Old King Coal
Czech Investors See a Future for Coal in Germany

Germany’s struggling coal assets are attracting attention from the country’s eastern neighbor, as two wealthy Czech magnates and a Czech state-owned utility—convinced that coal has a future even in green-minded Germany—are considering investing in the troubled industry. Bloomberg reports:

[A]dept at squeezing profits from the cheapest and dirtiest coal…[the investors are] betting that Germany’s need for lignite to guarantee energy security for years to come will eclipse concerns over emissions.

“At an attractive price, the business can be interesting for Czechs who are very familiar with Germany and have lignite expertise,” Sven Diermeier, an analyst at Independent Research GmbH, said by phone from Frankfurt. “It may also be a bet on increasing wholesale electricity and coal prices.”

Germany has a long history of mining and burning lignite, a particularly filthy variety of coal, which is already a dirty energy source. But the rapid expansion of the country’s renewable energy industry (coming as a result of heavy government subsidization) has made it more difficult for lignite-burning plants profitably to operate. This is a problem for Berlin, which, despite all of its green rhetoric, still needs lignite to keep the lights on. While wind and solar power might not emit greenhouse gases, they also don’t consistently provide power, and with the country’s nuclear reactors being phased out (an emotional decision made in the wake of the 2011 Fukushima disaster), Germany has had to increasingly rely on lignite for its baseload power.

Barring a breakthrough in commercially scalable (and cost-effective) energy storage, Berlin will keep mining and burning lignite for the foreseeable future—and that’s why these Czech investors are interested in these assets.

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