The German government will pay billions of euros to its utilities companies in order to hasten the removal of coal power from its nationwide fuel mix.
The agreement to pay the funds was reached between the representatives of four coal mining states and federal ministers, and will remove a significant hurdle in Germany’s plans to fight the climate crisis by reducing greenhouse gas emissions over the next few decades.
Some regions are heavily dependent on mining, especially in the east of the country. Lignite, or brown coal, is mined and provides roughly a third of Germany’s electricity needs along with bituminous, or black, coal.
However, these fuels are also behind a large proportion of the country’s carbon emissions.
Olaf Scholz, the finance minister, said that €2.6bn in compensation will be given to the operators of coal-fired power stations in the west of the country. Another €1.7bn will go to operators of plants over in the east.
Germany’s largest power producer, RWE, said that by 2030 around 6000 jobs will have to be cut as a result of the phasing out of brown coal as a source of energy. This is around a third of its current workforce.
The company also said that the compensation offered by the government was less than the losses they were expecting to make - which are estimated to be around €3.5bn. However, the company’s share price jumped up 2% as a result of the deal - the highest level in the last five years.
Reviews will be carried out by the government in 2026 and 2029 to calculate the likelihood of Germany exiting coal-fired electricity altogether by 2035.
The economy minister, Peter Altmaier, said: “What we have here is a good agreement for climate protection because it makes clear that we mean it seriously”.
The decision has been criticised by environmental groups, highlighting the fact that a new coal-fired plant, Datteln 4, will still open this year allowing the expansion of the Garzweiler mine.
Managing director of Greenpeace, Martin Kaiser, said: “Australia’s forests are burning, millions of people are demonstrating for climate protection and the German government is clearing the way for a new coal power plant.
“Nothing shows more clearly than Datteln 4 that this government can’t find an answer to the climate crisis.
“Chancellor [Angela] Merkel has missed a chance today to provide companies with long-term planning safety and to send a signal that Germany is reacting appropriately to the climate crisis”.
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