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Merkel cabinet OK’s €40bn for regions to be hit by coal exit

The cabinet green light comes five days ahead of elections in two Eastern German states that host lignite mining regions

The cabinet of Chancellor Angela Merkel has approved €40bn ($44.36bn) in aid for regions to be affected by Germany’s planned exit from coal and lignite by 2038.

“We are living up to our promise. With the legislative proposal approved today in the federal cabinet for a Structural Strengthening Act, we secure the structural support of coal regions until 2038,” economics and energy minister Peter Altmaier said.

“We want to maintain and expand jobs, secure the quality of life for people living in those regions and at the same time make an important contribution to climate change through the coal exit.”

The aid promised in the cabinet’s law proposal comes before the government has actually enacted the coal exit itself that had been recommended earlier this year by the so-called coal exit commission. The commission had suggested the country should phase out coal and lignite by 2038 at the latest, but only if flanked by heavy investments in coal regions to avoid a structural decline there.

The timing of the structural aid action is curious, to say the least.

Berlin’s promise to pour massive funds into coal and lignite mining regions comes five days before regional elections in Brandenburg and Saxony – two of three states that house Germany’s lignite mining regions.

In both states the Alternative for Germany (AfD) party that denies the climate crisis and is rallying supporters against renewable energy is expected to gain more than 20% of the vote and may become strongest or second-strongest party.

The cabinet in May – ahead of the European elections – had already given its green light for the general lines of the Structural Strengthening Act. The AfD nevertheless performed strongly in Eastern Germany, although it didn’t do as well in the West as it had hoped.

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Renewables groups have criticised the massive hand-outs to coal region at a time many more jobs are in danger in Germany’s struggling wind industry as a results of policy mistakes, installation caps and permitting bottlenecks.

While the AfD may make some inroads by coal miners fearing to lose their jobs, the climate crisis at the same time is strengthening the Green Party, which for the first time is expected to gain more than 10% in Eastern German states, where it traditionally had performed badly.

Germany’s Federation of Energy and Water Industries (BDEW) in a first reaction welcomed the law proposal, but stressed that the government now also must quickly decide upon the energy policy aspects of the coal exit.

“We need to think about the time after 2023, when the last nuclear power plant goes off the grid,” said (outgoing) BDEW chairman Stefan Kapferer.

“The expansion of renewable energies must also be accelerated clearly in order to reach the 65%-target [by 2030]. That also requires more speed at the grid expansion.”

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