In July 2020, the German coal power exit law, as well as a law that provides support to coal regions for the transition, was adopted. The first law stipulates a coal exit by 2038 with an option to forward it to 2035 and creates the basis for the retirement of an assumed 40 coal plants with a capacity of 23 GW by 2030 in addition to retirements that were announced already. We assume that about 15 coal plants with a capacity of nearly 19 GW are meant to operate after 2030, making the law incompatible with the UN Paris climate agreement 1.5 degrees C requirements. A public- private contract between the German government and the lignite industry, still to be signed, is supposed to grant 4.35 bln EUR in compensation to operators for closing down their lignite business. The compensation is still subject to approval by the state aid department of the EU Commission.
According to German civil society organisations and former coal commission members, the law is substantially weaker than what was proposed by the multi-stakeholder government coal commission, which had presented its final report in February 2019. The criticism centres on the slowness of the exit, that it does not foresee the rescue of the villages threatened by lignite mining, the non-linear phase out pathway of lignite plants, allowing the new coal plant Datteln IV to come online, the massive overcompensation for the coal industry for uneconomic and late coal plant closures, and subsidies for coal-to-gas/biomass switching. Many factors are in play that will force Germany to exit coal in the power sector faster. This was evidenced in December 2020, when a set of three younger hard coal plants unexpectedly won in the first auction to determine hard coal power retirements.
In a landmark German supreme court ruling, the German government was required to strengthen its 2030 climate targets in order to account for intergenerational climate equity. While the measures to be able to reach those climate targets have yet to be agreed, a coal phase out by 2030 has become inevitable because the power sector will have to contribute much of the early emission cuts. Following Germany’s September 2021 elections, the SPD, Greens and FDP entered into coalition negotiations and produced a consultation paper which establishes that a coal phase out by 2030 is an ideal scenario, but without referring to concrete steps. Two solutions to overcome dependence on coal are mentioned: a massive expansion of renewables and the construction of hydrogen-ready fossil gas-fired power plants.
After the collapse of the German government triggered early elections, the CDU and SPD formed a new ruling coalition. The new coalition have agreed to a late coal phase-out by 2038 in order to accommodate their plans to more than double fossil gas expansion.