Germany's Coal Phase-Out Delay: Economic Implications and Energy Security Concerns

Germany's coal phase-out plan, initially aimed at ending coal-fired power production by 2030, has faced delays due to political instability and industry resistance. The cancellation of the Power Plant Security Act, which would have facilitated the construction of new gas-fired power plants, has pushed back the timeline for keeping reserve coal plants operational. This article explores the economic implications and energy security concerns arising from the delay in Germany's coal phase-out.

The delay in the coal phase-out has significant economic implications for both the energy sector and the broader German economy. According to German economy minister Robert Habeck, keeping coal plants online as a precautionary measure has led to higher electricity costs and increased carbon dioxide emissions (Clean Energy Wire, 2025). This is because coal-fired power plants are more expensive to operate and maintain than newer, more efficient power plants, and they emit more greenhouse gases per unit of electricity produced.

Moreover, extending the lifespan of reserve coal plants can delay the transition to renewable energy sources, which is crucial for meeting Germany's climate targets. The country has committed to phasing out coal power by 2030 and reducing greenhouse gas emissions by 65% by 2030 compared to 1990 levels (German Federal Government, 2021). By keeping coal plants online, Germany may struggle to meet these targets, leading to potential penalties and reputational damage.

In addition, extending the lifespan of reserve coal plants can have negative economic impacts on the broader German economy. The coal industry is a significant employer in Germany, particularly in the lignite regions. However, the phase-out of coal power is expected to lead to job losses in the sector, which could have knock-on effects on the local and regional economies. According to a study by the Institute for Economic Research (IW), the coal phase-out could lead to a loss of up to 60,000 jobs in the coal industry and related sectors by 2030 (IW, 2021).

Furthermore, the coal phase-out is expected to have positive economic impacts in the long run. The transition to renewable energy sources is expected to create new jobs and stimulate economic growth in the green energy sector. According to a study by the German Institute for Economic Research (DIW), the coal phase-out could lead to a net increase of up to 400,000 jobs in the renewable energy sector by 2030 (DIW, 2021).

The delay in the coal phase-out also raises concerns about energy security in Germany. The reliance on aging coal-fired power stations, which are prone to failure and have an average age of 33 years, poses risks to grid stability and energy security (Götz, TransnetBW GmbH). This reliance on aging infrastructure increases the likelihood of power shortages and could lead to potential blackouts, particularly during peak demand periods.

In conclusion, the delay in Germany's coal phase-out has significant economic implications for both the energy sector and the broader economy. While it may provide short-term benefits in terms of energy security and job preservation, it can lead to higher electricity costs, increased carbon emissions, and delays in the transition to renewable energy sources. In the long run, the coal phase-out is expected to have positive economic impacts, including job creation and economic growth in the green energy sector. However, the delay in the coal phase-out raises concerns about energy security and the ability of Germany to meet its climate targets.