Germany`s Coal Phase Out 2038

Last weekend the German government`s commission on `growth, structural transformation and employment`, colloquially referred to as `coal commission`, published its recommendations on Germany`s coal phase out. They recommend to phase out electricity production from coal by 2038 in Germany, a contry that relies for a quarter of its electricity production on coal. The compromise is not legally binding, but the German government pledged to `constructively assess` the findings of the commission and to act accordingly. Questions about the compatibility of this new plan with German climate goals raised.

The existence of the commission on `growth, structural transformation and employment`, colloquially referred to as `coal commission`, is the result of the last coalition agreement. After the troubled elections of September 2017, it took almost half a year for German parties to create a new government. When the new government was finally installed, the coalition agreement postponed or circumvented some of the most contentious issues, such as the coal phase-out. The government decided to create a commission, consisting of all relevant societal stakeholders, to come up with a suggestion for Germany`s coal phase out. The commission started works on 6 june 2018 and now presented their final report.


The main features of the report are as follows:

• End of electricity production via coal by 2038

However, the commission recommends an `opening clause`saying that by 2032 it needs to be assessed whether or not that date could be fast-forwarded to 2035.

• Gigawatts counts,  not power plants

The commission suggests a quick start: by the end of 2017, 42 gigawatt of coal fired plant capacity was available at the market, plus the German capacity reserve.  Already until 2022 coal fired power plants with a capacity of 12.5 gigawatt shall now be put off grid. Until 2030, only 17 Gigawatt shall be left and by 2038 this number must come down to 0. However, the recommendations leave it to  politicians to negotiate with the plant owners to decide which plants have to go first and which last. In theory Germany`s climate goals for 2030 could be met with this compromise, but because there is no detailed road map for the period between 2022 and 2030, a situation could occur where a significant number of power plants are switched off `last minute` by 2029 to meet the 17 Gigawatt obligation in 2030. This practice, however, would likely make Germany miss its 2030 climate goals.

• Electricity price should be stabilized

The commission recommends that end-consumers should not be burdened with the cost of the coal-phase out. To achieve this they are suggesting to subsidize grid utilisation fees with 2 billion Euros per year.

• Structural Transformation

One of the burning questions for those Laender with considerable coal reserves is what comes after coal electrification ends. A contract between the national and the Laender governmemnts shall be drawn up in which the German government pledges to give 1.3 billion Euros every year to the Laender  - for a period of 20 years.  There are also a number of other monies that shall be transferred during that period.

• Avoid Expropriation Claims

The successfull approach of the nuclear phase-out shall be replicated. The commission, thus, recommends to come to a negotiated solution with the power plant owners. During these negotiations compensation is one of the options on the table, but legal challenges afterwards should be avoided as much as possible.

• Hambacher Forst struggle

The saga about the Hambacher Forst captured the imagination of  the public in germany. RWE wishes to clear the forest for coal production and there was a lot of resistance to that. The commission simply states that it would be `desirable`to save the forest, but makes no further remarks on that matter.