Gutting Germany — Part 1: Coal
A story of economic suicide in the face of resource scarcity
Germany is the economic powerhouse of Europe — or at least it was until 2022. Now, it is facing rapid deindustrialization due to a major loss to its energy supplies, with no real solution in sight. Despite the massive PR campaign depicting it as a wind and solar powered technological wonder, its economy is still wholly dependent on cheap fossil fuels — now lost to economic warfare waged against Germany’s biggest supplier of energy. Its economic woes, however, has much deeper roots than what recent events might lead you to believe — something that will eventually affect all industrial nations much sooner than you would think.
The story of German energy use in the past 30 years is a story of a long slow energy decline. As you can see on the chart above, the overall energy intensity of the German industry has hit its all time high in the 1980's — after which one can see a steady decline in coal (as well as nuclear) power. At this point one could ask: why did they give up on mining already in the 1990's? Was it an early sign of climate awareness? Or did they voluntarily left coal behind and consciously decided to “decouple” their industries from fossil fuels?
Hardly. I argue it was due to something entirely different. As Clean Energy Wire — one of the many advocates of ‘renewables’—inadvertently explains:
The post-war economic boom in Germany (Wirtschaftswunder) was fueled by hard coal mined in the states of North Rhine-Westphalia and the Saarland, which powered the industries of West Germany. But hard coal has since lost its competitive edge. As of December 2018, Germany doesn’t have any domestic hard coal mining left.
Of the 83 billion tonnes of hard coal still in the ground in Germany, 36 million tonnes are considered mineable, but their extremely deep and complicated geological location makes mining too costly to compete on the world market. The average cost for mining one tonne of hard coal in Germany is 180 euros; the price for imported hard coal was between 86 and 96 euros per tonne in 2017.
Sure enough: when easy to get, concentrated, close to surface resources run out, as we have seen in the case of West Germany above, we might easily find ourselves digging tunnels under miles of rock — requiring a lot of shoveling and trucking of debris — while posing enormous technical challenges:
These challenges include the catastrophic events that are often met in deep mining engineering: rockbursts, gas outbursts, high in situ and redistributed stresses, large deformation, squeezing and creeping rocks, and high temperature.
Technology aimed at fending off these problems, on the other hand, lead to higher and higher energy use — and thus higher costs (owed to the use of pumps, air conditioning systems, steel reinforcements and so on). Put it bluntly: we might have a lot of resources underground, but if they are out of reach no one will bother to get them.
The problem in general is, that we still rely on mining to get both energy (coal for example) and metals to build out our civilization from. And when we talk about extracting energy resources like coal, this can all too easily turn into a death spiral. Every year it takes more and more energy to get these materials due to increasing technological complexity. This makes electricity, for example (generated by coal) even more expensive — quickly turning mining projects (using lots of this very expensive electricity) unprofitable. This process naturally leads to closures and delayed investments for a lack of returns — causing supply to fall further and electricity prices rise higher still.
Here, I must mention before you ask: mankind faces the very same issue with ‘renewables’ — this is why I refer to them always in quotation marks. The mining of copper, metallurgical grade silicon and other minerals like lithium are also becoming ever more costly and energy intensive to get, as cheap and easy to access deposits deplete and being replaced by more technologically challenging and thus energy intensive sources — repeating the very same death spiral we have seen with electricity generated by coal. And remember, before we could recycle these expensive materials (which we can’t) we would need to build them out first. A classic catch-22 situation: we have left the transition to ‘renewables’ much too late.
This relentless energetic cost increase is a well researched and proven fact. There is no way turning it back. Despite all our efforts made at increasing the energy efficiency of our processes and machinery, resource depletion always and demonstrably had (and will have) the upper hand. We are literally trying to walk up against a landslide here.
This obviously cannot allowed to go on unabated. Especially not in Germany. The Clean Energy Wire article thus continues:
Instead coal is imported from Russia (50%), the United States (17%), Australia (13%) and Colombia (6%), followed by Poland, Canada and South Africa (2021 data).
Lacking any viable fossil fuel reserves, Germany has thus started to import its own share of this polluting and climate wrecking fuel from where it could still be mined in very large quantities and in an economically viable manner: Russia… Or at least they did till August 2022, when the EU decided to put an end to coal imports from its biggest supplier.
This has naturally impacted a very large portion of Germany’s metallurgical grade hard coal (anthracite) as well, as what has remained of its once vast coal industry is solely providing its economy with low grade brown coal — unsuitable for its steel industry, and only good for generating electricity in highly inefficient thermal power plants.
Now the question poses itself: how should Germany survive economically after losing 50% of its coal imports, especially when it comes to coking coal, vital to its famous steel industry?
I guess, the political elite thought, that German companies will now have to buy this essential resource elsewhere. Were it not for a major economic input like coal, but let’s say coat buttons, I would say: sure, fine. At this point however one cannot help but wonder what was the thinking behind shutting off half of this vital energy source when we are already in an era of a global coal shortage?
Remember: the same energy-economic death spiral, referred to as resource depletion, has started to bite deep in many other countries as well — especially in China — with supply clearly struggling to keep up with demand, and with prices shooting up already well before 2022 began. The EU import ban has just turned this price spike into a high plateau — at around 400 USD/ton — a level five times higher than it was during the previous years. This has thrown the monkey wrench into many business models reliant on cheap and abundant fossil fuels (and the electricity derived from it), like steel making and metallurgy in general… All vital inputs to ‘renewables’ by the way. Another undesired feedback loop.
Now, that global coal prices are well above breakeven levels for German open pit mines, coal has made its biggest comeback since the reunification with East Germany. This has, of course, imposed further burdens on the environment (from pollution to water use, not to mention increased CO2 release), but that’s a story for another day. Deep mines producing the much coveted black coal, however, are complex things to build taking at least a decade to complete, and as we have seen are energy intensive business to run. The main issue here is that these high prices didn’t make black coal more abundant in a country which has already burned through its easy to get reserves.
Resource depletion is always and everywhere an economic phenomenon. As easy to get and valuable (close to surface, above ground water level, nearby, high grade etc.) resources run out, people turn towards ores lying deeper, further away (sometimes thousands of kilometers away) and often lower in quality. At first this merely implies higher costs, but as soon as this process starts to affect energy production itself, it rapidly becomes a self-reinforcing feedback loop.
This is what we see today in Germany — with no end in sight. Till now the process was papered over by imports, but as soon as these external sources are gone reality will start to bite. Resource depletion knows no borders however, and what has happened to the German coal industry will eventually happen to every country around the world. As William Gibson used to say:
The future is here. It’s just not evenly distributed yet.
I strongly believe, that what we are witnessing since 2021 is but the beginning of the longest and deepest energy crisis humanity has ever suffered. Pandemics, wars, sanctions and bad policies have only made this issue worse by speeding up the drawdown of the last remaining local, but low grade and polluting resources. This has, and will continue to make entire regions completely energy deprived in the end — while turning the last remaining exporting nations and companies rich beyond measure.
The world desperately needs more awareness of this topic, more coordination and more international collaboration — not wars and military interventions, burning the last remaining bits of humanity’s once vast mineral inheritance even faster and in an even more unequal way.
Will this happen? I leave it up to you to decide.
Until next time,