An unexpectedly sharp decline in coal use led to a reduction in Germany’s CO₂ emissions in 2023, reaching their lowest level in 70 years, according to a recent report by Agora Energiewende.

In detail, Germany’s greenhouse gas emissions fell to 673 million tonnes of CO₂-equivalent, which refers to all greenhouse gas emissions, including substances such as methane and nitrous oxide, that are converted into their CO2 equivalent and added to the emissions balance.

Emissions, thus, fell by 46% compared to the reference year 1990 – their lowest level since the 1950s. At the same time, CO₂ emissions were about 49 million tonnes of CO₂ below the annual target of 722 million tonnes of CO₂ derived from the Climate Protection Act.

Agora Energiewende’s analysis shows that two main developments were responsible for the decrease of 73 million tonnes of CO₂ compared to 2022.

First, coal-fired power generation fell to its lowest level since the 1960s, saving 44 million tonnes of CO₂ alone. The reasons for this were a significant drop in electricity demand, increased electricity imports from neighbouring countries – around half of which came from renewable sources of energy – as well as a commensurate decrease in electricity exports and a slight increase in domestic green electricity generation.

Second, emissions from industry fell significantly. This was largely due to the decline in production by energy-intensive companies as a result of the economic situation and international crises.

“While overall economic output shrank by 0.3% according to preliminary figures, energy-intensive production fell by 11% in 2023,” the paper reads.

Coal-fired power plant in Lünen, Germany

Conventional electricity generation fell by 24% in 2023 in Germany compared to the previous year. Kernkraft is nuclear power; braunkohle is brown coal; steinkohle is hard coal; erdgas is natural gas; mineralöl is mineral oil; sonstige is other.

The think tank’s calculations, however, show that only about 15% of the CO₂ saved constitutes permanent emissions reductions resulting from additional renewable energy capacity, efficiency gains and the switch to fuels that produce less CO₂ or other climate-friendly alternatives.

About half of the emissions cuts are due to short-term effects, such as lower electricity prices. Therefore, Agora notes that most of the emissions cuts in 2023 are not sustainable from an industrial or climate policy perspective as emissions may rise again as the economy picks up or if a share of Germany’s industrial production is permanently moved abroad.

The study found that CO₂ emissions from buildings and transportation remained almost unchanged in 2023, resulting in these sectors missing their climate goals for the fourth and third successive time, respectively.

“2023 was a two-speed year as far as climate protection in Germany is concerned: the energy sector notched up a climate policy success with its record level of new renewable power, taking us closer to the 2030 target,” Simon Müller, director of Agora Energiewende Germany, writes in the report. “However, we don’t consider the emissions reductions seen in the industrial sector to be sustainable. The drop in production due to the energy crisis weakens Germany’s industrial base. If emissions are simply shifted abroad as a result, this won’t benefit the climate. The buildings and transport sectors are also lagging as far as structural climate protection measures are concerned.”

In Müller’s view, to permanently replace CO₂-intensive forms of electricity production in the electricity mix, the deployment of renewables needs to grow in the coming year.

“Industry needs adequate conditions to be able to invest in Germany – such as in the production of climate-neutral steel and the transition from gas to electricity for process heat,” the document points out. “In the building sector, the measures agreed need to be resolutely implemented in 2024. And transportation requires a fundamental political course correction to achieve a breakthrough for climate-friendly mobility.”

Coal’s performance

Looking specifically at coal, the report shows that emissions from electricity generation fell by 46 million tonnes of CO₂ to 177 million tonnes of CO₂ – less than half the level recorded in 1990. The 21% drop in emissions compared to 2022 is mainly due to the sharp decline in coal-fired power generation: lower electricity production from lignite saved 29 million tonnes of CO₂, while hard coal-fired power generation saved 15 million tonnes of CO₂.

The main reasons behind the decline were, first, a 3.9% drop in electricity consumption compared to 2022 as a result of the fossil fuel crisis.

Second, the strong renewable electricity generation across Europe meant that Germany imported more electricity instead of producing it in domestic coal-fired power plants. Over the year, Germany sold around 58 terawatt hours of domestically generated electricity abroad and imported 69 terawatt hours. About 49% of electricity imports came from renewable sources – primarily hydro and wind power – and 24% from nuclear power.

Third, renewable energy production increased by 5%. Total emissions from the energy industry, including refineries and district heating in addition to the electricity sector, amounted to 210 million tonnes of CO2 and were therefore 46 million tonnes of CO₂, or 18%, below the previous year’s levels.

The report notes that, overall, the supply situation in the energy market eased in 2023, and both electricity and natural gas prices fell compared to the previous year.

“The price of electricity is more strongly affected by levies and surcharges than the prices of fossil fuels such as oil and gas. This is slowing the switch by households to climate-friendly technologies such as electric cars or heat pumps,” Müller said. “A reform of the levy and surcharge system is necessary to correct the imbalance. The changes should make it possible for low electricity prices to reach consumers in times of high wind and solar power generation.”

Renewables’ performance

The executive also emphasized that record levels of newly installed solar capacity contributed to the drop in electricity prices: Germany added 14.4 gigawatts of photovoltaic capacity last year, an increase of 6.2 gigawatts compared to the previous record in 2012. Although there were fewer hours of sun in 2023, solar power facilities produced 61 terawatt hours of electricity – one terawatt hour more than the previous year. Photovoltaic expansion was therefore well above the target pathway for 2030. Wind energy generation had a record year. This was due to favourable weather conditions and a slight increase in the number of wind turbines.

“At 138 terawatt hours, wind remained the largest source of electricity, producing more than all of Germany’s coal-fired power plants (132 terawatt hours),” the dossier points out. “However, the expansion of onshore wind power was much too low at 2.9 gigawatts. To achieve the country’s binding expansion targets for 2030, annual average wind capacity additions need to rise to 7.7 gigawatts from 2024. Permits, meanwhile, increased: at 7.7 gigawatts, the output of approved wind projects rose 74% compared with 2022.”

Overall, renewable energy managed to supply more than 50% of the total gross electricity demand in Germany for the first time in 2023.