20 Feb 2019, 13:47

Implementing Germany’s coal exit proposal – the road ahead

Germany's coal exit commission has agreed on a proposal on how the fossil fuel's phase-out can be managed, but the ensuing political decision-making process in the Energiewende's home country is far from being finished. Chancellor Angela Merkel's government coalition has to decide how to implement the non-binding proposal and draft the necessary legislation. Many details have yet to be worked out and ultimately decided by parliamentarians in a process that could spill over into 2020. In this regularly updated factsheet, Clean Energy Wire lays out the basics of the ongoing political process to put the German coal exit into action.

Also read our full coal phase-out package Europe's largest economy aims to exit coal to reach climate goals. To keep track of the most recent developments, search for the hastag #coal, and also follow us on twitter @cleanenergywire.

 

Government must put proposal into action

The coal exit commission has agreed its highly anticipated phase-out proposal and recommends ending coal-fired power generation by 2038 at the latest. On almost 300 pages, commission members give detailed suggestions on certain aspects, while also omitting crucial questions – such as which power plant has to be switched off at what time.

From the onset, the commission’s final report was meant to serve as a general blueprint for the political decision-making process, rather than already providing a detailed manual on how to proceed. However, according to the commission's leadership, the proposal carefully balances the interests of all stakeholders, which is why the government should follow its recommendations as closely as possible. Germany's federal political system means that both the Bundestag (federal parliament) and the Bundesrat (council of state governments) must agree to most aspects of a German coal phase-out in the legislative process. [This factsheet gives a brief overview of German law-making on energy and climate issues.]

In the end, state governments will implement the coal exit on a regional level, for example through planning for future lignite mining.

Photo of Germany's Bundesrat building in the capital Berlin. Source: Bundesrat.
State government representatives in the Bundesrat have to agree to many aspects of a German coal phase-out in the legislative process. Photo: Bundesrat.

Before parliamentarians get involved, however, the federal government must decide details of the process and draft relevant legislation. Chancellor Angela Merkel's government has started to “closely and constructively review” the final report, though without providing any further details as of mid-February 2019. However, Merkel has signalled her readiness to move ahead with the deal. “The fact that a commission made up from such different societal groups has found an agreement and created a framework is an important message for us. We will handle this very carefully,” she said. The deal showed “responsibility for society as a whole and we want to live up to it.”

As the process is being discussed within the federal government, “we cannot give any details on the implementation or the timetable at this point,” the economy ministry told Clean Energy Wire.

Elections in mining states let policymakers tread carefully

German politicians have called the coal exit implementation “a very complex and unstable process” and warned that it “will surely not be a cakewalk”. Within the government coalition, conservatives from the CDU and the CSU have to agree with the Social Democrats (SPD) on the details of a phase-out, while state governments across Germany are made up of much more varied coalitions, including many with Green Party participation.

In addition, several eastern German states head to the polls this autumn, including lignite mining states Saxony and Brandenburg. Both Merkel’s conservative CDU/CSU alliance and the SPD have slumped in polls and in last year’s regional elections. Concerns that voters may perceive the deal proposed by the coal commission as a burden had made both parties nervous as the right-wing populist and anti-energy transition AfD party is polling strongly in eastern Germany. News of individual power plant closures in the economically weak eastern mining regions ahead of the autumn elections are feared to strengthen this trend.

Twofold implementation process

A few aspects have become clearer since the coal commission presented its deal in late January, one being that the future process of implementing the coal exit will be split up into two fields of action:

A. Structural economic change – support for lignite mining regions

B. Energy and climate policy legislation

Economy and energy minister Peter Altmaier has said Germany will need two major laws to implement the phase-out plan. One on support for mining regions, the other on the timetable for coal-fired power plant shutdowns. However, several additional laws, amendments to existing legislation or regulatory changes, will likely be necessary.

A. Support for mining regions

From the beginning, the economic future of lignite mining regions was handled as key task of the coal exit commission, as reflected in the official title “Commission on Growth, Structural Change and Employment.”

Accordingly, the implementation of the coal exit deal will “on the one hand happen via a law concerning the necessary measures for structural economic change,” the economy ministry told CLEW. This was already part of the commission’s recommendation on how to turn its proposal into law and government action.

Against the backdrop of the autumn elections in eastern Germany, coal state premiers want to act quickly to present tangible negotiation achievements to their mining regions. They have announced to agree with the federal government on key infrastructure projects in a programme of measures by the end of April.

Merkel says she plans to then get the requisite law off the ground by May. Then it will have to be debated and decided in parliament. Lignite mining state premiers call for an accompanying contract between the national government and the states to implement the law, which would give regions security beyond the current legislative period.

In addition, the coal exit commission has proposed to draft an immediate action programme to use the 1.5 billion euros earmarked for structural economic support in the current federal budget until 2021. Economy minister Peter Altmaier said the federal government is “ready for a very quick start regarding financing.” In a parliamentary debate on 14 February, state secretary in the economy ministry Oliver Wittke said this programme would be initiated in March 2019.

B. Energy and climate legislation

The government has not yet decided the legislative footing on which to place the coal exit. It is unclear whether there will be one ‘coal exit law’ or a package of legislative changes.

Graph shows installed coal power generation capacity before and after the potential coal exit according to Germany's coal exit commission. Graph: CLEW/Appunn 2019.

The implementation of the coal exit commission’s proposals for the energy sector will likely require the amendment of several existing laws, such as the Renewable Energy Act (EEG) or the Combined Heat and Power Law (KWKG).

Besides the law on measures to support mining regions, "additional action on legislative and regulatory levels" is going to be necessary, especially regarding the phase-out of coal capacity from Germany's energy system, the energy ministry told CLEW.

The timetable for shutting down coal-fired power plants will be among the more contentious pieces of legislation, as individual regions, companies and jobs are immediately affected. It could also be decisive for whether or not the embattled Hambach Forest can remain intact or will be cut down by utility RWE to expand a nearby lignite mine. On 20 February, North Rhine-Westphalia's (NRW) state premier Armin Laschet said his government had agreed with energy company and western German lignite mine operator RWE on a moratorium for clearing the embattled Hambach Forest until autumn 2020. Laschet said preserving the Hambach Forest would be “desirable”, adding that the forest needed to be part of the negotiations between lignite companies and the federal government over which power plants to shut down when and how to compensate the operators.

The coal exit commission recommends settling questions related to compensation for operators of lignite plants as well as for employees in “mutual agreements.” First talks could be conducted over the coming months, as the question is closely interlinked with the decision on a timetable for taking power plants off the grid. State premier Laschet made clear that these negotiations fall under the responsibility of the federal economy ministry, and his government would then implement the outcome. RWE has said it estimates costs of 1.2 billion euros for each gigawatt (GW) of power plant capacity switched off. 

Should mutual agreements not be found by the 30 June 2020 deadline, the commission recommends settling the dispute “by regulatory law,” which would mean that the government decides which plant has to shut down when to provide planning security and ensure uninterrupted power supply.

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