Statement on the final report of the Coal Commission

“A forward-looking conclusion – serious work is only now beginning”

Regarding the Commission’s final report “Growth, Structural Change and Employment”, or Coal Commission for short, Andreas Kuhlmann, Chief Executive of the German Energy Agency (Deutsche Energie-Agentur – dena) says:

Andreas Kuhlmann, dena's Chief Executive. Picture: Deutsche Energie-Agentur GmbH (dena)

“I am delighted that the members of the Commission have succeeded in arriving at a forward-looking conclusion. The direction is clearly the right one, though of course the exact paths could not be described by the commission in these few months. The proposed reduction of coal-fired power generation is sufficiently ambitious to achieve the climate protection targets for 2030 and 2050. This is also indicated by the transformation paths that we have developed together with companies and associations from all the relevant industries in the dena pilot study “Integrated Energy Transition”.

At the same, with its multi-faceted recommendations the commission rightly makes it clear how large and complex the challenges in the energy sector are. If one counts the nuclear power and coal phaseouts together, in barely 20 years approximately 50 per cent of the guaranteed power station capacity which is available today will be taken off the grid. This is a huge challenge for a highly developed industrial centre like Germany, but one we will succeed in overcoming. The report provides the guidance that many market players have been waiting for. I am sure that it will stimulate even more momentum for the development of new technologies and solutions for the energy transition and climate protection. However, political action is also required here. Politicians must now take advantage of the opportunity and create suitable regulatory frameworks through the right energy policy measures and changes.

The measures proposed by the Commission for the energy sector address the right issues and are the right basis for the remaining work in this legislative term. We must look beyond the end of coal-fired power generation and urgently find ways to speed up the development of renewable energies, incentivise investments in new gas-fired power plants and make the electricity grids fit for the new requirements, ensuring that the security of supply is guaranteed at all times. The estimates put forward by experts are in some cases still strongly divergent here. How will electricity demand in Germany develop? To what extent can Germany count on renewable electricity from abroad, including when bottlenecks occur? Can supply interruptions at a manageable level be accepted? These are all questions that we must urgently come to agreement on. Depending what assumptions are made here, the consequences for the energy system may end up being very different.

Also important is the commission’s reference to a reform of the economic framework of the energy transition and the assessment of carbon pricing. The system of taxes, levies and reallocation charges in the energy and climate protection sector is outdated. There is a lack of incentives to develop new technologies and business models, for example in the areas of flexibility, digitalisation and synthetic fuels. In this context individual structures, speeds and challenges must be taken into account for each sector. We need clear targets and market-oriented frameworks based on innovation, competition and entrepreneurship. A focus on carbon pricing would be a good approach for this. At the same time the aim must be to create more transparency, balance out social inequalities, reduce complexity, encourage innovation and enable cross-border collaborations.

In the coal-mining areas affected by the structural change it is especially important to create favourable frameworks for forward-looking investments. Above all, we should focus not only on what is lost in the course of the transformation, but also what we – including and particularly in those regions – can gain from it. Structural change can create new perspectives. In many regions and cities we can see already that the energy transition is also a driver of new business models and industrial settlements. Start-up companies are working on solutions for the affected sectors. Cities and municipalities are embarking on the path to urban energy transition. Technologies for and expertise in the energy transition and climate protection are internationally sought after.

Serious work is only now beginning. The commission has identified the right points, but has understandably not yet indicated any solutions. The ball is now in the politicians’ court. Any initiative that does not get off the ground this year has hardly any chance of being implemented in this legislative term. Expectations are high in the economy, in the regions and in society as a whole. The recommendations of the structural transformation commission are a good basis for upcoming discussions and decisions. It is supplemented by numerous studies that sketch out the transformation pathways for climate-friendly development. At the same time many companies are on the starting block with new ideas and business models. If we now succeed in setting the course correctly, things may suddenly begin to pick up momentum very quickly. We must use this opportunity.”