Germany postpones decision on coal exit until February

BERLIN (Reuters) - Germany has postponed until February a decision on how fast Europe’s largest economy should phase out brown-coal-fired power plants and whether the government should compensate utilities as well as regions that could face job losses, a commission said.

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With brown coal mines the only truly domestic resource in a country reliant on energy imports, Germany faces wrangling over when to abandon coal-burning to meet ambitious climate goals by 2030, as it also wants to be free of nuclear energy by 2022.

The German cabinet has appointed a 24-strong group, the coal commission, to find a compromise deal. It was expected to present an exit plan by the end of the year.

But after another round of talks in Berlin on Monday, the heads of the coal commission said in a statement that further negotiations were needed and that the group now aimed to wrap up its work on February 1.

The commission includes Matthias Platzeck and Stanislaw Tillich, former prime ministers of brown coal-mining states Brandenburg and Saxony, which are industrially weak regions.

Losses of thousands of jobs, even if spread out over years, will hurt both eastern states. In addition, Brandenburg and Saxony will have regional elections next year.

Economy Minister Peter Altmaier said the postponement of the decision could increase the chances for a broader acceptance of the coal exit plan.

“I think there is no reason to be disappointed,” Altmaier said, adding that Finance Minister Olaf Scholz, who also participated in the talks on Monday, was trying to fend off calls for extra spending.

Two people familiar with the talks told Reuters that Scholz has shown little sympathy for paying compensation to operators of brown-coal-fired power plants that could be forced to shut down early.

Scholz is also skeptical of other measures to help companies cope with the effects of the planned brown coal exit, such as lowering energy tax, two people familiar with the talks said.

A finance ministry spokeswoman declined to comment.

So far, the coalition parties have agreed to spend 1.5 billion euros ($1.7 billion) to help regions especially affected by structural change such as the planed coal exit.

The commission will help allocate federal funds for bringing new industries into the regions, such as battery cell research and production.

Coal-to-power production both from brown coal and imported hard coal accounts for 40 percent of Germany’s total power production, making the exit from coal difficult while maintaining reliable supply to industries and households.

($1 = 0.8814 euros)

Additional reporting Gernot Heller and Michael Nienaber; Editing by Riham Alkousaa and Adrian Croft