German Coalition Eyes 2030 Coal Exit, Years Ahead of Plan

(Bloomberg) -- A potential new SPD-lead German government wants to abandon coal as a power source eight years earlier than planned, a move that would be a big win for the planet but challenge a country struggling with energy supplies.  

“In order to reach the climate goals, an earlier exit from coal-fired power is needed, ideally by 2030,” the parties wrote.  

Details of how Europe’s largest economy plans to shed its reliance on coal will be hammered out in formal talks between the Social Democratic Party, the Greens and the Free Democrats set to start as early as next week. An accelerated expansion of energy from renewable sources like wind and solar is likely to be part of the plan. 

The move isn’t without risks. Under conservative Chancellor Angela Merkel, Germany has moved to shut down nuclear plants, and hasn’t sufficiently invested yet in alternatives. Utilities warn that the risk of blackouts is set to grow as electrification adds to demand for power. Germany’s reliance on gas is likely to increase at a time when that fossil fuel is coming under increased scrutiny by investors and voters alike because of its emissions.

Germany aims to wind down the last of its nuclear power generation next year, so cutting back on coal would make it more reliant on gas imports and renewables. 

The Green Party made an earlier exit from coal one of its core pledges ahead of the September election, as a step toward reaching carbon neutrality in Germany by 2045. 

Climate policy has become a priority throughout the European Union, with the bloc seeking to curb its greenhouse gas emissions by 55% by the end of this decade, compared with 1990 levels. 

A faster exit from coal in Germany might also be encouraged by market forces, since increasing carbon prices have made some plants unprofitable.  

Scholz Seals Initial Coalition Deal to Be German Chancellor 

Phasing out coal by 2030 could potentially allow Germany to avoid 1.1 billion euros ($1.3 billion) a year in emission costs, according to a study by Wartsila Oyj. Yet it would require the country to boost its wind and solar capacity by about 20% beyond what had been planned for the 2038 coal phase-out.   

Germany’s outgoing government has been accused by critics of failing to expand alternative energy production quickly enough to meet its future power needs. 

After more than two decades of energy transition, coal still supplies almost a quarter of Germany’s electricity. Gas accounts for about 16% of electricity production, according to estimates from AB Energiebilanzen e.V. for 2020. 

Germany Flirts With Power Crunch in Nuclear and Coal Exit

Friday’s coalition plan focused heavily on climate initiatives. 

As well as the coal exit timetable, the parties said they plan to install solar panels on all new commercial buildings, and to end combustion-engine powered cars before 2035 by allowing only CO2 neutral cars to be registered on German streets. 

The Liberals, who’ve been pushing for a more market-oriented climate policy, got backing for their plans to abolish Germany’s renewable energy surcharge within the next four years, and agreed to expand EU emission trading to airlines, road transport, shipping and buildings.

(Updates with detail on other proposals from 13th paragraph.)

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