The German government has reached an agreement with the coal-producing regions of the country to eliminate the use of coal power in 2038 in exchange for compensation and benefits worth € 40 billion.
Berlin will also reserve € 4.35 billion for public services such as RWE, which will close some of its coal plants ahead of time. The agreement removes one of the last obstacles to a historic energy transition in Europe’s largest economy.
The coalition government of Angela Merkel pledged last year to shut down all coal-fired power plants, but has since struggled to obtain political support from federal states such as North Rhine-Westphalia, Brandenburg and Saxony, where the mines are concentrated and power plants of Germany.
The agreement, presented by senior ministers on Thursday, means that Germany will end the use of nuclear and coal energy at the same time, dramatically increasing the country’s dependence on renewable energy sources such as wind and solar.
Berlin wants to meet at least 65 percent of its electricity needs with renewable energy by the end of this decade.
“Germany, which is one of the strongest and most successful industrial nations in the world, is taking giant steps to leave the fossil era behind,” said Olaf Scholz, the finance minister.
Svenja Schulze, Minister of the Environment, added: “We are the first country to come out of nuclear energy and coal.” [power]. That is also an important international signal that we are sending. ”
Only RWE is ready to receive 2,600 million euros from the compensation package of 4,350 million euros, with the remaining 1,750 million for public services in eastern Germany. Rolf Martin Schmitz, the executive director of RWE, said the agreement was acceptable but would stretch the group “to the limit.”
RWE said the early closing would impose financial costs of 3.5 billion euros, significantly more than the promised compensation, and would force the loss of 6,000 jobs by 2030. However, there would be no impact on the dividend. Shares in RWE rose 1.5 percent in afternoon trading.
The agreement presented on Thursday largely echoes the recommendations of a coal committee appointed by the government last year, which brought together experts from industry, the environmental movement and politics to develop a compromise.
Despite strong doubts about the long transition phase, green activists signed up for the agreement at that time, but have since urged the government to accelerate the closure.
Berlin has now committed to a formal revision of the phase-out plan at the end of the decade, with a view to ending the use of coal power in 2035.
The schedule for the closure of plants agreed between Berlin and the regions requires that the first 300MW unit be decommissioned by the end of 2020, with another 900MW to be disconnected by the end of 2021. However, some of the largest, the Most Highly polluting coal power plants will only close in 2028 and 2029.
An area in which the government agreement starts from the experts’ recommendations refers to the newly built power plant in Datteln, in western Germany, which has not yet started production. Considered by Uniper, its owner, as one of the cleanest and most efficient coal-fired power plants in the world, was supposed to close. Now, you will be allowed to start production as planned.
The compensation package for coal states includes plans to move government institutions and military facilities to the affected regions, in an effort to create jobs and income. Some sites will also benefit from the construction of new gas power plants.
The news of the agreement, and of the planned opening of Datteln, was received with disappointment by some activists. Olaf Bendt, president of Germany’s Bund environmental pressure group, said the government had delayed most of the power plant closures beyond 2030. “Once again, the government has shown that it has not understood the seriousness of the climate crisis. ”