The Just Transition Fund has been set up to support new companies and business incubators, as well as investments in research and innovation. Before any proposed payments can be made, however, EU member states need to first agree on a long-term budget for 2021-2027.
To alleviate structural effects of the German coal exit, the Commission has identified the 18 most-affected regions. Seven of the areas are in the eastern German region of Lusatia where 8,300 people are directly employed in lignite mining and nearly 5,000 people could be indirectly affected.
With 8,960 people employed in lignite mining, the Rhenish mining district is expected to experience “upheaval” but is deemed to be “more able to adapt,” the Commission stated. Meanwhile, the central German mining district will "face challenges," although fewer people are employed in the lignite sector there, because of "very low innovation and research potential and a rapidly ageing population."
German gov’ to pay €40 billion in structural aid
Proceeds from the European Commission may seem little in comparison with massive 40 billion Euro support that the German government has pledged to pay under a scheme to compensate electric utilities, workers and coal-mining regions.
The coal exit comes in addition to Germany’s earlier agreed nuclear phase out and its meant to ensure that Europe’s largest economy will meet its 2030 emission reduction targets. Investment in offshore wind, solar power and new long-distance power transmission lines are also in the making.
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."
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.