RWE Signs Contract with German Government on Lignite Phase Out
The German government and RWE signed a public-law contract in Berlin, which lays out the legal framework for the lignite phase out. The contract, which was already passed by the German parliament “Bundestag” at the end of last year, sets down the detailed roadmap and conditions under which RWE will gradually switch off its lignite power plants. RWE will decommission around 6,000 megawatts of lignite capacity by 2030. In addition, two of the three open cast mines in the Rhenish region will be shut down earlier than planned and the Hambach forest will be preserved. According to the contract, the compensation of 2.6 billion euros, to be paid in equal instalments over a period of 15 years, will be used to cover the follow-up costs associated with the open cast mines in a timely manner. This amount, which is subject to a state aid audit by the European Union authorities, is significantly lower than the actual loss to RWE, which had been previously calculated at around 3.5 billion euros. The contract also stipulates that RWE will not take up legal proceedings against the lignite phase out being decided upon by the German government.
As a result of legal and contractual regulations, over 3,000 jobs will be lost at RWE Power by the end of 2022, and over 6,000 jobs by 2030. Arrangements regarding transitional allowance (“Anpassungsgeld”) and compensation to make up for pension disadvantages in the state pension insurance as well as the collective tariff agreement “Kohleausstieg” (coal phase out) ensure that these measures are carried out in a socially acceptable way.