Response to: US Shift to Natural Gas – Effects on EU Coal Consumption

By Amy

(Note: This is a response to another post here. It’s entered as a new post in order to maintain the graphics – John)

Samantha brought up some very interesting points. It is fascinating that a developed country like Germany, who has been the role model for clean energy, is now building coal-fired power plants when most developed countries are reducing coal in their overall energy mix. In 2012, lignite and hard coal made up 46% of overall energy production in Germany.

I want to address the question about whether or not a similar coal renaissance is likely in other developed countries like Japan. I believe the answer is yes because of the merit order theory, which explains the order that energy sources are used to meet demand. The cheapest sources will be utilized first. Currently, the three cheapest sources are renewables, nuclear, and then coal. (Source: http://en.wikipedia.org/wiki/Merit_order). As countries like Japan and Germany reduce nuclear usage, coal will be next in line as an energy source. The only way to prevent a coal renaissance is for the government to step in with regulation that will effectively increase carbon prices. Without government regulation, the current trend towards the use of more coal in countries like Germany will continue to persist.

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About macomberjohnd

HBS Finance faculty interested in sustainability in the built environment including devices, structures, townships, and cities.

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  1. Most Commented through November 26 | Innovation in Business, Energy, and Environment - November 29, 2014

    […] US Shift to Natural Gas – Effects on EU Coal Consumption […]

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