New Roadmap for German coal phase-out includes worker payments till 2043

After intensive negotiations, on January 16 the German government, its coal mining states and several major utilities agreed on a roadmap for shutting down the country’s lignite-fired power plants, making Germany the first country in the world with an actual plan to end both nuclear and coal-fired power production.  Most critics say that the roadmap deadline of 2038 is too slow, although it adheres to the deadline recommended by Germany’s Coal Exit Commission  in 2019.  Analysts also criticize an exception which allows a new coal-fired power plant – Datteln 4 –  to come online in summer 2020. (Activists pledge to oppose it). A summary of the agreement is provided by Clean Energy Wire, as well as in “Bye Bye Lignite: Understanding Germany’s Coal Phase-out”  in Deutsche Welle (Jan. 16), or  “How Hard Is It to Quit Coal? For Germany, 18 Years and $44 Billion” in the New York Times (Jan. 16) .  Reaction to the plan appears in  “Hambach Forest: Germany’s sluggish coal phaseout sparks anger” in Deutsche Welle which states that, although the iconic Hambach forest will be saved, activists and local residents are “appalled” because surrounding villages will not. General reactions from German media appear in English in  “’Historic compromise’ or “pact of unreason”? – media reactions to Germany’s coal exit deal” (Jan. 17).

An estimated 20,000 people are employed in Germany’s lignite industry — of which 15,000 work in open-pit mines and 5,000 in lignite power plants. For them,  adjustment payments (not yet quantified) will be provided until 2043, following the pattern of  provisions for workers in the hard coal sector phase-out which ended in 2018.  The coal workers’ union, Industriegewerkschaft Bergbau, Chemie, Energie (IG BCE),  said the agreement would “set the benchmark” for a socially acceptable and climate-friendly transformation and would “lay the groundwork for linking social and climate justice.” The leader of the IG BCE stressed that the phase-out roadmap has to be complemented by a “phase-in roadmap” for renewables, which needs to be done urgently.

In addition to billions in compensation to the utility companies such as giant RWE, there are to be support payments for the affected states of Brandenburg, Saxony-Anhalt, Saxony and North Rhine-Westphalia –  a total of 14 billion euros until 2038 for direct investments in the regions,  and another 26 billion euros provided by the federal government for  “further measures” to strengthen local economies.

 

 

Recommendations for Just Transition coal phase-out in Europe

Bela Phasing-out-coal-a-just-transition-coverPhasing out coal – a just transition approach  was released as a Working Paper by the European Trade Union Institute in April – the latest of several publications on the topic by ETUI Senior Researcher and ACW associate Béla Galgóczi . Following  a summary of the role of coal in the European economy and the current employment structure of the broader coal sector, the paper provides an up-to-date summary of energy policies and just transition policies in France, Germany, Poland and Spain, and also looks at lessons learned from past phase-out experiences in the Ruhr Valley of Germany, Hazelwood coal plant in  Australia, and ENEL, Italy.  He notes that  a clear distinction should be made between hard coal regions, like the German Ruhr or Silesia in Poland, which are strongly-industrialized regions with a high level of urbanization and  a greater economic diversity,  and brown coal regions  such as German Lusatia or the Polish Lodzkie region, which  are rural areas with low population densities and employment concentrated in the mining and energy sectors.  The paper concludes that successful just transition requires, amongst other things: specific and targeted just coal transition policies with government involvement at the central and regional level; a properly-funded, specific mine closure agency, or a specialized agency for employment transitions for several years; individualized active labour market policies and personal coaching; and active EU-level financial support.

The author has made similar arguments  in a 5-page ETUI  Policy Brief,  From Paris to Katowice: the EU needs to step up its game on climate change and set its own just transition framework  (2018), and in his detailed  report  published by the ILO in October 2018 : Just Transition Towards Environmentally Sustainable Economies  and Societies for All, previously summarized in the WCR.

English language version of Germany’s Coal Transition Report now available, with independent analysis of employment impacts

The final report of the German Commission for Growth, Structural Change and Employment (Coal Exit Commission) was delivered in January 2019, and is now available in an English language version.  The Clean Energy Wire  is a German news service written in English, and updates the implementation of the Report’s recommendations.  For example, an article from April 4 states that Germany’s federal government and coal mining states have agreed on a programme worth 260 million euros to provide fast support to regions affected by the coal exit – a first step in the estimated 40 billion euros  needed over the next 20 years.  On April 8, it published  “Mining union wants more efforts to unleash energy transition’s job potentials” , providing an English language  summary of German statements by the leader of IG BCE.

The Wuppertal Institute commented on the Commission’s findings and made its own recommendations in Assessment of the Results of the Commission on Structural Change  . The report commends the Commission for finding a consensus path forward amidst very strong competing interests, but looking ahead, it calls for  public education and acceptance, as well as policy tools “to push ahead vigorously with the expansion of renewable energies, to create the necessary framework conditions with the expansion of the electricity grid and to implement a holistic approach to the energy transition which, above all, takes the potential of energy efficiency into account to a much greater extent than before. ”

coal miner germanyAlso in the wake of the Coal Exit Commission report, researchers at the German Institute for Economic Research , the Wuppertal Institute  and the Ecologic Institute released a detailed joint report explaining why the coal phase-out is needed and how it can become a success. It also provides facts and figures on the German coal industry, including a list of all large coal plants . The summary press release is here .  Phasing Out Coal in the German Energy Sector:  Interdependencies, Challenges And Potential Solutions  argues that the benefits of phasing out coal exceed the costs and will province  new economic opportunities, with jobs in demand-management, storage, “power-to-x applications”, and efficiency technologies. Of particular interest is Section 4 of the report,  which includes statistics and discussion of employment effects.  Approximately 18,500 persons are employed directly in lignite-fired power plants and lignite mining, with another 4,000 to 8,000 in coal-fired power plants. The report finds that, by 2030, approximately  two thirds of the direct employees would be eligible for normal retirement, and another 10% would be eligible for early retirement schemes at the age of 55.   For younger employees, some jobs will be created in dismantling power plants and for remediation. For others who will need to find new jobs, the report holds up the example of Vattenfall in Berlin, where trainees under a rotation scheme can learn different skills in various functions . The report acknowledges that the wage level in the lignite industry is far higher than comparable new employment. It also discusses the availability of   EU, German Government and Federal State funds to finance structural change in the lignite regions.  EU support includes policy support under the Platform for Coal Regions in Transition,  established in December 2017, as well as EU funds.

 

 

 

German Coal Exit Commission recommends Just Transition measures but a 2038 deadline

coal machine germanyOn January 26, the German Commission on Growth, Structural Change and Employment, (better known as the Coal Exit Commission) delivered its highly-anticipated report and a “roadmap” for lignite coal plant closures in the country. The report calls for Germany to end coal-fired power generation by 2038 – subject to reviews by independent experts in 2026, 2029, and 2032, when it  will be decided if the deadline can be advanced to 2035. The 28 official Commissioners, drawn from industry, unions, environmental NGOs, community leaders and government, negotiated for six months , with all but one voting in favour of the final recommendations. Greenpeace voted “yes”, but also issued a dissenting opinion, stating  “Germany finally has a road map for how to make the country coal-free. There will be no further coal plants. Greenpeace and other groups made sure that the commission has clearly supported keeping Hambach forest. However, the report has a grave flaw: the speed is not right.” Other participants, including Sir Nicholas Stern, also criticized the slow speed of the plan.  The Powering Past Coal Alliance , of which Canada and the U.K. were founding members, state that, in order to meet the goals of the Paris Agreement,  “a coal phase-out is needed by no later than by 2030 in the Organisation for Economic Co-operation and Development and in the European Union.”

A compilation of reactions from Commissioners is here. From Michael Vassiliadis, head of the miners’ union IG BCE :“We have found a compromise after 21 hours of negotiations that cannot make us happy, but leaves us overall satisfied. We managed to shield the employees in coal power generation from social hardships from the structural change. At the same time, the coal phase-out is closely tied to verifiable progress with the future energy mix, the expansion of renewables and the grids. The regions get money for structural change, to create new quality jobs. The commission laid the foundation for a new Energiewende of reason.”

The 336-page report is currently available in German only; , but it is well summarized in English in a Fact Sheet from Clean Energy Wire. According to CLEW, key issues addressed are the stability and pricing of energy supplies for Germany, CO2 reduction, and compensation to industry.  Regarding Just Transition for workers and communities, the report devotes almost 40 pages to the economic measures for the regional economies and workers. While the report itself doesn’t estimate those costs, an article in Der Speigel   states that communities will receive 40 billion euros in structural assistance over the next 20 years.  The Commission calls for the coal mining regions to remain energy-oriented, through the development of innovative technologies, such as electricity storage, renewable energy, or power-to-gas production .

The Commission’s recommendations are expected to be accepted by government, but there is a long road ahead in passing legislation and negotiating financing, as outlined in  “German government stands ready to move on coal exit proposal” (Jan. 29). The coal exit will be one part of the government’s Climate Action Law package, promised for the end of 2019.

Coal transition case studies argue for anticipation and early action

coal transitions report sept 2018Implementing coal transitions:  Insights from case studies of major coal-consuming economies , published on September 5, brings together the main insights from the Coal Transitions project, the international research program led by IDDRI and Climate Strategies.  The report provides an overview of the drivers of coal transition across the world (with brief mention of the Powering Past Coal Alliance and Canada), and concludes that coal transition is already happening, and that it is technically feasible and affordable. The report then presents case studies of coal transition in six countries: China, India, Poland, Germany, Australia and South Africa.

The analysis concludes that there are multiple policy options which have proven effective for coal transition, but warns that the meaningful consultation and participation of stakeholders early on in the decision-making process is critical to success. In an explanatory blog,  lead author Oliver Sartor states that coal transition policies: “…. must be context-specific and agreed between the relevant parties. However, the crucial success factor is to anticipate rather than wait until the economics turns against coal. A good preparation can allow for younger eligible workers to be more easily placed into alternative jobs, for older workers to retire naturally, and for tailored worker reconversion and job-transfer programs for workers in the middle of their careers.”

In addition to the Synthesis report, national reports for each of the six countries are available from the IDDRI here.