According to WirtschaftsWoche, a German weekly business news magazine, LEAG—one of the country’s largest energy producers—plans to position lignite as a low-cost energy source, arguing that the Middle East conflict has made a return to coal a scenario worth considering.

“Leag is working behind the scenes to reverse the energy transition, promoting lignite made in Germany – and is thus fully in line with the global trend,” according to a document for the company’s management ahead of the dialogue with the state governments of Brandenburg and Saxony. 

The document also states that high carbon prices in the EU ETS eroded the profitability of lignite generation which became largely uncompetitive. “The coal company therefore proposes excluding lignite-fired power plants from the ETS.” Leag also proposes reducing the carbon price for “a “predetermined period” and placing several coal plants on “security standby.” 

Last month, speaking at a conference, Chancellor Friedrich Merz questioned the country’s plan to phase out coal, saying that “we may need to keep our coal plants online for longer” and adding, “I am not ready to gamble with the core of our energy supply just because we agreed on some deadlines years ago.”

However, a recent report found that coal generation in the EU declined after the blockage of the Strait of Hormuz, largely due to increased solar and wind power generation. As Carbon Brief noted, “A much-discussed ‘return to coal’ by some countries in the wake of the Iran war is likely to be far more limited than thought.”

Based on a new analysis by think tank Ember, shared exclusively with Carbon Brief, the “worst-case” scenario would be a maximum 1.8% rise in global coal generation, though the actual increase could be even lower. A separate analysis by the Centre for Research on Energy and Clean Air found that “global power generation from fossil fuels fell in the first month since the start of the Hormuz closure, with the fall in gas-fired generation offset by large increases in solar and wind power, rather than coal.”