TH€ D€ADLY FUNDING AWARD
1. German obsolete coal power plants paid to rest idle before closing down
The German government has set out a plan that will pay for power stations burning lignite, the dirtiest form of coal, to go on standby and eventually shut down by 2020. Energy companies will get paid for keeping their oldest and most inefficient lignite plants on standby, which amounts to a golden farewell for utilities at the expense of taxpayers and consumers. This delays the closure of some plants that will receive this subsidy and also incentivises companies to keep their other lignite plants active in the hope of receiving the same subsidy, keeping some of these worst polluting fossils going.
€1.6 billion will be paid over 2017-2023 to RWE and EPH for putting 2.7GW of lignite power plants in a "reserve" and to eventually close them down by 2020. Instead of fining power plant operators for polluting, as envisaged under an earlier government proposal that was killed by utilities and unions, they will now be paid for not polluting. Keeping those power plants as “network reserve” - with 10 days warning period for activation - is obviously useless in compensating for renewable power fluctuation and unnecessary given German generation overcapacity. Some of the plants would have closed earlier, and the payment actually delayed their closure. The payments cover only 12% of the lignite plants of RWE and LEAG, encouraging them to keep the other 88% of plants to stay open, begging to the government for money to close, extending their lifetimes until the government caves in and signs the cheque. In addition, the payment agreed was irrationally high; it was based on high historical power prices, which had already collapsed to a fraction of what they were.

This measure is a waste of money that won’t even benefit the workers, despite job concerns being the main reason for replacing the climate levy proposal with this ill-conceived climate protection measure.

This move could have longer term negative impacts for Germany’s climate action and health impacts (lignite plants are one of the dirtiest ways to produce electricity), especially because making these kinds of deals with companies only increases the incentive to keep polluting power plants open in the hope of eventually being paid for their closure. According to the WHO, 26,160 people die in Germany from air pollution.

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