The transition is expected to cost up to €80 billion ($91 billion) over 20 years, half of which will go to the regions shuttering plants in the west and east of the country, with the rest helping prevent electricity prices from rising, the commission said.
The panel, consisting of politicians, climate experts, unions and industry figures from coal regions, reached this decision on Saturday morning after a final marathon 24-hour session, several members told AFP. It followed months of bitter wrangling as pressure mounts on Europe's top economy to step up its commitment to combating climate change.
The commission's findings will now be passed on to the government, which is expected — barring a surprise — to follow the recommendations of the panel it set up.
Under the plan, several plants that use lignite or brown coal, which is more polluting than black coal, will be closed by 2022. Other plants will follow until 2030, when only 17 gigawatts of Germany's electricity will be supplied by coal, compared to today's 45 gigawatts.
The last plant will close in 2038 at the latest, the commission said, but did not rule out moving this date forward to 2035 if conditions permit.
The affected regions, where tens of thousands of jobs directly or indirectly linked to brown- and black-coal energy production, will receive €40 billion as compensation over the next two decades.
Nuclear power phaseout
Two billion euros will also be spent each year over the same period to stop customers from facing rising electricity prices.
Environmental groups had pushed for Germany to shutter its more than 100 coal-fired power plants by 2030 as part of efforts to meet Germany's target of becoming carbon neutral by 2050. But opponents warned against ditching coal too quickly, saying it could endanger energy supply and push up electricity prices.
Despite its green reputation, Germany remains heavily reliant on the dirtiest of all fossil fuels, in part because of Chancellor Angela Merkel's decision to phase out nuclear power by 2022 in response to the 2011 Fukushima disaster.
Coal accounted for more than 30 percent of Germany's energy mix in 2018, putting it neck-and-neck with renewables like solar and wind energy.
The German government admitted last year it will miss a 2020 target for cutting greenhouse gas emissions by 40 percent compared with 1990 levels. It now expects to manage reductions of just 32 percent, badly undermining Merkel's role as a leading advocate of the Paris Climate Agreement.
A survey commissioned by public broadcaster ARD on Friday showed that 59 percent of Germans are in favour of ending coal exploitation swiftly. But in mining states, 61 percent want Germany to hold on to the fossil fuel for longer.