Germany, the largest user of coal for power generation in Europe and the fourth largest in the world behind China, India and the United States, has pledged to stop using the fuel by 2038. For lignite — the low-quality, soft, highly polluting coal that Germany mines domestically in abundance — it brought the phase-out forward to 2030.
But a jump in global gas prices after the US-Israel conflict with Iran has complicated those plans. Several countries have already begun to reverse course. Japan loosened rules to allow for increased use of coal-fired power plants. Italy is delaying the closure of its remaining coal stations until 2038. India postponed maintenance shutdowns.
Germany now faces its own reckoning. The country is self-sufficient in lignite, with the largest reserves in Europe and the third largest globally — and the fuel is cheap. By contrast, it imports 95% of its natural gas, making it acutely exposed to volatile international prices.
Nuclear power is not available as an alternative: Germany closed its last nuclear power stations in 2023.
German energy firm LEAG, the country’s second-largest lignite miner, said it welcomes the government’s renewed focus on supply security. “We very much welcome the fact that the German federal government is placing not only medium, but also long-term, security of supply at the heart of its energy policy considerations,” the company said in a statement. It noted that it increased lignite supplies after Russia’s 2022 invasion of Ukraine to compensate for the halt in Russian gas imports. “We already demonstrated our ability to quickly draw on reserves to return to the market when the situation demands it.”
Hauke Hermann, a senior researcher at the Öko environmental research institute, argued that more coal is not the answer. Instead, he called for further expansion of renewables, which already supplied 59% of Germany’s electricity last year.
Industry groups are urging the government to make a decision quickly. “Our industry needs reliable energy,” said Wolfgang Große Entrup, director general of the German Chemical Industry Association (VCI). “Renewable energy alone cannot yet guarantee this… Companies will only invest billions if they can trust that energy will remain reliably available at competitive prices in the future.”
One compromise under discussion involves six coal power stations that use imported hard coal, which is less polluting than domestic lignite. These plants are currently used only as back-up for the national grid. The owner of some of them, Steag Iqony Group, said they should be allowed to operate continuously. “If they were temporarily allowed to resume regular production, they could deliver electricity to several million homes,” a company spokesman said. “We think these plants should be used in order to strengthen security and affordability of supply.”
A parliamentary committee established in March is studying that possibility. The government must also decide this year whether the 2030 deadline for lignite phase-out will be enforced or whether some capacity may be maintained as a strategic reserve.
In August, the government will publish a statutory review of the coal phase-out examining its impact on energy supply, security, and prices. The review was originally designed to determine whether the phase-out could be accelerated. Observers now widely expect the document will be used to argue for slowing it down.
The government’s grand coalition — the center-right CDU/CSU parties and the left-wing SPD — is divided on the question. The SPD’s energy spokeswoman, Nina Scheer, warned that relaxing coal rules would be “counterproductive for the energy transition and mean new fossil lock-in effects.” Michael Kretschmer, deputy leader of the CDU and minister-president of Saxony, countered: “Germany, as a major industrial nation, must do everything in its power to ensure that energy remains affordable,” adding that “the energy transition must be completely recalculated. It should not be a matter of cost, but rather a matter of realistically considering security of supply and affordability.”
The debate, which the Germans call kohleausstieg — “coal phase-out” — is unfolding against a broader global reconsideration of coal as an energy source amid rising gas prices. MSI previously reported that Asia has increasingly turned to coal as the Iran war has squeezed global liquefied natural gas supplies, and that Europe faces prolonged high oil and gas prices even after the conflict ends. Asia turns to coal as Iran war squeezes global LNG supplies