German Chancellor Angela Merkel’s
cabinet has approved legislation setting a detailed schedule for the phase out of
more than 100 coal-fired power stations across Europe’s largest economy by 2038.
The decision follows an agreement reached earlier this month between Germany’s government and its coal-producing states to kick off the shutdown of their fossil fuel-fired power plants, as part of the country’s efforts to fight climate crisis.
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The legislation must still run through various stages of parliamentary approval in coming weeks, but once passed, it will govern 50.8 billion euros ($55 billion) of compensation for regions and companies rely on coal.
Once passed, the law will govern 50.8 billion euros ($55 billion) of compensation for regions and companies rely on coal.
The deal, which also implies shutting
down the mines that feed those plants, sees the government paying up to 40
billion euros ($44bn) in structural aid to the affected coal states of
Brandenburg, North-Rhine Westphalia, Saxony and Saxony-Anhalt in the next 18
years.
Merkel’s administration will take
further measures worth up to 4.8 billion euros ($5.3bn) in compensation to
employees affected by the coal exit law until 2043, and a further 6 billion
euros to utilities.
Germany’s timetable, however, could present challenges to the European Union’s efforts to cut its greenhouse gas emissions sooner — by at least 40% by 2030.
Most of the 28 EU states aim to become carbon-neutral by 2050 — that is, carbon emissions should be balanced by carbon-reduction measures. Poland, however, relies heavily on coal and has a temporary exemption.
Germany is the world’s largest producer of lignite (or brown coal), which fuels about 19% of the country’s electricity capacity. That kind of coal is considered the most polluting type because its low heat content means more must be burned and it contains a large amount of impurities such as toxic chemicals.
Late last year, the German government agreed not to force hard coal power plants — which rely on imported raw material — to close over the next seven years. The government plans to use a mixture of subsidies and tenders to encourage operators to close hard coal plants beginning this year.
With files from Bloomberg.
