STEAG Sale Without Coal Exit Commitment Risks Germany Missing 2030 Target

The planned sale of Germany's state-owned coal utility STEAG could derail the country's coal exit strategy unless a binding decommissioning plan is attached to the sale process, according to an IEEFA report published in June 2023. With 4.1 gigawatts of coal capacity and no published phase-out timeline, STEAG's continued operation under a profit-maximising private owner risks pushing Germany past its 2030 coal reduction target.

STEAG currently operates 4.1 GW of coal-fired generation and has not released a decarbonisation plan. The company is the second-most polluting power utility in Europe, with a CO2 emission factor of 927 kilograms per megawatt-hour in 2021, as assessed across 25 European utilities. The six German municipal utilities that collectively own STEAG through the KSBG KG consortium announced the sale in late 2022, with the sale process expected to begin in May 2023. STEAG has been loss-making for most of the past decade.

Germany's Energiewende sets a national target of 9 GW of operating coal capacity by 2030 and a full coal exit by 2038. IEEFA's analysis, authored by power sector analyst Jonathan Bruegel, finds that without a binding decommissioning commitment, STEAG's new owner would be legally free to operate the full coal fleet until 2038, the compulsory shutdown date. This would make STEAG the sole remaining coal operator in North Rhine-Westphalia if the state advances its own coal exit to 2030, increasing pressure on the federal timeline.

IEEFA recommended that the six municipal owners either postpone the sale until all plants have binding decommissioning dates or require public commitment to the coal phase-out as a condition of sale. Although STEAG's net-zero emissions goals were expected to be published in the second quarter of 2023, they would not be contractually binding on a new private owner post-acquisition. IEEFA sent a copy of its report directly to STEAG and to KSBG KG as part of its advocacy effort.

Key figure — 4.1 GW — STEAG's current coal-fired generation capacity, with no binding decommissioning dates established