VDKi

The Coal Importers Association e. V. (VDKi), Berlin/Germany, is calling on the new German government to allow the introduction of CO₂ capture systems (CCU/CCS) for the modern and newer hard coal-fired power plants in Wilhelmshaven, in the Ruhr region (Duisburg, Datteln, Lünen) and in the south-west (Mannheim, Karlsruhe). The coalition agreement provides for the introduction of CCU/CCS technology for industry and for the new gas-fired power plants to be built. The VDKi is also calling for this option for hard coal-fired power plants, which essentially run in back-up operation.

From the VDKi’s point of view, retrofitting modern hard coal-fired power plants with CCU/CCS technology is far more cost-effective than building new gas-fired power plants. The possible use of green ammonia in coal-fired power plants to reduce CO₂ emissions should also be taken into account. This reduces the costs of the energy transition. In addition, hard coal is no more harmful to the climate than other fossil fuels used to generate electricity if the entire supply chain is considered.

The VDKi supports the new German government in its plans to utilise the hard coal-fired power plants with a capacity of 6.9 GW that are currently in reserve operation to curb electricity prices. The past winter has shown that when dark doldrums occur, the capacity of the secured output is not sufficient to keep the listed electricity prices at a tolerable level for the industry. VDKi Chairman of the Board Alexander Bethe: “Utilising the reserve power plants in these phases is the right thing to do. This leads to a reduction in winter electricity prices and prevents ultra-high price peaks, as happened last winter.“

The VDKi is also calling for a change of course in energy policy. The new Minister of Economic Affairs, Katherina Reiche, has announced a “pragmatic energy policy”. Quote: “I am personally in favour of a realistic, innovation-driven and reliable course with clear goals.” The VDKi strongly supports this. For the VDKi, one thing is certain: Energy must remain affordable for citizens, otherwise acceptance of the energy transition will be lost. Controllable energy is needed for stable security of supply. This is why the new fleet of hard coal-fired power plants in particular should continue to be used in backup operation. The plants do not contradict the political goal of phasing out coal. This is because these power plants hardly have any impact on the CO₂ balance with short operating times. Bethe: “Without the backup of hard coal-fired power plants, there will be no energy security in the medium term.”

In view of the crises in the Middle East and the Persian Gulf, the VDKi once again emphasises the security of supply aspect of hard coal imports. Hard coal is not affected by geopolitical events due to its broad availability in different regions of the world (Table 1). (VDKi/Si.)

The effects of the European elections are also being felt in the energy sector. Institutes, associations and family businesses are complaining about the poor state of the German economy, which is primarily due to high energy prices. Germany is one of the world’s most expensive countries for electricity. Furthermore, Germany has become a net importer of electricity – bad news for the security of domestic supply.

In particular, in light of the special report by the Federal Audit Office on the energy transition, there should be no “business as usual”. “The energy transition is not on track for the electricity supply,” it says. “The Federal Audit Office does not consider the goal of providing the general public with electricity at a reasonable price to be secured”. The auditors criticise the fact that, in particular, onshore wind energy is not being expanded to the extent provided for by law. The Federal Ministry for Economic Affairs and Climate Action (BMWK) is also unable to meet its schedule for secure, controllable back-up capacity with the 2026 power plant strategy (KWS). Furthermore, the expansion of the grid is significantly behind schedule. The Association of Coal Importers (VDKi), Berlin, is therefore calling for an energy transition with common sense and not with a crowbar.

The current concept for the energy transition is hardly affordable. Studies expect investments in the order of 1.2 tn €. That is more than 50,000 € for a four-person household. For the VDKi, one thing is clear: Energy must remain affordable for citizens, otherwise acceptance of the energy transition will be lost.

Controllable energy is needed to ensure a stable supply. That is why the newer fleet of coal-fired power plants should continue to be used in back-up operation. In the opinion of the VDKi, these plants do not contradict the political goal of reducing CO₂. This is because these power plants have little impact on the CO₂ balance when they are used for shorter periods of time. In addition, the German government is now allowing the use of CCS/CCU, transport and offshore storage in Germany too. For the VDKi, there is no climate policy reason to prevent the use of CCU and CCS in hard coal power plants.

The possible use of green ammonia in hard coal power plants to reduce CO₂ should also be taken into account. VDKi Chairman Alexander Bethe: “Our aim should be to act in an open-minded way. This will reduce the costs of the energy transition.” The responsibility for the costs of operating CCU/CCS plants is in competition with the CO₂ certificate market and is therefore the responsibility of each company. Therefore, only the companies, not the federal government, should decide on the suitability of CCU/CCS for hard coal power plants.

The VDKi points out that the path ahead of us towards a hydrogen-based energy transition will be a long and extremely expensive one. Furthermore, hydrogen will be far too scarce and expensive to be used in power plants for a long time to come. In addition, hard coal is no more harmful to the climate than other fossil fuels used to generate electricity when the entire supply chain is taken into account. In view of the immense investment costs, the VDKi advises that the principle of “less is often more” should be applied when planning the future energy infrastructure.

The state, as a forward-thinking energy company, seems to be getting bogged down in “climate protection perfection” and driving up costs for everyone. “The German coal market is working,” says Bethe. “Despite the sanctions on Russian coal and the sudden loss of up to 70 % of Russian imports of coke and coal, a stable supply of coal in Germany has been and will continue to be ensured at all times.” This will also be the case in the future. The supply of hard coal is rock solid and stable. Bethe: “For energy security in Germany, it is necessary to continue operating hard coal power plants beyond 2030. Without hard coal, there will be no security of supply in the foreseeable future”.

Hard coal should not be demonised and will continue to be needed for a secure and affordable energy supply for some time to come. CO₂ emissions would nevertheless fall. The current import volumes of around 33 Mt/a hard coal as a basic quantity, of which 18 Mt of hard coal for power plants, with more than 8 bn t of coal being mined worldwide, will continue to play a role in ensuring a secure energy supply for some time to come. “Lesser for longer” is the motto. (VDKi/Si.)

“The Federal Government’s strategy on the subject of the energy transition overestimates the willingness to invest in new gas-fired power plants on the one hand and the technical possibilities of being able to convert hydrogen into electricity at 100 % on the other. Moreover, green hydrogen will not be available in the required quantities for the foreseeable future.” This is what Alexander Bethe, Chairman of the Association of Coal Importers (VdKi), Berlin/Germany, said at the VdKi annual meeting in Duisburg.

In the last crisis winter, hard coal was on hand as a back-up. After the EU embargo, sufficient proven alternative coal was available for the expanded power plant park. Because of the mild winter, the hard coal stocks are now well filled. But another possible crisis winter is on the horizon. The industry is prepared for that, too. Bethe: “We are there when we are needed”.

And not only that: “Germany needs at least 50 new gas-fired power plants to meet its energy needs by 2030. Taking into account lengthy planning and building permits, a lack of willingness to invest when gas prices are high and lengthy construction phases, this is not feasible,” says Bethe. “Green electricity from wind and solar also urgently needs controllable power plants because of the dark lulls. And since all nuclear power plants in Germany are shut down and gas-fired power plants are lacking, we need more realism in energy policy.” The VDKi chairman calls on the Federal Government to immediately lift anticipatory fuel bans. “First expand green technology, then switch it off. And not the other way round.”

The discussion that hard coal is only needed for two winters is unrealistic, according to Bethe. “And let’s look at our modern coal-fired power plants and take into account that high CO₂ savings are possible with CCS/CCU technology or co-firing with ammonia, for example. Countries like Norway, the Netherlands or Denmark are already pushing these technologies. Why not Germany as well? ”

The production of hard coal worldwide has reached a new record level of around 8 Mt. Germany imports less than 1% of this record amount. And now that the supply of Russian natural gas is no longer available, the VdKi is certain: In view of the manageable and expensive world LNG production, demand for hard coal will not collapse. Bethe: “Hard coal plays a significant role in securing the power supply in Germany. Until well into the 2030s”. (VDKi/Si.)

“It is irresponsible to talk about the end of hard coal without having reliable alternatives”. This is what Alexander Bethe, Chairman of the Board of the Coal Importers Association (VdKi), Berlin/Germany, said at the traditional New Year’s reception of his association in Hamburg. “Politics must be honest with itself. There is no way around coal as a mainstay in the medium term”.

Instead of discussions about shortening operating times, the focus should be on expanding the grids and storage facilities. “We need a reorientation of energy policy and an immediate lifting of the anticipatory fuel bans: first build up green technology, then switch it off. And not the other way around,” says Bethe.

The discussion that coal is only needed for one or two winters is unrealistic and counterproductive. This will not convince logistics companies in the long term to invest more in means of transport and more staff. After the stop on Russian coal, his industry reacted very well. In a short time, the industry switched to alternative types of coal. The trade has set new priorities: USA, South Africa, Colombia.

Gas will remain expensive, as 100 bn m³ of pipeline gas will have to be replaced in Western Europe. LNG export capacities and means of transport do not fall from the sky. The new fleet of gas-fired power plants envisaged as a bridging technology is so far only in fragments.

Chancellor Scholz had spoken of a turn of an era. Bethe: “The turn of an era in the energy sector must include that the bitterly needed hard coal will accompany the energy turnaround for longer”. CO₂ capture and storage (CCS) for coal-fired power plants should not be excluded.

On the figures: Global coal consumption could reach a new record high of more than 8 bn t in 2023. Germany will import about 43 Mt of this (steam coal, coking coal, coke). That is about 0.6 % of world production.(VDKi/Si.)

“We are well prepared for the German government’s announcement to run coal-fired power plants more because of the gas shortage.“ This is what the Chairman of the Board of the Association of Coal Importers (VdKi), Berlin/Germany, Alexander Bethe, said at the VdKi annual meeting in Berlin. He also said that the replacement of Russian coal due to the EU embargo was in full swing. Bethe: “The changeover must succeed. The coal-fired power plants are under great pressure. The industry is confident”.

The world market for steam coal is being redistributed. The very high share of 50 % of Russian coal in total imports can be replaced from other coal-exporting countries. The test programmes of the new coal types from South Africa, Australia, USA, Colombia and Indonesia are in full swing, he said.

“However, we have problems with logistics,” says Bethe. The seaports in Amsterdam, Rotterdam and Antwerp are working at full capacity due to the high arrival of Russian coal (until the beginning of August) plus alternatives and they are running at their limit. There are also bottlenecks in inland logistics, the transport of coal from the seaports to the coal-fired power plants by ship or rail, due to the high staff shortage. The VDKi calls for at least a five-year perspective for upgrading seaport terminals and inland logistics.

The full utilisation of the coal-fired power plants, however, is not a problem. And Bethe also does not see any drama in power generation now in summer because of the availability of renewable energies.

“The coal-fired power plants will ensure security of supply in electricity production already in the summer months, so that a gas reserve can be created with the available gas for the coming winter,” says the VdKi board chairman.

Traditionally, VdKi publishes a yearbook with the most important facts, figures and data for its annual meeting. Among other things, it says: “Never before has more coal been used to generate electricity globally than last year. According to calculations by the International Energy Agency (IEA), more coal could be produced and demanded worldwide in 2022 than ever before. The IEA expects records for the coming years as well”.

And Bethe adds: “We expect consumption of steam coal to exceed 30 Mt in Germany this year. That would again be an increase of more than 11 % compared to the previous year”.

More on the developments in the global coal and energy market in the current VdKi Annual Report, available on the VdKi website: www.kohlenimporteure.de (English version only in September 2022). (VDKi/Si.)

Based on the latest survey of members of Germany’s Coal Importers Association (VDKi) in Berlin, hard coal imports from Russia can, at least in the medium term, be replaced entirely by imports from other countries (Figure  1). These other countries include the USA, South Africa, Australia, Colombia, Mozambique, Indonesia. Approximately 80 % of the members surveyed were in favour of this.

Alexander Bethe, Chairman of the VDKi: “We have an efficient global market with approximately 1 bn t hard coal. In the last year, Germany has imported approximately 20 Mt of hard coal from Russia, approximately 18 Mt of which are for the power industry. This is about 2 % of the global trade”.

Due to the reorganisation of goods flows and shortages of certain hard coal qualities, the VDKi believes there will soon be price increases. According to approximately 60 % of those surveyed, however, the prices for imported hard coal will stagnate in the medium to long term.

A delivery stop would hardly be surprising for the VDKi. Since September last year, logistical problems with the import of Russian hard coal have continued to pile up. Since then, retailers and consumers have been searching for alternatives and already import from countries other than Russia.

Besides, Russian hard coal has specific qualitative properties. The switch to alternative hard coal qualities will certainly require the power station engineers in the transition period as the change will not be easy. The relevant authorities for handling design specifications should also bear this in mind.  “But ultimately”, says Bethe, “we will overcome this challenge”.

56 % of those surveyed graded the current supply situation for this winter as “satisfactory”. And for next winter, another 22 %.

In the context of a national hard coal reserve, the vast majority of VDKi members surveyed, 84 %, spoke out in favour of a decentralised stockpiling of hard coal. 16 % voted for centralised storage.

Stephan Riezler (STEAG GmbH), VDKi board member: “By next winter, we should be able to dispense with Russian hard coal altogether.” But it is important to consider: Germany’s most stringent emission limits may need to be adjusted for a reasonable period. (VDKi/Si.)

Events during the year 2021 illustrate very clearly that supply security is and will remain one of the most important topics of the energy transition. The penultimate act in the nuclear power exit in Germany, the shutdown of 4 GW of power plant capacity, points to the importance of the remaining base of controllable, secure capacity. Securing power supply during the energy transition is also a priority for the German Coal Importer Association (VDKi), Berlin/Germany, because the availability of electrical power is indispensable as the share of production from renewable energies continues to rise.

The VDKi explicitly warns against a crash transformation of the German electricity and district heating supply within only a few legislative periods. The system of large fossil-fuelled power plants with reliable output that has always served the country well, even during the dark doldrums – especially as a back-up – must not be hastily destabilised. The VDKi explicitly emphasises the important role of hard coal-fired power plants for the supply of electricity and district heating. In view of tense market situations, switching back-up generation capacities exclusively to gas is detrimental to the security of supply and will impose even higher costs on consumers. The future course of energy policy, which also affects the market structure, must be defined quickly so that the transition to a sustainable and secure energy supply can be secured and so that prospects for the future can be clearly outlined for companies and their employees.

Power generation using hard coal increased by 26.7 % in 2021. The use of hard coal in the power plants was favoured by the extreme rise in prices of the competitive energy source natural gas as well as the lower electricity feed-in from wind power plants related to weather conditions. The energy source benefited from the economic effects with regard to sales to the steel industry. The share of hard coal in total primary energy consumption (PEC) increased from 7.5 to 8.6 %. German hard coal imports increased significantly by 7.2 Mt (24.5 %) to approximately 39 Mt in 2021. Imports of coking coals increased by 16 %, imports of steam coals by 28 %.

According to provisional calculations by the VDKi, global hard coal production increased by more than 5 % to 7.4 bn t in 2021. China once again posted a considerable increase in production of 200 Mt in 2021 because of the rapid economic recovery. India, the USA, Russia, Vietnam and Colombia also benefited and were able to increase their production.

Seaborne trade increased as well by almost 6 % to 1,180 Mt. With the exception of Australia and South Africa, the exports of the largest coal exporting countries rose. Compared to the previous year, Russia with an increase of 13 % and the USA with an increase of 44 % were even able to surpass the export levels of 2019.

At the VDKi’s New Year’s reception on 14th January 2022 in Hamburg/Germany, CEO Alexander Bethe bid farewell to the previous managing director Manfred Müller and thanked him for his excellent work in the difficult year 2021, which was overshadowed by the coronavirus pandemic. He will be succeeded by former ARD correspondent Jürgen Osterhage as of 1st February 2022. (VDKi/Si.)

Over the course of 2021, it has become clear that security of supply is and will remain one of the most important topics of the energy transition. The expansion of renewable energies that are dependent on supply, wind and solar, is at the centre of energy policy. The continuously increasing share of renewable energies increases the need to hold on to the power we have available. An adequate, controllable and secure service has to be available during “slack periods”, i. e. periods with limited power from wind turbines and solar panels. And when there are prolonged slack periods, the neither electricity imports from neighbouring countries nor incentives for flexibility on the electricity demand side can meet the high demand in Germany. Hard coal can and will be a reliable partner for the security of supply in Germany for as long as it is still permitted – not only for power supply, but also in a transitional period for district heating.

To enable the transformation into a sustainable, secure energy supply and show companies and their employees prospects for the future, decisions on energy policy that also concern market design need to be made quickly.

The high demand for electricity owing to the recovery of German industry after the economic slump in 2020 brought about by the pandemic, along with the low availability of wind power, has significantly reduced the share of renewable energies in electricity generation. Hard coal has largely closed this gap and made an important and reliable contribution to electricity generation. In the first three quarters of 2021, the amount of electricity generated from hard coal increased by around 35 % to almost 37 TWh. At 8.6 %, hard coal made a significant contribution to security of supply, underlining its important role in ensuring that the energy transition is a success. For the calendar year 2021, the Coal Importers Association (VDKi), Berlin/Germany, expects hard coal imports to Germany to reach a level of 38 to 39 Mt, which is approximately 6 to 7 Mt more than the previous year.

On the world market for steam coal, China continues to be the dominant factor on the demand side. In the run-up to the celebrations for the 100th anniversary of the Chinese Communist Party, the country’s own hard coal production capacities were shut down for reasons of health and safety. Since the Chinese economy’s Covid comeback, these capacities are now lacking, but they are being structurally rebuilt. The restart after the pandemic is also causing problems for Russian hard coal exports, and rail logistics is currently falling far short of requirements. For Europe, the gap left by Russia is being filled with hard coal from South Africa, which, after a long absence from the market, is now increasingly pushing its way into the ARA (Amsterdam/Rotterdam/Antwerp) markets.

Despite the strong increase in global demand for hard coal, the German market has had a secure supply. The extremely fluctuating demand situation poses an enormous challenge for domestic logistics.

The price of hard coal, which has risen sharply since the start of the year has not led to a slowdown in hard coal demand. Since the price of the competing energy source natural gas rose much faster than hard coal, the use of hard coal is economically attractive despite the high cost in terms of CO₂. As a result of this very volatile market situation, in particular due to the development of gas prices, the stock exchange prices for electricity have also increased significantly. (VDKi/Si.)

The first half of 2021 demonstrated that despite the agreed phase-out of coal, the fuel continues to make an important and reliable contribution to electricity generation. The amount of electricity generated in coal power stations increased by more than a third (35.6 %) to almost 25 TWh during a period of low temperatures and significantly less wind power compared to the previous year. Through this growth, coal made a significant contribution to security of supply, underlining its important role in ensuring that the energy transition is a success. According to Germany’s Coal Importers Association (VDKi) in Berlin, coal will continue to be needed in this role in the future, particularly since the German government has increased its forecast for energy consumption in 2030 to between 645 and 665 TWh/a.

The Coal Phase-out Act came into force on 8th August 2020. The first three invitations to tender saw 25 successful bids with a bid volume of 8,435 MW. This included a number of young, modern coal power stations. The mechanism of the law has therefore not resulted in primarily older power stations with higher specific CO₂ emissions being taken off the grid.

Coal power stations in southern Germany are at a big disadvantage at the auctions for capacity to be decommissioned. They were excluded from the first tender process altogether, and a network factor is being taken into account in subsequent tenders, which is very likely to prevent bids from being successful. As a result, employees at south German coal power stations are at a significant disadvantage when it comes to any socially responsible reduction in the workforce.

There is also an urgent need for action with regard to district heating supply. In many German towns and cities, district heating is supplied by highly efficient coal-fired cogeneration plants. The VDKi member companies affected have highlighted difficulties with potential plans to switch to gas or biomass. There is a lack of funding or simply not enough usable gas grid connections.

Now that the Climate Change Act has been passed, the conditions in the energy economy need to be rapidly adapted.

Global coal production declined by approximately 220 M t to 7.06 Bn t in 2020 due to the pandemic, reaching 2018 levels. Essentially, it is only thanks to China’s (+94 M t) and India’s (+7 M t) increases in production that global coal production did not fall even more drastically. Seaborne trade declined in 2020 by 149 M t or 12.1 % to 1,083 M t. Seaborne coking coal exports declined by 13.2 % to 264 M t and the steam coal market by 11.7 % to 819 M t. Coal also continued to ensure economic growth in Asia and other growth regions, with the share of seaborne trade in Asia now 84 %.

On 31st August this year, VDKi celebrated its 125th anniversary in the knowledge that its members continue to make an important and extremely reliable contribution to the German economy through their coal activities. (VDKi/Si.)

The decision to phase out fossil fuels has already been taken. The intention behind Germany’s Coal-Fired Power Generation Termination Act (KVBG) is to resolve a social conflict, while also guaranteeing planning reliability for everyone involved. However, the legislation is not catering to this aspiration in full. In particular operators of young, modern coal-fired power stations are currently uncertain as to whether it will be possible to avoid the kind of massive losses some are currently predicting.

Power generation from coal has become a stopgap, and coal-fired power stations are still not being adequately compensated for this. Indeed, some are not receiving any compensation at all. Even the most recent improvements to the legislation have not really changed anything in this regard. Young coal-fired power stations are not protected. Particular emphasis is therefore being placed on the evaluation included in the KVBG.

Increased use of renewable energy sources requires flanking by secured power station capacity. This includes power generation during periods when renewable sources are not delivering their full capacity, e. g., due to a lack of wind or sunshine. Young, modern coal-fired power stations are already available today. Yet it remains uncertain whether the market will actually deliver the necessary increase in new gas-fired power station capacity and companies can continue to rely on their investment being protected.

Although many members of the Coal Importers Association (VDKi), Berlin/Germany, are clearly not in favour of the switchover from coal-fired power stations to other fuels, the membership does generally understand that power stations, in particular municipal power stations with combined heat and power (CHP), need to be switched over to natural gas. However, solid biomass must also be given a fair chance within the scope of a funding programme for greenhouse gas neutral generation and use of heat. After all, coal-fired power station locations with a suitable port are predestined for this.

The VDKi is relying on an unpre­judiced evaluation of the KVBG which also incorporates young coal-fired power stations to accompany the further expansion of renewable energy sources.
(VDKi/Si.)