Chancellor Angela Merkel’s cabinet has approved legislation to aid coal-producing regions with a total of €40bn ($45bn) to cushion an exit from coal and lignite by 2038, a date seen as far too unambitious by climate activists.
“With up to €40bn by 2038, we give coal regions and local residents a clear perspective for the future and secure jobs in the regions,” economics and energy minister Peter Altmaier said.
“We exit coal until 2038, but do so in a responsible manner and actively shaping structural change in coal regions.”
The government in January had presented a schedule to shutter some 16GW in lignite generation capacity by 2038, with a first around 2.8GW scheduled for closure by 2022, and another 5.7GW by 2030.
Germany’s best-known climate activist, Luisa Neubauer from the Fridays for Future student strike movement, on Twitter said the government with its coal exit legislation was in effect slowing down the fossil exit and making it incredibly expensive by giving too much in tax payers money to fossil corporations.
The end date for coal in Europe’s largest economy is far behind that of Western European peers such as France, which intends to exit coal by 2022, or the Netherlands, which want to switch off coal by 2029, according to Fridays for Future.
Some €14bn in aid are slated to be granted to coal and lignite mining states (Brandenburg, North-Rhine Westphalia, Saxony and Saxony-Anhalt), while another €26bn in further measures are planned to be given to lignite regions directly for research or infrastructure.
The government wants to push the legislation to ‘strengthen structures’ through both chambers of parliament jointly with a coal exit law.
Once the coal exit law and the structural aid legislation have passed parliament, the government will sign an exit contract with lignite miners and power producers settling billions in compensation payments.
Utility RWE, for example, is slated to receive €2.6bn for phasing out its lignite mining pits in a "socially compatible manner" and closing power stations, a draft of the contract states.
LEAG, a Czech lignite mining company, is entitled to another €1.75bn.
A separate law will settle the exit in Germany from hard coal. Compensation payments for closing hard coal generation plants will be granted via tenders to be held by 2027.
UPDATE to add compensation payments to lignite companies