January 29, 2020 Read More →

German cabinet gives final approval to $55 billion coal plant phaseout plan


Chancellor Angela Merkel’s cabinet approved legislation that sets out the timetable to close more than 100 coal power plants across Germany, entrenching the most important part of a program to green Europe’s biggest economy.

The law when passed will govern 50.8 billion euros ($55 billion) of compensation for regions and companies that rely on coal. That will result in payouts for utilities led by RWE AG and Uniper SE that will have to close facilities.

The decision ends a year of fierce wrangling between Merkel’s government, coal state governors and utilities over the cost of phasing out coal as a power generation fuel by 2038. Environmental groups and the opposition Greens urged Merkel to restrict compensation, noting that market pressures are already weighing against keeping online the most polluting plants.

The legislation’s significance “can’t be exaggerated,” said Finance Minister Olaf Scholz. “Within a few short years, Germany will put a central part of its energy supply on a new footing — modern, climate-friendly and future-orientated.”

Compensation for the coal phase-out embedded in the bill envisages payment of 40 billion euros in structural aid for the four main coal regions, a further 4.8 billion euros in labor-market programs and a minimum of 6 billion euros to utilities. The legislation must still run through various stages of parliamentary approval in coming weeks.

Hard coal plants must enter auctions from this year to 2026 to try to win premiums to close. The government set maximum bid rates this year at 165,000 euros ($181,000) per megawatt, a rate which will decline progressively to 49,000 euros/MW by 2026, according to the legislation. Merkel’s government envisages that hard coal plants — which rely on imported raw material — will close down sooner than lignite plants, to which mining jobs are tied even though the fuel emits the most pollution.

[Brian Parkin and Patrick Donahue]

More: Germany’s $55 billion plan to scrap coal clears cabinet hurdle

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