Germany releases 40 billion euros for its coal exit
By Florence Schulz, Euractiv | 06/09/2019, the Grandstand
The Bundestag is proposing a law to support the structural change in the coal zones. But the mystery hangs over the date of closure of coal plants. An article from our partner Euractiv.
On Wednesday 28 August, the Bundestag cabinet agreed on a "structural strengthening law", exactly 214 days after the proposals of the "coal" commission. More than € 40 billion, including € 26 billion for infrastructure, will be allocated to North Rhine-Westphalia, Brandenburg, Saxony and Saxony-Anhalt until 2038, when Germany plans to close its last coal-fired power plant. The law has yet to be adopted by the Bundestag and the Bundesrat before it can enter into force this year. This financial contribution is timely for Saxony and Brandenburg, where elections will be held this Sunday, September 1, 2019. According to an Infratest survey, the AfD could win 24% of the vote in Saxony and 22% in Brandenburg.
The law provides for the establishment of government institutions in the Länder affected by the structural change and to improve connections by rail, motorways and federal roads. Private companies should also benefit: 5.000 new jobs should be created in the old coal basins. In addition, research institutes will have to study the accounting of these coal zones to accommodate the energy of the future, notably Power-to-X installations.
Law on the total exit of coal still missing
This bill is only a promise, however, because the accompanying law (Begleitgesetz) on the total withdrawal of coal is still missing. The sums of money provided for in the new law will remain frozen until each of the plants passes the security tests and is subsequently closed. Until now, the federal budget provided 500 million euros per year until 2021 for the coal regions.
The State is now negotiating with the plant operators on the closure conditions. The coal exit compromise stipulates that energy companies are entitled to financial compensation for each gigawatt from coal plants which closed prematurely. Three sites should be shut down by 2022 in the Rhine region, thus generating 3,6 billion euros in compensation for the RWE group.
In the eyes of the Greens, as long as the closings are not concluded, financial commitments must not be made to the Länder: "if the money is granted before the entry into force of the exit plan, the Bundestag will lose means significant pressure, "said party president Annalena Baerbock to the Tagezeitung.
Other priorities
The Länder welcome the prospect of pocketing billions. The law to strengthen structural change is the first cornerstone laid by the German federal government for structural change to be successful, "announced Armin Laschet, Prime Minister of North Rhine-Westphalia. Peter Altmaier also welcomes the efficient cooperation between the Länder. "They had proposed lists with hundreds of regional projects, which should receive financial support until 2018, but their funding is not fixed," he said.
Currently, no one can predict what we will be able to finance with the funds available in 2034 and 2035, ”added the Minister of Economy. Priorities may no longer be the same. This vagueness around the future of financing feeds the concerns of many ministers, who want an agreement guaranteeing the amount of investments, rather than having to renegotiate the rates before each new federal budget. The draft adopted today does not however provide for such an agreement.
Environmentalists fear increased road construction
The initial reactions to the bill are positive. Representatives of industry and business associations welcome it. For their part, environmental defense organizations have a downside: they fear an increase in road construction, for a questionable environmental impact. The Greens also welcome this law with enthusiasm, as they advocate closing the plants as quickly as possible. They had already established their own bill for a coal exit in May 2019.
For their part, the Liberals deplore the lack of ambition of this law. The party calls for the establishment of specific economic zones in the former coal regions. The head of the Christian Democrats, Annegret Kramp-Karrenbauer, also abounds with this sense. A few days before the elections in Saxony and Brandenburg, his party welcomes the slight economic recovery. The law, which was presented just in time to the Bundestag and Bundesrat, could allow them to grab a few votes.
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