Germany Opens Way For Gas Beyond 2035 With Subsidy Extension

(Bloomberg) -- Germany’s parliament has extended a support scheme for some gas plants by four years to 2030, in a law hurried through just before the general election on Feb. 23. 

The Economy Ministry estimates that the subsidies will run for 12 years, meaning that the final applicants in 2030 will be allowed to operate stations beyond 2035 - the target date for carbon-free power production. The scheme applies to combined heat and power plants that burn gas and has been opposed by environmental groups.

It’s yet another sign that Germany doesn’t have a clear plan for how to phase out coal and lignite and cut emissions. The nation has ambitious targets but lacks a roadmap to reach them. The government was part of six European Union countries pledging to decarbonize their power systems by 2035, and it wants to reach climate neutrality in 2045, five years earlier than the EU. Germany is also banning imports of liquefied natural gas after Dec. 31, 2043, in favor of green gases.

The CHP plants, which produce heat and well as electricity, are crucial to keeping the power grid in balance when wind and solar aren’t generating. A plan to force new gas plants to switch to hydrogen in the mid-2030s was scrapped by the government last month, removing the off-ramp for the fossil fuel.

The extension was proposed by the conservative opposition and, along with four other energy and climate bills, found a majority in parliament on Friday, in a rare cross-party deal agreed in the midst of a fierce election campaign.

The subsidy, which is paid for through consumer bills, applies to 30,000 running hours. However, there’s currently no deadline by which stations must use up these hours meaning they could generate beyond 2045.

If an operator decides to claim funding for only 2,000 hours annually, it could receive the subsidy until 2045, and even beyond, think tank Öko-Institut warned in parliament earlier this month. This is “incoherent with existing climate targets,” the think tank said.

“Shortly before the new elections, the government is giving the fossil lobby a gift and manifesting the dependence on fossil gas,” said Judith Grünert, senior expert in energy and climate protection at Environmental Action Germany. 

The “goal of climate neutrality in 2045 stands and will not be called into question by the extension” of the bill, the economy ministry said by email.

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