Excavators in a quarry

© iStock/claffra

Today, the Bundestag and the Bundesrat adopted the Act on the Phase-out of Coal-fired Power Plants and the Structural Reinforcement Act for Mining Regions. Furthermore, the Bundesrat consented to the Buildings Energy Act and amended the Federal Building Code to introduce a minimum distance between wind turbines and settlements, and the Renewable Energy Sources Act to lift the cap on photovoltaics.

Said Federal Minister Altmaier: “Today’s adoption of the Act on the Phase-out of Coal-fired Power Plants and the Structural Reinforcement Act also launches the major project of the phase-out of coal, which will take an entire generation to complete. It is a long-term project that comes after tough debates and a milestone for Germany’s energy transition. Germany is one of a handful of industrial countries in the world that is phasing out nuclear power by 2022 and power generated from coal by 2038 at the latest, and is deploying an active structural policy that provides clear prospects for the people living in the regions affected by this. We are taking care to design the coal-phase out in a way that delivers legal certainty, is based on sound economics, and provides for a social equilibrium. A number of power plants will be retired before the end of the year. At the same time, we are expanding the use of renewables and retrofitting coal-fired power plants with CHP technology. Our structural change projects for local communities are also to begin this year. We will soon be signing an agreement to this effect between the federation and the Länder where lignite is being mined, and decide on specific projects within the coordination body set up by the federation and the Länder.”

The Act on the Phase-out of Coal-fired Power Plants puts the structural-policy recommendations made by the Commission for “Growth, Structural Change and Employment” into practice. It contains provisions stipulating a gradual phase-out of electricity generation from hard coal and lignite by 2038 at the latest, a continuous monitoring of the energy security situation, the deletion of CO2 certificates, compensation for electricity users in the event of a rise in electricity prices resulting from the coal phase-out, and adjustment payments for older employees working in the coal sector. The loss of electricity caused by the gradual phase-out of coal will be compensated for by a higher renewables target of 65% by 2030. At the same time, funding for combined heat and power will be extended and developed to encourage the transition from coal to more flexible and climate-friendly power sources.

The Bundesrat’s decision on the Buildings Energy Act will also add momentum to the energy transition. The rules have been simplified and streamlined to encourage the use of renewables and innovative approaches in buildings. The cap on photovoltaics has been lifted and distance rules between wind turbines and settlements introduced. All this helps with the transformation of the entire energy system from fossil fuels to renewables.

The Structural Reinforcement Act puts the structural-policy recommendations made by the Commission for “Growth, Structural Change and Employment” into practice. Lignite-mining areas will receive up to €14 billion in financial aid until 2038 for especially important investments facilitating their structural change. Furthermore, the Federation will also take other action to support these regions with another €26 billion until 2038. This support will take the form of top-ups for research and promotional programmes, research infrastructure projects, and new federal institutions opening in the areas affected.

Now the new legislation governing the phase-out of coal needs to be swiftly implemented: within the next few weeks, the Bundesnetzagentur will have the auction forms ready for those prepared to retire their (hard-) coal-fired power plants early on a voluntary basis. Operators can also choose to retrofit their plants and claim funding under the Combined Heat and Power Act (basic funding and coal-replacement premium). The federation and the Länder will sign an agreement on structural change and hold deliberations in the federal/Länder coordination body to get some initial projects off the ground to support structural change.

In January 2019, the Federal Government’s Commission “Growth, Structural Change and Employment” had presented its report (PDF, 4 MB) (in German) on how a gradual phase-out of coal-based electricity generation can be delivered together with specific new economic prospects for the regions affected. The Federal Cabinet adopted the Key points for a Structural Reinforcement Act for Mining Regions (PDF, 220 KB) (in German) in May 2019 and the Structural Reinforcement Act for Mining Regions (PDF, 533 KB) (in German) in August 2019. In January, the Federation and the Länder agreed on Key-points for a phase-out of coal and lignite (in German). The Federal Cabinet adopted the Act on the Phase-out of Coal-fired Power Plants (PDF, 968 KB) (in German) on 29 January 2020.

The key elements can be found here (PDF, 290 KB) (in German).