germany started in the 1990s with policies to trigger the growth of renewables. The government gave priority access to the grid for renewable energy as long as it displaced fossil fuels, and it provided a fixed, feed-in tariff. The cost of building solar and wind installations started to come down and the erosion of old industry took place slowly at first.
Q How did Germany shut down coal plants?
A Nobody had to tell coal plants to shut down, they just aren’t making money. The coal industry is phasing out mainly because it’s no longer profitable. With the growth of renewables, electricity prices have gone down. The last deep coal mine will close in 2017.
Q Was there a lot of pushback from the coal industry when the government started promoting renewables?
A No, partly because it started slowly and at a low base. Nobody imagined then it would displace and disrupt the business of the big coal companies. Also, big coal utilities did not invest in renewable energy and still do not.
They own only five per cent of renewable power and they used to own 85-95 per cent of coal and nuclear power. Smaller companies have been the major players in the renewable energy sector. But I don’t think that will happen in other places, including Alberta. The big utilities have wised up to the need to get into the renewable market.
Q In Alberta, coal provides more than half of the province’s electricity. Can the transition to renewables happen without major disruption?
A Each (region) is different and Alberta has a different starting point because of its large fossil fuel industry. But renewables are now much cheaper, unlike in the 1990s when Germany started out. Germany’s experience shows that the energy transformation produces short-term benefits that outweigh the costs, that those costs are not higher than maintaining the old non-sustainable system, and that costs are coming down.
Q In 2011, Germany also shut down eight of its 17 nuclear plants following the deadly incident at the Fukushima nuclear plant in Japan. The rest of the plants are also scheduled to close. How was that achieved?
A In 2000, the government gave the nuclear industry 22 years to phase out their power plants and that was the residual lifetime of the last plant. Some plants closed early in 2011 for safety reasons. But the rest are allowed to run until their debt is paid off. So the phase-out policy was crafted to avoid triggering compensation for early closure. Renewables are ramping up to take up the space.
Q Did Germany take steps to help workers in the dying coal and nuclear industries?
A Yes, you must have policies to help the incumbent industries: buyouts, golden handshakes and retraining for mid-career and younger employees. We also have a policy that allows the government to send new investment to areas of the country that lost jobs in the transition. Job creation was successful. For Alberta, it
might be more of a trade-off, creating jobs in the south of the province and possibly losing jobs in the north in the oilsands.
Q Is it necessary to keep some coal power available as socalled “base power” — a reliable supply to fall back on if renewables cannot provide enough?
A Base load is not a concept we use anymore. By definition, base load is the cheapest power and that’s always renewable.
Q Climate change experts say the world cannot stabilize the climate unless three-quarters of existing fossil fuel reserves are kept in the ground. What does that mean for oil-producing regions like Alberta?
A It’s an unpleasant thought — it’s perfectly normal Alberta doesn’t want to think about the province without a large fossil fuel industry. But some forward-looking agency should look ahead, along with business, to imagine different scenarios, just to understand the risks. For instance, what if the price of oil stays low for years? In that case, what is the maximum size of the oilsands industry? Or, do an exercise to envision what Alberta looks like with 100 per cent renewable energy. This kind of “thought experiment” is helpful
to enrich thinking on the issues.
Q Europe approaches the need to reduce carbon emissions with much more urgency than North America. Why?
A Europeans for a long time have accepted what scientists said about global warming — we don’t have the polarization about that issue there is in North America. In North America, I also think people worry they will have to change their lifestyle or lose personal freedoms if they transition to a low carbon economy. But the shift has not caused a drop in standard of living in Germany.
Q The Alberta identity is closely tied to oil and gas. How do you manage such major cultural and economic change?
A You mean the Edmonton Oilers might become the Edmonton Turbines? My family were coal miners and I started in the oil and gas industry. You can’t vilify the old industries, but you have to manage the transition, you have to diversify. There are market risks to the oil and gas industry in the future. I think there are some development risks down the road that may not be discussed in Alberta and may not have an impact on policy making. But sooner or later they will.