25 Jul 2023, 13:34
Carolina Kyllmann

German lignite projects receive support worth €1.7 bln in 2022 – report

Clean Energy Wire

Lignite projects in Germany received around 1.7 billion euros worth of support throughout 2022, according to an analysis by think tank Green Budget Germany (FÖS). Despite the country’s ambition to phase out the fossil fuel “ideally” by 2030 but no later than 2038, the mining of lignite and the generation of electricity from it benefited especially from energy tax breaks (around 817 million euros), exemptions from a production levy paid on the exploitation of mineral resources, and coal phase-out compensation payments. “Although electricity generation from coal is indirectly taxed through the electricity tax - due to numerous exemptions, especially for energy-intensive industry, the effect of this tax is greatly minimised,” report author Isabel Schrems said. Out of the 1.7 billion euros worth of support, 1.2 billion came directly from the German state budget, according to the report commissioned by renewable electricity provider Green Planet Energy. “In addition to state subsidies, lignite companies receive other financial benefits, which, however, do not come from the public treasury but have to be borne in part by all consumers," Schrems added. These include payments to lignite power plants being kept ready in the security reserve, paid by electricity consumers. FÖS calculates that this accounted for around 500 million euros.

As a result of the energy crisis, 2022 saw a short revival of coal power production in Germany as the country took steps to ensure energy supply security following a halt of Russian gas deliveries. The former government put the gradual withdrawal from coal-fired power production into law, setting a 2038 deadline. However, the current government coalition is pushing to bring this forward “ideally” to 2030. The European Commission is examining whether the compensation payments for operators agreed under Germany’s coal phase-out act could constitute illegal aid, the FÖS press release reads. A decision is expected in the coming weeks, it says.

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