Germany is phasing out coal and there is still debate about compensation payments for large corporations like RWE. There has now been a decision regarding Germany’s billions in payments to the energy company.
The federal government is allowed to compensate the energy company RWE with several billion for its coal phase-out. The EU Commission published a corresponding decision on Monday, which sees no violation of EU state aid rules in the funding of 2.6 billion euros. It remains unclear whether the energy company Leag will also be allowed to receive its billion-dollar payment in the East German coal region.
“The aid will compensate RWE for the early closure of its lignite-fired power plants in the Rhenish region,” said the EU Commission in Brussels. Although the compensation payment represents state aid, it is necessary so that RWE can phase out its lignite-fired power plants. The current net value of the lost profits is higher than the value of the compensation.
Opencast mining and power plant blocks shut down
RWE welcomed the decision – and pointed out the costs of the earlier exit. Since 2020, the group has, among other things, shut down five brown coal power plant blocks, it said in a statement. In addition, there is the closure of the Hambach opencast mine, combined with the preservation of the Hambach forest. After the Commission’s decision, the way is now clear for the compensation to be paid out in stages until 2030 as planned.
According to the German coal phase-out law, electricity will no longer be generated from coal from 2038 in order to increase climate protection. However, the government partners SPD, Greens and FDP had agreed in their coalition agreement to “ideally” bring forward the coal phase-out from 2038 to 2030. According to the Federal Ministry of Economics, the compensation amount for RWE for an exit in 2038 was negotiated. The end of brown coal in the Rhineland region was brought forward by law last year to 2030, without the compensation amount for RWE increasing.
RWE wants to build hydrogen-capable gas power plants with at least three gigawatts of output in Germany by the end of 2030. According to previous information, the systems are to be built primarily at existing coal-fired power plant locations. They are intended to provide electricity when wind and solar generation is not sufficient. The company does not rule out reserve operation of the coal-fired power plants on behalf of the federal government after 2030.
The decision for East Germany is still open
Germany had already reported the planned compensation to the Commission in 2021, a total of 4.35 billion euros for two operators. 2.6 billion euros were earmarked for the RWE lignite plants in the Rhineland, and 1.75 billion euros were planned for the Leag plants in Lusatia. The EU’s vote for the latter is still pending.
Leag CEO Thorsten Kramer emphasized on Monday that the restructuring of his group required planning security. “The timely and positive decision in the aid proceedings is therefore of utmost importance for LEAG.” His company is an important employer in Lusatia and is working on structural change.
Saxony’s Prime Minister Michael Kretschmer (CDU) reacted disappointedly to the decision only regarding the West German region. “One gets the impression that the federal government is not doing enough to support the lignite companies in East Germany, Leag and Mibrag,” said Kretschmer. He now expects a quick solution for the 1.75 billion euros that the federal government has promised.