Climate Fees for Coal-Fired Power Stations: Is This the Right Step Towards Achieving Climate Goals?

For a long time the German Federal Ministry for Economic Affairs and Energy favoured an additional climate fee for old coal-fired power stations to achieve German climate goals. With the compromise of 1 July this proposal seems to be off the table. To what extent are alternative proposals more effective? For Erik Gawel and Sebastian Strunz, Helmholtz-Zentrum für Umweltforschung – UFZ, Leipzig, the option preferred by the coalition committee is “the worst” – without the phase-out of CO2-certificates unneeded capacity reserves in the short and mid-term would also be kept in old power stations, while the structural incentives for the electricity sector would be heavily limited. The original proposal of the federal government economics ministry, by contrast, would have placed the burden on emission-intensive power stations and included the phase-out of certificates. This would have structurally counteracted the recent renaissance in lignite-based electricity. In the opinion of Sonja Peterson, Institut für Weltwirtschaft at the University of Kiel, the proposals that are currently being discussed as an alternative to the climate fee, are going in the wrong direction: “They are costing German taxpayers a lot of money, increasing inefficiencies in Germany and the EU and are not saving any emissions at an EU-wide level”. At least the climate fee discussed is moving in the right direction. For Hartmut Möllring, Minister for Science and Economic Affairs in Saxony, by contrast, rejection of the climate fee is “good news”. The envisaged climate fee is politically questionable and constitutionally gives rise for concern, without actually making any contribution to climate protection. Carl-Friedrich Elmer, Martin Faulstich and Christian Hey, German Council of Environmental Experts (SRU), see the alternatives to the climate fee as less efficient and effective individual measures. Regardless of this, the climate fee could still play a role in the instrumental support of a coal consensus. According to Felix Höffler, University of Cologne, the phase-out of coal mining is probably the most effective unilateral contribution that Germany can make. Softening the hardships that this would entail in the coal districts would be a matter for long-term regional structural policy, which could be financed by reducing, for example, less carefully targeted funding for renewable energy.