The coal exit is meant to ensure that Germany, Europe’s largest economy, will meet its 2030 target for cutting greenhouse-gas emissions. Investment in offshore wind, solar power and new long-distance power transmission lines are also on the cards.
“Germany, one of the strongest and most successful industrial nations in the world, is taking huge steps towards leaving the fossil fuel era,” said Finance Minister Olaf Scholz.
Boosting RES and gas-fuelled CHP plants
The agreed phase-out roadmap entails a boost for renewable energy sources (RES) to reach a 65 percent share in power consumption by 2030 in order to compensate for the closure of coal power plants. It will also seek to expand combined heat and power (CHP) systems and install "two gas plant capacities" to cushion "the vanishing of large quantities of controllable energy."
Analysts said that the decision marks a major turnaround for Chancellor Angela Merkel’s Conservative-Social Democrat coalition. It previously shelved a key emissions target shortly before re-taking office in 2017, only change course amid growing public concerns about climate change, and a surge in polls by the Green Party.
“These were tough negotiations,” said environment minister Svenja Schulze. “But you can see the result - we are the first country that has a binding agreement to exit coal and nuclear power - and that’s an important signal internationally.”
Timeframe of coal exit – two options
In a first step, Germany's total installed lignite-fired power generation capacity will be reduced to 15 gigawatts (GW) by the end of 2022, with eight plants operated by RWE in western Germany going offline by that year. The total installed lignite generation capacity stood at about 21 GW in 2019.
In a second phase, starting after a two-year hiatus following the nuclear exit, capacity will be cut to 8.8 GW between 2025 and 2029. A total of eleven units are to be taken offline, three of which are transferred into security standby. Five of these eleven units are operated by RWE in the west and six by LEAG, a subsidiary of Czech investor EPH, in eastern Germany.
During the final phase starting in the 2030s, the remaining eleven lignite units in the country are scheduled for decommissioning between 2034 and 2038, the year agreed by the coal exit commission as the very last for the fossil fuel in the country. But the agreement also says there will be an assessment in 2026 and 2029 to see whether the last phase of decommissioning in the 2030s can be brought forward by three years. In this case, the coal exit would be completed in 2035 instead of 2038.
LNG imports to soon add to Russian pipeline gas
Situated in central Europe, Germany has been a long-standing offtaker of pipeline gas, mostly from the Russian energy giant Gazprom, but also from Norway's Gassco and previously from the Netherland.
However, it will soon alos have LNG import capability, allowing the country to diversify its gas import sources and taking advantage from cheap LNG cargoes on oversupplied global markets. Two new LNG regas and import facilities are two are planned, one on the Elbe River near Hamburg and another at the North Sea port of Wilhelmshaven.