New report from Agora Energiewende published

Though Germany was able to reach, and even overachieve, their 2020 climate target, statistics from the Agora Energiewende thinktank suggests the country would have fallen short of the target if it wasn’t for the COVID-19 pandemic.

German thinktank, Agora Energiewende kicked off 2021 with the release of their latest report, The energy transition in the Corona year: state of affairs. The report looks back at trends in carbon emissions and the energy markets throughout 2020, a year dominated and characterised by the global COVID-19 pandemic. Germany’s climate target for 2020 was a reduction in greenhouse gas emissions of 40% compared to 1990 levels. The Agora Energiewende reports that Germany overachieved this target with an overall reduction of 42.3% in emissions, equating to a drop in 80 million metric tons from 1990 levels. However, one major finding of the report, was that around 60% of this drop was related to the impacts of the coronavirus. In fact, it is estimated that the overall reduction would have only been 37.8% without the impacts of COVID-19, meaning Germany would have missed its target.

 

Difference in 2020 emission reductions compared to 2019 with and without the coronavirus pandemic. Source: Agora Energiewende (2021): Die Energiewende im Corona-Jahr: Stand der Dinge 2020. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2021.

 

A decline in emissions throughout the year was driven by declines in three main areas; energy consumption, which fell 9% from 2019, industrial production and transport. All of these reductions were predominantly a result of the coronavirus-induced recession. For example, the report notes that travel-related emissions have seen minimal change between 1990-2019. During 2020, however, sales in aviation fuel fell to just over a third of the figures from the previous year. This was primarily due to major travel restrictions, particularly in international aviation.

Only evidence of real climate action from the electricity sector

The biggest change in 2020, which reflected active climate action, was the development of the electricity sector, in which coal has historically been outcompeted by gas and renewables. For the first time ever, gas, coal and nuclear only supplied 50% of Germany’s power. Renewables now account for 45% of the power mix in Germany.

 

2020 electricity mix for Germany, 2019 percentage shares in brackets. Source: Agora Energiewende (2021): Die Energiewende im Corona-Jahr: Stand der Dinge 2020. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2021.
Installed capacity (GW) of renewable energy generation in 2019 compared to 2020. Source: Agora Energiewende (2021): Die Energiewende im Corona-Jahr: Stand der Dinge 2020. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2021.

 

According to the report, the majority (around two thirds) of the increase in renewable supply in 2020 was due to good wind conditions, rather than expansion of wind generating capacity, which grew comparatively slowly. Photovoltaics, however, accounted for around 30% of the increase and, for the first time ever, provided more power than hard coal (8.5 TWh more). Dr. Patrick Graichen, director of Agora Energiewende, believes however that expansion needs to continue, if Germany is to meet its 2030 target: “The growth of wind power must be tripled and solar power doubled in line with the installation rates we had a few years ago. Germany has managed to increase the share of renewables in electricity consumption from 17 to 46 percent over the past ten years. We now need a similar effort consistently up to 2030.”

Coal and nuclear take a hit

Coal plants have taken the biggest hit during 2020 events as the cost of CO2 allowances remained high whilst demand fell, making it unable to compete with cheap renewables and competitive gas prices. As the German government begins its coal-phaseout towards 2038, coal generation is diminishing. Since 2015, coal-fired electricity generation has already more than halved, whilst in the same time period, wind capacity increased by two thirds. Germany has also initiated a nuclear-phaseout and nuclear production dropped 14.4% in 2020 as the Philippsburg 2 nuclear power station was closed.

 

Future Forecast

Whilst the price of CO2 allowances in 2020 sat around €24 per metric ton, EU heads of state and governments committed in December 2020 to raise the European 2030 reduction target from 55% to 65%, which will likely result in higher carbon prices. Furthermore, it was decided that a carbon price of €25 per ton will apply on a national level to all heating fuels from January 2021. Consequently, the report expects an increase in building retrofits, renewable heating production and electromobility, but also argues that this still won’t be enough to meet 2030 targets.

The report describes the upcoming year as ‘eventful’ as the 26th COP in Glasgow will see the United States re-joining the Paris Agreement and a likely increase in 2030 targets for signatories. The European Commission is also expected to pass its climate package this year.