The long-awaited verdict on Germany’s coal power industry has come. A government commission advised Angela Merkel’s government to shutter all its coal power plants by 2038 to cut greenhouse gas emissions and help reach Germany’s climate protection targets. The announcement in a 336-page report will mean further upheaval to an industry already rocked by the phaseout of nuclear power. In some scenarios, the last coal power plant could already be taken off the grid as early as 2035.
The government body in question is officially and euphemistically called the "Commission on Growth, Structural Change and Employment" but colloquially dubbed the "coal commission." Its roadmap lays out a plan to gradually shutter German's 100-odd coal-fired power plants, which will eliminate 20,000 jobs and thousands more in ancillary industries. The plan could also mean that Uniper, one of the utility companies, never actually operates a €1.2 billion ($1.4 billion) power station scheduled for completion next year.
Merkel’s government, which last year admitted to missing its 2020 climate targets, had tasked the commission of 31 people to present a phase-out plan acceptable to all parties involved, from the coal-mining states in the east and west to environmentalists who occupy the Hambach Forest, where utility RWE operates an open-mine pit.
The task is daunting, because Germany still derives more than a third of its electricity from burning lignite and hard coal, despite the buildup of renewable power sources (see graphic below). Already by 2022, plant operators should take almost a third of coal power plants off the grid, said the commission, which includes representatives from employer associations and unions, scientists and environmentalists, and of course politicians.
But some industry lobbyists are warning that electricity supply could become unreliable and prices could skyrocket. “The competitiveness of energy-heavy industries, especially chemical firms, is at risk,” the Federation of Chemical Industries said.
Dumping coal power plants will indeed come with an expensive price tag, burdening consumers, businesses and utilities, such as RWE and Uniper. Merkel’s decision in 2011 to dump nuclear energy by 2022 and to accelerate the build-out of renewable sources such as wind and solar power is already costing them €27 billion each year in the form of a renewable-energy tax. Merkel’s surprise announcement in 2011 was sold as a reaction to the nuclear meltdown in Fukushima, Japan.
When Merkel decides to follow the commission’s recommendations, Germany will once again take an unknown road to wean a country off an energy source by state order. Although global electricity output by coal power plants has been falling, hundreds of coal power plants worldwide are under construction or expanding operations, according to the International Energy Agency.
Familiar with the consequences of closing nuclear power plants in Germany, the coal commission advised the government to pay around €50 billion to the three regions hit by the shutdown of lignite mines to make sure new jobs are created. It also recommended that the government should pay €32 billion to compensate consumers and business for higher electricity prices and an unspecified amount to indemnify coal power plant operators for the lost value of their assets. Merkel’s cabinet should negotiate these payments with the utilities, the commission said.
The bill could ultimately prove to be much higher. The phase-out of black-coal mining in Germany between 1960 and 2018 cost more than €240 billion. The last mine of that type of coal closed last month. The German Chambers of Commerce and Industry estimate the cost of shutting down Germany’s coal power industry at €170 billion.
Germany must try harder to cut its emissions of carbon dioxide, which coal power plants generate in abundance. Merkel has already lost her title as “Green Chancellor” after CO2 emissions have been creeping up in recent years and her government was forced to ditch its 2020 target of reducing greenhouse gases by 40 percent. The goal of cutting CO2 output by 55 percent compared to 1990 levels is also in doubt.
Environmentalists said the deal was overdue and the proposed phase-out unacceptably slow. They are also angered by the commission’s lack of guarantees regarding Hambach Forest, the scene last year of a fierce disputes between RWE, which wants to raze the woods for new mining operations, and campaigners keen to save the ancient woodland. The new report only says it is “desirable” that the forest should be maintained.
Merkel and her government now have to reconcile all these recommendations and make the decision when and where the last coal power plants and mines have to turn off the light.
Silke Kersting reports for Handelsblatt from Berlin, focusing on consumer protection, construction, environmental policy and climate change. Klaus Stratmann covers energy policy and politics for Handelsblatt in Berlin. Gilbert Kreijger is an editor with Handelsblatt Today. To contact the authors: , [email protected], and [email protected]