17-01-2019

German coal exit debate unblocked by government finance promise: report

Germany’s coal commission is to vote January 25 on a final report for the government after a meeting late Tuesday chaired by Chancellor Angela Merkel resolved conflicts within the commission, German state broadcaster ARD reported Wednesday.

Aiding the compromise was an assurance made in the meeting by finance minister Olaf Scholz of long-term support for Germany’s four lignite-mining states beyond the Eur1.5 billion ($1.7 billion) set aside in the federal budget to 2021, state premier for Saxony-Anhalt Reiner Haseloff told ARD.

The four states had called for over Eur70 billion in subsidies over coming decades as Germany plans to end coal-fired power generation.

Debate within the commission reached an impasse last year on the question of how to guarantee financial support for mining regions.

Political pressure has been rising in the east with two states — Brandenburg and Saxony — facing elections this year.

The government postponed the deadline for a final report to February from November.

Should the 28 commission members — representing states, industry groups, unions and environmental activists — fail to reach a compromise next week, state heads would meet again with the government on January 31, Haseloff said.

Germany would need to close at least half its coal and lignite capacity to meet 2030 climate targets, with many observers expecting a final exit date for coal in the late 2030s.

2019 is set to be the year that coal-to-gas switching in power generation takes off in continental Europe. Carbon prices supported by the new market stability reserve cutting supplies, coupled with potentially lower gas prices, could prompt unprecedented C2G switching volumes.

The government was expected to base its planned 2030 climate act upon the recommendations by the coal commission to make the 2030 climate targets legally binding.

Germany is set to miss its 2020 targets despite the power sector being on track to achieve its goal of a 40% cut in emissions, according to the latest projections by utility lobby BDEW.

Meanwhile, uncertainty remained on near-term coal closure recommendations by the commission, which was initially also tasked to look at how to close the gap to the 2020 climate targets.
Source: Platts

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