German lignite exit contract lacks transparency on compensation – think tank

Experts have criticised the lack of transparency in the contract between lignite operators and the German state, presented by the government this week, which would provide 4.35 billion euros in compensation for early plant shutdowns, writes Nora Marie Zaremba in Tagesspiegel Background. “The contract does not give any indication of what exactly the companies are being compensated for,” said Swantje Fiedler, head of research at think tank Green Budget Germany (FÖS). While lost revenues or higher costs for restoring the landscape after mining has finished could be reasons, the contract should have shown precisely which additional costs resulting from the coal exit companies need to be compensated for, she told Tagesspiegel. A short legal opinion by lawyer Hartmut Gassner also took issue with the fact that it remained opaque what exactly operators would do in exchange for the compensation. In addition, the mode of payment – 15 equal annual payments beginning with the first shutdown – meant that the state pays for more than it gets early on, as many plants are only scheduled to be taken off the grid towards the end of the exit path.

Germany is one step closer to finalising legislation on the planned coal exit by 2038 at the latest after the government approved a draft contract between the state and companies to flesh out the country’s farewell to lignite. Environmentalists have also noted with relief that the contract in its current form will not prevent an earlier exit from coal should market conditions make coal plants uneconomical.