Throwing Money Down the Pit

The Council of Environmental Advisors has called for the government to end its large subsidies to the coal industry within the next three years. Otherwise, the advisors say, the country will not meet its goal of reducing carbon dioxide (CO2) levels by 25% of 1990 levels by 2005.

The deputy chair of the advisory group, Martin Jänicke, asked the government to engage in a "ordered transition" away from environmentally harmful industries, including coal. He said the government should do with coal what it has done regarding nuclear power, namely, renounce it.

In 2000, the Social Democratic government of Gerhard Schröder reached a historic agreement with energy companies to gradually close down the country’s 19 nuclear reactors. Germany’s last nuclear power plant could go off-line in 20 years.

The council said Germany would be taking a leading role in environmental protection if it turned away from coal production and coal-fired power plants.

Throwing Money Down the Pit

Coal was once king in Germany. It fired the country’s industrial revolution and helped make it one of the world's economic giants. The industry was centred in the Ruhr Region, where miners delivered coal to Germany and the world.

But coal production has been declining for decades. From 600 million tons per year in the early 1960’s to 86 million tons in 2000. Most of the mines have shut down and high production costs mean the industry is forced to run at a loss. German coal costs up to four times more to produce than can be earned by selling it on the world market.

Today coal mining in Germany is only possible with the help of large public subsidies that cover the different between the price of EU produced and imported coal. Those subsidies amounted to €4.7 billion in 1999, or over €70,000 per worker.

Critics of coal mining say subsidies to fossil fuel use artificially boost the supply of coal and encourage its over-use, while delaying the transition to more environmentally friendly fuels.

Reducing CO2 Emissions

As it stands now, Germany is not on schedule to meet its carbon dioxide reduction goals for 2005. In fact, CO2 emissions actually increased in 2001 by 1.6% over the previous year, largely due to the operation of new brown coal plants in the eastern part of the country.

Brown coal use is on the increase in western Germany, as well, according to the Bonn-based environmental lobby group Germanwatch.

In order to meet its ambitious CO2 reduction goals, according to a paper by the German Economic Institute in Berlin, the country would have to reduce emissions by 12% over the next three years. That will be next to impossible without drastic environmental and industrial restructuring, the institute reported.

Coal Still Has a Foothold

But that radical restructuring is not likely to happen on the back of the coal industry, or at least soon. According to Gerhard Sohn, director of the German coal industry association GVST, coal’s share of the power generation market is assured through 2020.

Coal-fired generation is forecast to account for 56% of Germany’s capacity in 2020, a 50% rise on the present situation. Ironically, much of the rise is due to the phase-out of nuclear power.

Still, more German mines face closure this year and European Union aid to the German coal industry is directed at closing mines rather than keeping them operational. It is estimated that the attrition rate could mean that in 20 years, the only place one will find operational German coal mines are in history books.