Daily Reports
Germany Approves €1.75 Billion Compensation for Coal Phase-Out in East Germany
The German mining company Leag will receive up to €1.75 billion in compensation from the state for phasing out coal by 2038. The EU's preliminary approval includes €1.2 billion for fixed costs such as land redevelopment and social measures for workers. The remaining €550 million will depend on the future profitability of the power plants after 2038. This decision, linked to the country's commitment to end coal-fired power generation, aims to ease the transition for East Germany.
Reports from Berlin and Brussels outline the EU's preliminary approval as a crucial step in ensuring Germany's compliance with EU competition rules. German Economy Minister Robert Habeck lauded the decision, underscoring that final compensation figures will hinge on various factors. Leag plans to invest this compensation in renewable energy, targeting a substantial 7 gigawatts of solar and wind capacity by 2030.
The German government has reiterated its dedication to phasing out coal by 2038, although an early exit might be feasible. Habeck emphasized that the reform of the European emissions trading system and the increased availability of renewable energy could expedite this timeline. The gradual phase-out agreement, reported back in 2021, underscores that the EU competition authorities must sanction any state aid. The preliminary state aid assessment confirmed the validity of Leag's compensation scheme.
The coal phase-out involves €1.2 billion earmarked for fixed costs, including recultivation and social costs, irrespective of the coal phase-out date. The remaining €550 million will become available if it's confirmed that Leag's power plants remain economically viable beyond the official decommissioning dates set by law.
An accelerated coal phase-out is already agreed upon for the Rhenish Revier, with a new end date of 2030. However, the early exit for East Germany's lignite mining regions remains contentious. Political consensus is crucial for any advancement of this timeline, as indicated by Habeck.
The federal government's recent paper highlighted the validity of the legally agreed coal phase-out date of 2038. It remains open to any market-driven exits before this date, emphasizing the need to prepare the transition in East German coal regions. The anticipated reform of the European emissions trading and the enhancement of renewable energies may make coal-fired power generation unprofitable well before 2038.
Compensation plans for other regions, such as North Rhine-Westphalia, have already been approved. The energy company RWE is set to receive around €2.6 billion by 2030 as part of their early exit from lignite mining and power generation. This phased compensation package underscores the EU's stance on state aid being vital for the transition away from lignite-based power plants.
- In addition to the compensation and renewable energy investments, Leag intends to integrate advanced technological systems to optimize their transitions towards a greener energy model.
- Further, the federal government aims to broaden the scope of state funding programs to accelerate structural changes within the existing coal regions. This includes enabling direct investments into company locations.
- Germany's approach towards an early coal phase-out aligns with the broader European goal of reducing greenhouse gas emissions and adopting sustainable energy sources. The reform of the emissions trading system plays a critical role in this transformative journey.
- Local authorities and communities are expected to play a significant role in facilitating a smooth transition from coal to renewable energy, ensuring that the social and economic impacts are mitigated effectively.
