Sian Crampsie
The deal means that plans for a levy on coal-fired generation have been abandoned and have been welcomed by the energy sector.
The Economy Ministry said that the decision would mean that Germany could meet its target of reducing CO2 emissions by 40 per cent by 2020 compared with 1990 emissions. "Brown coal-fired plants with a capacity of 2.7 GW will be mothballed. Those plants will not be allowed to sell any electricity on the normal power market," said a spokesman after the deal was clinched on 2 July.
The deal also includes an agreement to set up a capacity reserve system, allowing utilities to re-start brown coal fired power plants in the event of power shortages.
Environmental groups have criticized the move. Greenpeace said the plans made a mockery of a Group of Seven (G7) climate deal brokered by Merkel at Schloss Elmau in Bavaria in May.
"Angela Merkel has broken her climate promises from Elmau. Instead of starting the exit from coal, she has ensured all the dreams of the plant operators come true," said Greenpeace’s Tobias Muenchmeyer.
Economy minister Sigmar Gabriel originally proposed putting a levy on CO2 emitted by the oldest and most-polluting power stations above a certain threshold to help curb CO2 emissions from the coal sector by 22 million tonnes by 2020.
Industry strongly opposed that proposal, however, with unions saying that they would put up to 100 000 jobs at risk and lead to a decline in the coal mining industry.
