Germany agrees plan to phase out coal power by 2038

The German government, the country's coal mining states and several major utilities agreed on Thursday on a shutdown plan for coal-fired power plants in Germany by 2038 at the latest.

"We are the first country to make a binding withdrawal from nuclear and coal," said German Minister for the Environment, Nature Conservation and Nuclear Safety Svenja Schulze during a press conference, adding "Coal phase-out begins now."

Schulze said that eight "very old and dirty" power plant units should be quickly taken off the grid, the first one already at the end of this year.

The German government said that operators of coal-fired power plants would receive compensation for the early shutdown of their plants. A total of 4.35 billion euros (4.85 billion U.S. dollars) is earmarked for this purpose.

The government announced last year its intention to phase out electricity generation from hard coal and lignite by 2038 at the latest. To support the affected areas, former coal mining regions are to receive a total of 40 billion euros for the restructuring of their economies.

Despite the phase-out, a new hard coal power plant in North Rhine-Westphalia is still planned to start electricity production.

According to Minister for Economic Affairs Peter Altmaier, the government would not prevent the commissioning of the power plant due to the complex system of compensation payments, among other reasons.

Germany "is about to leave the fossil age with big steps," said Minister of Finance Olaf Scholz.

In the ensuing "restructuring process," said Scholz, the dismantling of old energy producers would need to be matched with the expansion of renewable energies in order to cover future demand.