Germany to exit coal by 2038

February 2019: Germany announced its plans to phase out coal by 2038, to invest €40bn in structural aid over the next 20 years, and to compensate businesses for closing down coal plants. Transforming Germany’s energy system towards natural gas and renewable energies impacts north-western Europe’s ability to reach its Paris climate change goals.

Information

As the last major coal-burning country in north-western Europe, Germany has decided to phase out its coal reliance by 2038. The coal exit commission consisting of 28 members from industry, politics, and environmental NGOs, agreed in a vote 27:1 to reduce the country’s reliance on coal energy from currently 40% to 20% by 2022, 17% by 2030 and a total phase out by 2038 the latest. To achieve Germany’s climate goals, the country’s government will invest €40bn in structural aid over the next 20 years into affected regions and to compensate energy firms for closing coal plants before the end of their lifetime. Each affected region will receive €1.4mil per month with €0.7mil dedicated for structural aid and €0.7mil its constituent state’s free use. The German government further announced to write the coal exit plan into law, making it legally binding for future governments.

Implications & Opportunities

Germany’s coal plants emitted approximately 256mil tons of CO₂ in 2016. The decision to phase out energy from coal will have major ramifications for the country’s energy sector and Europe’s attempt to meet the Paris climate change targets. It further represents opportunities for innovation-driven structural change for the 25,000 people currently working in mines and on energy plants. The commission recommends investments into the expansion of renewable energy grid and storage systems as well as the development of Germany’s natural gas infrastructure. It further presents opportunities to transform its energy sector and invest into the region’s infrastructure, public transport systems, network connections, and new research facilities to curb potentially negative structural effects of closing down coal plants.

Limitations

The decision to phase out coal by 2038 paired with Germany’s plans to phase out nuclear energy by 2022 comes with concerns about the country’s future dependence on natural gas imports from Russia, the Netherlands, and Norway. While the German public supports the government’s decision, concerns about rising electricity prices, rising taxes, potential loss of jobs, developing  storage and renewable energy systems, and major structural setbacks in affected regions remain.

Sources

Spiegel Online. (2019). Was die Einigung zum Kohlausstieg Bringt. Retrieved from http://www.spiegel.de/wirtschaft/soziales/analyse-zum-kohleausstieg-damit-ist-das-deutsche-klimaziel-zu-schaffen-a-1250097.html

Le Monde. (2019). L’Allmagne va Sortir du Charbon en 2038. Retrieved from https://www.lemonde.fr/economie/article/2019/01/28/l-allemagne-va-sortir-du-charbon-en-2038_5415627_3234.html

The Guardian. (2019). Germany Agrees to End Reliance on Coal Stations by 2038. Retrieved from https://www.theguardian.com/world/2019/jan/26/germany-agrees-to-end-reliance-on-coal-stations-by-2038?CMP=Share_iOSApp_Other