Germany goes green, sees coal exit by 2038

The move will be supplemented by heavy investment in renewables

Brown coal currently generates about 19% of Germany's electricity.

The German cabinet backed plans last Wednesday to exit coal as an energy source by 2038 as part of efforts to protect the climate and restore the country's green credentials, news wires reported. “This is not just an exit from coal, it's an entry into renewable energy,” Environment Minister Svenja Schulze said cited by Reuters. “What the government is doing is setting in motion a huge and fundamental transformation in our energy supply,” Chancellor Angels Merkel's spokesman Steffen Seibert told reporters in Berlin.

The German government is spurring a shift toward renewable energy sources such as wind and solar power as besides coal exit it also planned an exit from nuclear power by 2022. Last year a major climate package, which included economy-wide carbon pricing, was introduced as well. Overall, Germany aims to cut greenhouse gas emissions to 55% of its 1990 level by 2030.

Designed to ensure Germany hits the 2030 target, the coal exit will be accompanied by heavy investments in renewable energy. Economy Minister Peter Altmaier said last week Germany's transition to a fossil-fuel free energy mix will be like undergoing “open-heart surgery” as the car, steel and renewable industries will need to work hard to stay competitive.

As part of the plan, the government has agreed to compensate workers, companies and regional governments as it switches off plants by 2038. The government has struck a deal worth more than €40bn with coal-mining regions. “These regions need us to think about their future too,” Finance Minister Olaf Scholz said, adding that the package would “ensure the structural change succeeds”.

A draft law approved by the cabinet to phase out hard coal-fired power stations envisages maximum phase-out compensation of €165,000 per megawatt in 2020, falling to €155,000 in 2021 and 2022. The maximum sum would drop by about 25% annually thereafter before reaching €49,000 in 2026. There will be no further compensation after 2026.

Once the heartland of German industry, the coal regions of North Rhine-Westphalia have fallen on hard times as traditional heavy industries have lost sway, while coal regions in the east have yet to fully shrug off the impact of four decades in Communist East Germany. The oldest, dirtiest plants, some dating back to the 1950s, will go first. As well as phasing out hard coal power stations, the government also plans to exit brown coal, or lignite, of which Germany is the world's largest producer. Brown coal generates about 19% of the country’s electricity, but is considered the most polluting type of coal, partly because its low energy density means more must be burned.

But activists and campaign groups such as Greenpeace say the planned law falls far short of what is needed for Germany to fulfil its climate promises. “We're in the middle of a climate crisis, and it's unjustifiable for the coal plants to keep warming the Earth for another 18 years,” Greenpeace energy sector expert Lisa Goeldner said. “This draft law disdains the hundreds of thousands of voices of young people who have demonstrated for swift climate action”, Quang Paasch of the Fridays for Future movement added.

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