Germany announces eventual exit from coal power

The agreement sets out a timeline for decommissioning lignite coal power plants in the states of North Rhine-Westphalia, Saxony, Saxony-Anhalt and Brandenburg, and lays out financial measures to ease the transition for the governments and utility firms involved. 

Some 20,000 people are employed in Germany’s lignite, or brown coal, industry – with 15,000 working in open-pit mines and 5,000 in coal-fired power plants. At present, coal also provides about one-third of the country’s electricity and is responsible for a major share of its greenhouse gas emissions. 

Under the new plan, the national government will offer €40bn to the affected states to aid their switch to other forms of electricity generation – and bolster their economies while doing so. Meanwhile, energy firms will receive a €4.4bn payout for shuttering coal power stations before the end of their operational lives. 

In response to the agreement, RWE, Germany’s largest electricity producer, has said that it will have to cut 3,000 jobs in the short term. By 2030, it anticipates that some 6,000 jobs will have been cut from the coal production and electricity generation arm of its business. 

The German government has arranged for RWE to receive a €2.6bn compensation payment over the next 15 years. But the company has noted that this figure is much lower than the €3.5bn in financial damages that it predicts it will suffer. ‘We will bear the majority of the burden the German government demands for the coal phase-out,’ says Dr. Rolf Martin Schmitz, CEO of RWE. 

‘We were well aware that a consensus solution was needed in order to contribute to solve a social and political conflict, to achieve the climate protection goals and, last but not least, to regain planning security for our company. The consequences for our employees and our company are tremendous.’ 

Under the agreement, a new coal-fired power plant, Datteln 4, will still be allowed to enter operation this year and the Garzweiler opencast mine in western Germany will be expanded as previously planned. This has brought criticism from environmentalists who have campaigned for the imminent closure of all German coal facilities. 

Martin Kaiser, the Managing Director of Greenpeace Germany, said: ‘Nothing shows more clearly than Datteln 4 that this government can’t find an answer to the climate crisis.’ Meanwhile, Germany also plans to shut down its six remaining nuclear power stations in the next two years. It has closed 11 nuclear plants since 2011, when the Fukushima disaster prompted the government to turn away from fission energy. 

Since then, studies have suggested that the rejection of nuclear has had public health consequences in the country. One working paper published recently by the US-based National Bureau of Economic Research found that keeping the nuclear plants running would have saved the lives of 1,100 people per year who die because of air pollution from coal-fired generation. 

Now, Germany must figure out how to expand its renewable capacity to make up for lost coal and nuclear assets. The government has set a target of generating 65% of Germany’s power from renewables by 2030. 

‘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,’ said the country’s Environment Minister, Svenja Schulze, ahead of the coal deal announcement.