Germany to stop using coal by end of 2038

A government commission has agreed that Germany should phase out all coal-fired power plants by the end of 2038. The government is already planning to shut down nuclear power plants over the next three years.

A government-appointed commission has agreed that Germany will stop producing energy from coal-fired plants by 2038, sources told local media early on Saturday.

A final agreement was reached after 21-hour talks that lasted well into the night, with only one opposing vote in the 28-member body.

The decision aims to reduce Germany's carbon emissions from coal, which drive climate change.

German Finance Minister Olaf Scholz welcomed the proposal, stressing that it was important for Germany to keep power prices stable while at the same time creating new jobs in coal-producing regions.

"If we all work hard and don't lose sight of the joint goal, then we can further develop Germany into a role model in energy politics," he told the Sunday edition of the Frankfurter Allgemeine Zeitung newspaper.

Reliance on coal

Germany currently produces nearly 40 percent of its electricity from coal and has failed to meet targets agreed to under the 2015 Paris climate agreement.

Financial considerations and the exact date of the phase-out were major sticking points during the marathon session, as energy companies had insisted on compensation to hedge against rising electricity prices.

Germany's coal-producing regions, meanwhile, demanded firm financial commitments to cope with the structural upheaval from the transition away from fossil fuels.

The plan includes relief for those stakeholders and some financial help for consumers.

Phase-out starts immediately

Over the next four years, plant operators, including RWE and Uniper, will be asked to shut down about 12 gigawatts of capacity early in a first step, members of the commission told the Reuters news agency. This equals about 24 large power station units.

Reuters cited commission sources as saying that €40 billion ($45.65 billion) should be set aside for the phase-out.

Critics, though, have argued that the government will spend huge sums to effectively buy up an entire energy sector in order to shut it down.

The plan still needs formal approval from the German government and the individual states, who will be responsible for its implementation.

The agreement marks the second major intervention in Germany’s energy market within a decade after a landmark decision to shut down all nuclear power stations by 2022. The decision to switch away from nuclear was taken in the wake of Japan’s Fukishima disaster in 2011

Wide public support

The coal phase-out, for which green groups have campaigned for years, is backed by almost three-quarters of Germans, according to a new poll published on Friday by public broadcaster ZDF.

The coal commission consists of representatives from industry, trade unions, science organizations and environmental groups.