Germany should fully phase out coal by 2038, says commission

Water vapour rises from the cooling towers of a power plant in Jaenschwalde, Germany, on Jan 24, 2019.
Water vapour rises from the cooling towers of a power plant in Jaenschwalde, Germany, on Jan 24, 2019.PHOTO: REUTERS

BERLIN (REUTERS) - Germany should shut down its coal-fired power plants by 2038 at the latest, a government-appointed commission said early on Saturday (Jan 26) as part of a road map laying out an accelerated phase-out of the polluting fuel.

The commission's plans are at the centre of Germany's strategy to shift to renewables, which accounted for more than 40 per cent of the energy mix last year, beating coal for the first time.

The proposals of the coal commission, which were finalised after more than 20 hours of last-round talks, will serve as a guideline for the government in its effort to turn the planned exit from coal into law.

Commission sources told Reuters the body agreed a total of at least €40 billion (S$61.7 billion) should be provided in aid for states affected by the coal phase-out up to 2040, less than the roughly €60 billion that they had asked for.

In a first step, plant operators including RWE, Uniper, EnBW and Vattenfall will be asked to shut down about 12.7 gigawatts of capacity by 2022, equivalent to about 24 large power station units, the report, seen by Reuters, said.

"The commission recommends a mutual agreement with the operators on a contractual basis with regard to the shutdown," the report said, adding this would include agreeing on the exact size of compensation.

This should apply to plants in operation and those that have not yet entered service or are still being built, including Uniper's Datteln 4 plant, the report said.

 
 
 

Ways to determine compensation could include capacity tenders or keeping plants on standby, similar to existing reserve payments for operators that have totalled as much as €600 million per gigawatt in the past, it added.

The committee's proposals, if implemented, would be the second major intervention in Germany's energy market within a decade after a landmark decision to shut down all nuclear power stations by 2022.

The decision to switch away from nuclear was taken in the wake of Japan's Fukishima disaster in 2011.

While the 2038 exit date seems broadly in line with estimates, the report said there is a chance that the phase-out could be completed by 2035, adding it would be decided in 2032 whether this was feasible.

Compensation for companies and consumers experiencing higher electricity prices resulting from the coal phase-out should be €2 billion per year, with the exact amount to be fixed in 2023, the report said.