Germany's Coal Usage and Phase-Out Plans
Germany currently generates approximately 20% of its electricity from coal-fired power stations. The country uses the term kohleausstieg, which translates to "coal phase out," to describe its commitment to ending coal usage.
As the largest coal consumer for power generation in Europe and the fourth largest globally after China, India, and the United States, Germany has pledged to cease coal use entirely by 2038. Specifically for lignite, a low-quality and highly polluting form of soft coal, the phase-out deadline has been advanced to 2030.
At present, coal accounts for about 20% of Germany's electricity production, but the government aims to eliminate this share as it prioritizes the expansion of wind and solar energy. In fact, renewables already supplied 59% of Germany's electricity last year.
Transition to Natural Gas and Renewables
To support intermittent wind and solar power, especially during winter months, Germany plans to replace coal with additional natural gas power plants. Natural gas emits roughly half the carbon dioxide of coal and currently represents 13% of the country's electricity generation.
However, recent global increases in gas prices, influenced by the US-Israel conflict involving Iran, have prompted several countries to reconsider coal as an energy source. For example, Japan has relaxed regulations to permit greater coal-fired power plant usage, Italy has postponed the closure of its remaining coal stations until 2038, and India has delayed maintenance shutdowns.
Germany's Position on Coal Amid Rising Energy Costs
Regarding Germany's stance, Chancellor Friedrich Merz stated in March,
"We must supply this country with electricity. I am not prepared to jeopardise the core of our industry simply because we have adopted phase-out plans that have become unrealistic."
This statement raised questions about whether Germany might reconsider or delay its coal phase-out plans.
Supply and Price Challenges
The German government faces a dual challenge concerning electricity fuel sources: supply security and cost. Germany possesses abundant, inexpensive lignite reserves—the largest in Europe and third largest worldwide—making it fully self-sufficient in this fuel.
In contrast, Germany imports 95% of its natural gas. Consequently, when global gas prices surge, switching back to cheaper lignite becomes economically attractive, with no concerns about supply shortages.
Additionally, nuclear power is not an option, as Germany permanently closed its last nuclear power plants in 2023.
Industry Perspectives on Coal Usage
German energy company LEAG, the country's second largest lignite miner, expressed optimism about the potential extension of coal-powered energy, stating,
"We very much welcome the fact that the German federal government is placing not only medium, but also long-term, security of supply at the heart of its energy policy considerations."
The company also noted its increased lignite supplies to compensate for halted Russian gas imports following Russia's 2022 invasion of Ukraine, adding,
"We already demonstrated our ability to quickly draw on reserves to return to the market when the situation demands it."
Conversely, Hauke Hermann, a senior researcher at the Öko environmental research institute, argues that increasing coal use is not the solution and advocates for further expansion of renewable energy sources.
Within German industry, there is a desire for clarity regarding energy sources. Wolfgang Große Entrup, director general of the German Chemical Industry Association (VCI), stated,
"Our industry needs reliable energy. Renewable energy alone cannot yet guarantee this… Companies will only invest billions if they can trust that energy will remain reliably available at competitive prices in the future."
Debate Over Coal Phase-Out Adjustments
While almost no political parties outside the far-right AfD advocate abandoning the coal phase-out entirely, some support easing the timeline.
One proposed compromise involves six coal power stations that use imported hard coal, which is less polluting than domestic lignite. These plants currently operate only as backup to supplement the national grid during peak demand, such as cold winters.
Steag Iqony Group, owner of some of these plants, argues they should be permitted to operate continuously, stating,
"If they were temporarily allowed to resume regular production, they could deliver electricity to several million homes. We think these plants should be used in order to strengthen security and affordability of supply."
A parliamentary committee established in March is examining this possibility.
Political Dynamics and Upcoming Decisions
The German government is a grand coalition comprising the centre-right CDU/CSU parties and the left-wing SPD. The CDU/CSU generally favors extending coal use, while the SPD opposes it.
SPD energy spokeswoman Nina Scheer cautions that relaxing coal regulations would be,
"counterproductive for the energy transition and mean new fossil lock-in effects."
In contrast, CDU deputy leader and Saxony Minister-President Michael Kretschmer asserts,
"Germany, as a major industrial nation, must do everything in its power to ensure that energy remains affordable. The energy transition must be completely recalculated. It should not be a matter of cost, but rather a matter of realistically considering security of supply and affordability."
The government must decide this year whether to adhere to the 2030 lignite phase-out deadline or maintain some capacity temporarily as a strategic reserve.
In August, the government will publish a statutory review of the coal phase-out, assessing its effects on energy supply, security, and prices. While initially intended to explore accelerating the kohleausstieg, it may now be used to justify slowing the process.
