January 31, 2019 / 5:39 PM / 19 days ago

Merkel signals readiness to push ahead with coal exit

BERLIN (Reuters) - German Chancellor Angela Merkel signaled her readiness on Thursday to implement costly proposals tabled by a government-appointed commission to facilitate the phasing out of coal-fired power, but key questions about money and priorities remain.

FILE PHOTO: Water vapour rises from the cooling towers of the Jaenschwalde lignite-fired power plant of Lausitz Energie Bergbau AG (LEAG) in Jaenschwalde, Germany, January 24, 2019. REUTERS/Hannibal Hanschke/File Photo

The commission proposed the shutdown of all Germany’s coal power stations by 2038 at the latest, recommending that at least 40 billion euros ($46 billion) in aid be provided for affected regions, with further payments to cushion the potential burden of rising energy prices for companies and consumers.

Speaking after a meeting with state premiers, Merkel said that the federal government would handle the commission’s proposals “very carefully”, adding that the phase-out of coal-fired power plants was a task for society as a whole.

The center-right leader said the government would present a draft law by May in which Berlin would address the commission’s recommendations.

Touching on the thorny issue of how to finance its switch away from coal, Merkel said it was too early to start a debate about money. The government’s mid-term budget plans cover a time period until 2023. “We’re talking about 2038. Nobody knows what the mid-term planning will be in the future,” Merkel said.

Finance Minister Olaf Scholz made clear that he is not planning to allocate any extra money to help with the phasing out of coal-fired power, complicating efforts by Europe’s largest economy to achieve its climate protection goals.

“PLAUSIBLE”

Scholz told Handelsblatt business daily that the proposed 2 billion euros of annual aid until 2040 was a “plausible assumption” but other ministries would have to manage the coal shift with money from existing budgets.

“We have earmarked big funds for investments; for example, in the budgets of the transport ministry, economy ministry, science ministry and construction ministry,” Scholz said.

Scholz, a member of the center-left Social Democrats, junior partner in Chancellor Angela Merkel’s coalition government, rejected the coal commission’s proposal to support the construction of new gas power plants with state money.

He said that state money would be better used in research to fund solutions such as using hydrogen as an energy source.

Reiner Haseloff, prime minister in the eastern state of Saxony-Anhalt, called on the federal government to implement the coal commission’s proposals without changes.

“The proposals must be implemented as recommended. Changing them would jeopardize the hard-won compromise as a whole,” Haseloff told Reuters.

“The 40 billion euros are urgently needed to cushion the earlier exit from brown coal, as demanded by the federal government.”

(This story refiles to cut extraneous paragraph on Scholz and Merkel meeting state premiers in the afternoon.)

Reporting by Michael Nienaber, Andreas Rinke; Editing by David Goodman

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