German authorities have agreed on a plan to shutdown coal-fired power stations in the nation by mid-2030. Under this plan, operators will receive financial compensation to the tune of billions of euros, the government said on Thursday.
“Germany is taking big steps on its way out of the fossil fuel age,” said Germany’s Finance Minister Olaf Scholz.
Durchbruch beim #Kohleausstieg! Die #Bundesregierung und die Ministerpräsidenten der #Kohle-Länder haben sich auf einen Zeitplan verständigt. Alle Infos auf https://t.co/hpSS5rBKkB 👉 https://t.co/54WHbx3tLs #Kohlekompromiss pic.twitter.com/Y1sIbjkfxN
— BMWi Bund (@BMWi_Bund) January 16, 2020
The payment will be deferred until after the closure
Scholz told the press that utilities that close their coal-fired power plants during the 2020s, would be compensated with a combined amount of €4.3 billion.
These payouts “will be spread out over the 15 years following the shutdown” and represent an “affordable and in my view good result,” Scholz said.
The Minister of Finance explained that operators of heavily polluting coal-fired power plants in western Germany will receive 2.6 billion euros ($2.9 billion); in compensation for switching them off early, while 1.75 billion euros will go to those with plants in the east.
This payout will be independent from the €40 billion that the government has already promised to coal mining regions to soften the blow of abandoning fossil fuels.
Authorities said they will carry out reviews in 2026 and 2029 to determine whether Germany can exit coal-fired electricity generation in 2035, three years before the final deadline.
Olaf took to Twitter to say that “Germany takes climate protection seriously. After the climate package that includes the price of CO2, we have now determined the road to eliminating coal. Now we have to move forward with the expansion of renewable energies.”
Deutschland macht ernst mit dem #Klimaschutz. Nach dem Klimapaket samt CO2-Preis haben wir jetzt den Pfad zum Kohleausstieg festgelegt. Jetzt müssen wir den Ausbau der Erneuerbaren mit viel Schwung vorantreiben. https://t.co/fMiIAWpa47
— Olaf Scholz (@OlafScholz) January 16, 2020
“What we have here is a good agreement for climate protection because it makes it clear that we are taking it seriously,” the minister of economy Peter Altmaier said; adding that the government this legislation will be brought before the Parliament by the end of the month.
According to Altmaier, the legislation on the transition away from coal power is expected to be presented before the government on January 29. The official clarified that the last coal-fired power plant must be closed by 2038.
Energy intensive companies that compete on an international level will be eligible to receiving annual subsidies as of 2023. This will enable them to compensate the higher electricity prices caused by shutting down these power stations.
However, environmentalists have criticized the decision. According to them, this agreement will allow a new power plant, Datteln 4, to be commissioned this year. It will also enable the expansion of the Garzweiler open pit mine in Western Germany. All of this in spite of the possible effects on a nearby forest, which has been a focus of protests for a long time.
Impact on the market
German utilities E.ON and RWE, which will receive a significant compensation for closing their power plants; were up over 2% on the Frankfurt exchange Thursday.
Nonetheless, Eric Schweitzer, in charge of the Berlin Chamber of Commerce and Industry, said that the key question is how to replace the electricity from coal-fired power stations moving forward.
The government set a goal of generating 65% of its electricity from renewable sources by 2030.
For his part, the minister of the environment Svenja Schulze recognized that Germany will need a “massive expansion of wind and solar energy as the country is also in the process of exiting atomic power.”
“We are the first country that is exiting nuclear and coal power on a binding basis and this is an important international signal that we are sending,” she said of Thursday’s agreement.
The head of Germany’s main industrial lobby group, BDI, urged the government not to wait until 2026 – three years after the shutdown of the last nuclear plant – to review the measures.
However, Altmaier, said that while there would be less “excess production” in Germany in the future; “we are very sure that we can ensure sufficient electricity supply for business but also for private consumers”.
Germany is the world’s largest lignite producer. This mineral accounts for approximately 19% of the country’s electrical capacity.
At the end of 2019, the government agreed to not enforce the closure of coal-fired power stations over the next seven years. Instead, it plans to use a combination of subsidies and tenders to encourage operators to close the facilities.
For more information, check Energía16