European policy makers retreat slightly from green energy push, alarmed at power prices roughly double that of US, allow expansion of mines that produce dirtiest form of coal

Allison Oesterle

NEW YORK , January 6, 2014 (Bloomberg LP) – Europe’s appetite for cheaper electricity is reviving mines that produce the dirtiest type of coal, threatening to boost pollution and raze villages that have survived since medieval times.

Across the continent’s mining belt, from Germany to Poland and the Czech Republic, utilities such as Vattenfall AB, CEZ AS and PGE SA are expanding open-pit mines that produce lignite. The moist, brown form of the fossil fuel packs less energy and more carbon than more frequently burned hard coal.

The projects go against the grain of European Union rules limiting emissions and pushing cleaner energy. Alarmed at power prices about double U.S. levels, policy makers are allowing the expansion of coal mines that were scaled back in the past two decades, stirring a backlash in the targeted communities.

“It’s absurd,” said Petra Roesch, mayor of Proschim, a 700-year-old village southeast of Berlin that would be uprooted by Vattenfall’s mine expansion. “Germany wants to transition toward renewable energy, and we’re being deprived of our land.”

Lignite demand worldwide is forecast to rise as much as 5.4 percent by 2020, according to the International Energy Agency. At the same time, it estimates consumption must fall 10 percent over that period to achieve goals endorsed by EU and world leaders to hold global warming to 2 degrees Celsius by the end of this century.

Mining machines the size of skyscrapers stand just to the north of Proschim ready to swallow up the town of 330 residents near the German border with Poland. Vattenfall, which is owned by the Swedish government, is seeking approval to knock down buildings in the town to expand its Welzow-Sued lignite mine.

Middle Ages

In Poland, PGE, which is the nation’s largest power producer, is upgrading a lignite-burning unit at its Turow plant. In the Czech Republic, a plan to relax mining limits may annihilate Horni Jiretin, a 750-year-old village that survived everything from plagues in the middle ages to the last two world wars.

Lignite’s revival is concentrating attention on the drawbacks of the fossil fuel and may actually bolster support for renewables such as wind and solar power, according to Barry O’Flynn, a director in the environmental finance and clean technology team at Ernst & Young LLP.

“There will be increasing emissions restraints and controls in the years ahead,” O’Flynn said. “Lignite is not a threat to renewables. It could benefit them, since the emissions from lignite-fired plants will need to be offset” under EU pollution restrictions.

Open-Pit Mining

Geologically younger than hard coal, lignite is mostly found near the surface of the Earth, making open-pit mines the most economical way to extract it. Lignite use fell 40 percent from 1990 to 2010 as governments across the former Soviet bloc nations closed aging industrial plants.

Now, Poland, which gets almost 90 percent of its electricity from coal, is stepping up use of the fuel as a way of ensuring energy security and maintaining employment in some of the nation’s poorest regions.

Lignite power production rose 3.7 percent last year in Poland, while output from hard coal plants fell 7 percent, according to PGE, the state utility. In late 2011, it started a 858-megawatt unit at its Belchatow plant, Europe’s largest thermal power generation facility. The company’s strategy from 2012 assumed long-term reliance on lignite due to its low costs and the prospect of building new mines.

In the Czech Republic, Severni Energeticka AS is seeking to expand its mine past limits imposed in 1991, two years after the collapse of communism.

Eroica Symphony

Giant excavator machines at the Horni Jiretin pit, which stretches as far as the eye can see, eat into the ground around the clock, loading lignite onto conveyor belts that fill waiting railroad cars.

Nearby stands Jezeri, a baroque castle where Beethoven premiered his “Eroica” symphony two centuries ago. Peeling walls and half-collapsed ceilings echo the screaming machines below. The view from the window for Vladimir Burt reveals the sprawling pit and smoking chimneys from a chemical factory nearby.

“There used to be a lake where we’d go swimming every day,” said Burt, the deputy mayor of Horni Jiretin, pointing to the bottom of the mine. “The Communists started this devastation, and this government wants to finish it.”

CEZ, the largest Czech producer of electricity controlled by the state, generates 48 percent of its power in coal-fired plants. Its lignite mining unit, active in the same region as the army mine, plans to increase production 6 percent to 24.1 million tons this year, the company said on Nov. 12.

Eliminated Villages

In Germany’s Lausitz region, lignite mining has eliminated 136 villages since 1924, according to the Archiv Verschwundener Orte, a museum in Forst that chronicles the impacts of mining.

The rock is the single most important source of electricity for the nation, accounting for 26 percent of power production last year, according to AG Energiebilanzen e.V., a group that brings together the energy industry and energy-related research institutes. Mining lignite sustains about 22,000 jobs in the Lausitz, Vattenfall says.

Expanding the mine at Proschim would unlock 204 million tons more of lignite for Vattenfall, which digs up about 60 million tons a year. Much of it is hauled by train to the Scharze Pumpe power plant in Spremberg, which produces enough power for 2.4 million homes. Expanding the mine would keep the generation plant working until 2042.

Traditional Energy

“Lignite is the only traditional energy source that is in the long run domestically available in sufficient amounts and at affordable prices,” said Kathi Gerstner, a spokeswoman for Vattenfall. “All the alternatives foreseeable today are more expensive, strengthen import dependency or drive away investments, value-creation and jobs.”

Local authorities in the state of Brandenburg say a decision to extend the mine is due in the first half of this year. Meanwhile, Debate about the mine is dividing the community. Olaf Koall, a Vattenfall employee who lives with his wife and two children in Bohsdorf near Cottbus, says Germany needs more coal even as it expands renewables.

“The sun isn’t shining today, and there’s hardly any wind,” Koall said on a December day as he handed pro-coal banners at a demonstration. “Coal can provide the energy needed, and at affordable prices. If we didn’t have coal, we wouldn’t have jobs.”

Brandenburg’s state government, which seeks to reduce carbon dioxide emissions 72 percent by 2030 from 1990 levels and meet 40 percent of the state’s final energy consumption with renewable sources by that same year, will decide whether to authorize Vattenfall’s mining plans.

“We know that it’s a very polarizing and emotional topic,” Klaus-Otto Weymanns, a division head at the Brandenburg Ministry for Infrastructure and Agriculture, told reporters Dec. 10 in Cottbus. “We have not made a decision yet.”

In Proschim, a red-brick town rebuilt after a fifth of its homes were destroyed in World War II, Hannelore and Klaus Jurischka live in a farmhouse rebuilt after it burned to the ground in 1945. It now has solar panels on the roof, part of the town’s effort to foster renewable energy. Proschim’s photovoltaics, wind and biomass plants produce enough power for about 5,000 homes.

“I’m not leaving,” said Hannelore Jurischka, standing in the inner courtyard of her home, decorated with a large cherry laurel bush and two blue-hatted garden gnomes. “This is my home. No amount of money can compensate me for that.”

--With assistance from Marek Strzelecki in Warsaw, Louise Downing in London and Todd White in Madrid. Editors: Reed Landberg, Will Kennedy

To contact the reporters on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net; Ladka Bauerova in Prague at lbauerova@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; Reed Landberg at landberg@bloomberg.net

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