Marathon talks have produced an agreement between the government and Germany’s coal-producing states on phasing out its coal-fired energy plants at the latest by 2038. Some plants will already be shut down this year.

Chancellor Angela Merkel’s government and Germany’s four coal-producing states unveiled details of their plan to phase out coal at the latest by 2038 on Thursday.

The plans outline a timeline for decommissioning lignite-coal power plants in the states of North Rhine-Westphalia, Saxony, Saxony-Anhalt and Brandenburg as well as easing the financial transition for the states and energy firms involved.

What’s in the plan?

  • The government wants to move up the timetable, shooting to exit coal by 2035 and at the latest by the previous target date of 2038.
  • Energy firms will receive a €4.35 billion ($4.85 billion) payout to compensate for the coal phaseout.
  • At least eight coal-fired power plants will be taken off the grid this year.
  • The government will provide €14 billion to the affected states to specifically aid the transition out of coal.
  • An additional €26 billion will be dedicated for “further measures” to support the states.
  • Financial payouts will only begin once parliament passes legislation making the deal binding.


‘Important breakthrough’ for the climate

Environment Minister Svenja Schulze praised the plan, which was agreed after six hours of talks with state leaders that lasted until the early hours of Thursday morning.

“We are the first country that is exiting nuclear and coal power on a binding basis, and this is an important international signal that we are sending,” Schulze said at a press conference.

Finance Minister Olaf Scholz said the payouts to energy firms are “affordable and in my view a good result.”

“Germany is taking big steps on its way out of the fossil fuel age,” Scholz added.

Armin Laschet, the state premier of North Rhine-Westphalia called the deal “an important breakthrough for climate protection.”

“We will only succeed in achieving an ambitious coal phase-out if we take the citizens in the affected areas with us,” Laschet said.

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How will the regions be impacted?

An estimated 20,000 people are employed in Germany’s lignite industry — of which 15,000 work in open-pit mines and 5,000 in lignite power plants. The country’s last active black coal mine closed in 2018, but more than 5,000 people still work in coal-fired power plants.

The government was particularly under pressure from the eastern German states of Saxony, Brandenburg and Saxony-Anhalt who raised concerns that the policy shift could worsen economic inequality with the former western states.

Germany under pressure to cut emissions

Germany has come under increasing pressure to ditch its dependence on coal from experts, environmental activists as well as the European Union.

Despite setting ambitious climate protection goals, Germany is the largest contributor of carbon emissions in the EU, amounting for over 22% of the bloc’s CO2 emissions, according to an EU report.

Over a third of the electricity generated in Germany comes from burning coal — which produces large amounts of greenhouse gases that contribute to global warming. Last year, the government rolled out a new climate protection plan with a target to generate 65% of its energy from carbon-neutral sources by 2030.


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