German government and coal power companies sign lignite phase-out agreement

The German federal government and energy companies have officially signed the public law agreement to end lignite-based power generation in the country by 2038, according to a dpa report carried by Tagesspiegel. The operators will receive compensation for the early closure of their power plants. RWE will receive 2.6 billion euros for its lignite plants in the western Rhineland region while LEAG will receive 1.75 billion euros for power plants and opencast mines in the eastern state of Lusatia. The agreement has decisive advantages for the federal government, said Andreas Feicht, state secretary in the economy ministry (BMWi). Operators will not be able to file lawsuits against the coal phase-out either in German courts or in international arbitration tribunals. The compensation payments would be secured for the reclamation of the opencast mines. In addition, the agreement would give the federal government the option to bring forward all closure dates in the 2030s by another three years without additional compensation. The compensation payments, which will be paid out in fifteen equal annual instalments, still have to be approved by the European Commission.

At the end of last year, RWE shut down its first lignite unit in North Rhine-Westphalia, a state in the west of Germany. The German parliament (Bundestag) adopted the country's coal exit law in July 2020, 18 months after the multi-stakeholder coal exit commission recommended an end to coal-fired power generation in the country by 2038 at the very latest. For hard coal, the coal exit law foresees auctions for plant operators to take capacity off the grid according to the government's timetable.