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Hogsback on the great European coal rebound

LAUGH or cry, they were the two emotions that stirred within Hogsback when it was reported earlie...

Tim Treadgold

Coal critics said they were appalled by the report from EnergyBilanz, an electricity industry association, that 162 billion kilowatt hours of power were generated last year from the burning of brown coal, or lignite.

According to the association, that number represents the highest level of brown coal consumption since 1990, triggering a fresh round of finger pointing and angst in Europe’s biggest economy.

The problem, which The Hog has explored several times over the past few years, is Europe and the other regions that subscribed to a green power future are waking to the fact that they can’t afford it.

That simple statement (based on the obvious fact that alternative and renewable energy costs too much) will send the green lobby into a spin, but it will also highlight the fact that there is a major disconnection between the reality of today’s harsh economic conditions and the dreamworld of a time when energy is both abundant and cheap.

In the case of Germany, which is fast becoming the testing ground for all sorts of energy experiments, the problem is being magnified by three issues.

Firstly, Germany took the bold (or foolish) step of announcing a plan to mothball all of its nuclear reactors as a knee-jerk response to the Fukushima accident in Japan.

Secondly, it has placed too much faith in the ability of wind farms in the North Sea to generate the base-load power that Germany’s famous industrial heartland needs to make the country’s number one export, high-specification machinery and high-class cars.

Thirdly, the US used its technical expertise and hard-headed knowhow to unlock a treasure-trove of natural gas, which is flooding the North American market with cheap energy and changing how the world works.

For Europe, and Germany in particular, a crisis is brewing that could derail the painfully slow resuscitation of a region bedevilled by an unaffordable social welfare system, unproductive workforce, and simmering rivalries inside a union of countries reverting to the traditional position of disliking each other intensely.

So far, most attention on Europe’s problems has focused on the area known as Club Med, that group of lazy southern countries.

But as the cost and availability of power to drive Europe’s industries shifts into crisis mode the debate will turn north, and it will turn to the coal industry that is emerging as a saviour, not the sinner as it has been portrayed.

What the anti-coal crusaders cannot swallow, or even acknowledge, is that they are being exposed as the true wreckers of the region. It is not coal which is doing the damage to Europe (or the rest of the world), it is the headlong and badly considered rush out of coal and into the unknown of a solar/wind future.

Major industry groups in Germany are starting to panic over the energy crisis that is pricing them out of business.

Blame, so far, is being heaped on European law makers who have mandated an increased use of green power and reduced use of fossil fuels.

But it will not be long before the debate widens and goes global as the cost factor of today outweighs an unproven and vague potential benefit sometime in the future.

Germany is the guinea pig in the way the world is shifting and while it is a long way from Australia, there is no doubt that the European energy shift will be felt around the world with potentially significant benefits of Australian coal mines.

Rather than push too far into the unknown but high-cost world of wind and solar, there will be recognition that if a country is to protect its key industries and maintained the living standards of its population, it must have competitively priced power.

The US knows this and that’s why another green group nonsense, claims that gas production stimulation by underground rock fracturing, has been tipped in the garbage bin already overflowing with disproved green assertions.

The rise of cheap US gas, the mothballing of the nuclear fleet, the failure of wind and solar to deliver reliable cost-competitive electricity is combining with rising demand for power to drive a revival in demand for coal – the global low-cost and reliable source of electricity.

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