In their efforts to phase out coal, Germany's ruling coalition is expanding a pit instead
Germany, the EU's largest greenhouse gas emitter, has announced a plan to phase out coal, a significant step towards meeting its climate commitments. However, the plan, which involves direct payments to coal operators and affected regional governments, has been met with criticism.
The coal phase-out plan, which will roll out through three main stages, promises €4.35 billion in compensation for plant shutdowns to operators like Uniper and the Czech Company EPH. Uniper, a company that received over one billion euros in state subsidies, is required to divest coal plants like the Datteln 4 power station as part of a state rescue package and EU conditions tied to the bailout. RWE, the dirtiest company in Germany and Europe, will receive €2.6 billion in compensation by 2030.
The phase-out plan aims to shut down the last coal plants by 2038, with the Niederaussem lignite plant and mine, a major single point-source of emissions in Europe, continuing to burn coal until December 31, 2038. The lignite phase-out will have a larger regional economic impact due to its effects on both mining and burning industries.
The government has authorized regulators to initiate a tendering procedure to incentivize operators to voluntarily start shutting down. This move is expected to encourage operators to close their plants earlier than the scheduled dates.
The plan, however, has been criticized as a 'golden handshake for the coal industry' and a perverse industry buy-out that reverses the polluter pays principle. Environmentalists and opposition parties argue that the plan is a golden parachute for the dying coal industry, diverting funds that could be used for a more rapid transition to renewable energy sources.
In 2019, over a quarter of Germany's power came from coal. Yet, in the first half of 2020, Germany's net electricity production from renewable sources reached 56%. Despite this, the coal phase-out plan may not ensure that Germany meets its Paris Climate Agreement commitments.
The new law deviates from the Coal Commission's more balanced coal exit plan from 18 months ago. The law symbolically promises protection for the Hambach Forest but seals the fate of thousands of residents living in towns scheduled to be destroyed by the expanding lignite mines.
The CDU/CSU alliance, SPD, coal companies, and worker unions are satisfied with the coal exit plan. The federal government has promised the four affected coal states €40 billion in compensation through 2040.
For a comprehensive understanding of the complex coal phase-out decision in Germany, The Clean Energy Wire (CLEW) provides an excellent summary of the issue.
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