German coal phase out agreement and how that relates to their - - PowerPoint PPT Presentation

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German coal phase out agreement – and how that relates to their energy transition plans and policies

Parallel Session 4-1: Challenges and opportunities from fossil energy to renewable energy; LCS-RNet 11th Annual Meeting; Rome, 17./18.10.2019

• Dr. Pao-Yu Oei (pyo@wip.tu-berlin.de)

Research Group CoalExit, TU Berlin and German Institute for Economic Research (DIW Berlin) Follow our research @PaoYuOei @CoalExit @CoalTransitions

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Public reactions to climate change vary

Coal Trends in the USA never-the-less plummit

Source: The Guardian (2018), Berkeley (2019), Mendelevitch et al. (2019)

Global temperatures keep rising

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Coal Phase-out within most OECD countries is clearly visible

The share of coal is shrinking in OECD Americas and Europe. An uncoupling of coal consumption and GDP growth can be

• bserved.

Coal consumption within OECD Asia Oceania and non-OECD is increasing

Source: IEA (2018).

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Many European countries have decided (green) or consider a coal phase-out by 2030 (blue) or by 2035/38 (violet)

Source: Europe beyond Coal (2019) Source: Matthes (2019).

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Germany: Long history starting with the European Coal and Steel Community in 1951 and coming to an end in 2018

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Only Increasing Renewables is not sufficient - Development of coal and RES employment and electricity share in Germany

Source: Own calculations and illustration based on DIW et al (2018)..

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The carbon lock-in of coal regions and actors originates from various sources

Source: Oei et al. (2019).



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So who is in charge of managing a coal phase-out? ‘Commission on Growth, Structural Change and Employment’

Source: Agora Energiewende (2019).

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Composition of the commission

Source: Agora Energiewende (2019).

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5

The ‘coal commission‘s’ decision

• 12.5 GW of coal capacity will go offline by

2022, only 17GW remain by 2030 (of currently ~42 GW)

• Phase-out date 2038 with option of early

phase-out by 2035

• A total of €40 billion in transition measures

in German coal regions for next 20 years

• Costs and conditions for compensating

utilities subject to negotiations with the government

• Confirming target of 65% renewable

electricity production by 2030

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Finding 1: The upcoming coal phase out affects countries differently

Need to differentiate between countries:

that only mine coal (e.g. Colombia)

• employment
• income from exports

those burning coal (e.g. UK and many countries in Europe)

• energy security
• (employment)

those doing both (e.g. US, China, India, South-Africa, Germany)

• energy security
• employment
• (income from exports)

that only mine coal (e.g. Colombia)

• employment
• income from exports

those burning coal (e.g. UK and many countries in Europe)

• energy security
• (employment)

those doing both (e.g. US, China, India, South-Africa, Germany)

• energy security
• employment
• (income from exports)

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Finding 2: Political instruments need regional adjustments

Financial payments as compensation for a moratorium on new mines and export losses

• Support for RES to

meet rising energy demand, enable energy access & create jobs Active & passive labour market instruments to enable a just transition

e.g. Colombia

Moratorium on new mines Existing coal power plant fleets need to be closed Support for RES to replace fossil capacities & create jobs Active & passive labour market instruments to enable a just transition

e.g. Europe or US

Moratorium on new mines; maybe linked with compensations Moratorium for new plants to prevent (stranded) assets Support for RES to meet rising energy demand, enable energy access & create jobs Active labour market instruments to create new jobs

e.g. China or India Financial payments as compensation for a moratorium on new mines and export losses

• Support for RES to

meet rising energy demand, enable energy access & create jobs Active & passive labour market instruments to enable a just transition

e.g. Colombia

Moratorium on new mines Existing coal power plant fleets need to be closed Support for RES to replace fossil capacities & create jobs Active & passive labour market instruments to enable a just transition

e.g. Europe or US

Moratorium on new mines; maybe linked with compensations Moratorium for new plants to prevent (stranded) assets Support for RES to meet rising energy demand, enable energy access & create jobs Active labour market instruments to create new jobs

e.g. China or India

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Finding 3: The energy system is just one element of a ‘just transition’

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Kick-of of Discussions: Main Findings

We need to enable a timely CoalExit to meet climate targets Different challenges prevail for countries and regions Technical solutions are comparably easy & well researched Crucial to prevent coal investments from emerging countries Only possible if developed coal countries set a positive example

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International research platform coaltransitions.org - independent from funding institution or project duration.

We encourage academic scholars, research projects, or institutions to contact us if they want to be included on the website.

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Selected References

Brauers, H. et al. Coal transition in Germany - Learning from past transitions to build phase-out

• pathways. (IDDRI and Climate Strategies, 2018).

https://www.iddri.org/sites/default/files/PDF/Publications/Catalogue%20Iddri/Rapport/20180 609_ReportCOAL_Germany.pdf Herpich, P., Brauers, H. & Oei, P.-Y. An historical case study on previous coal transitions in

• Germany. (IDDRI and Climate Strategies, 2018).

https://coaltransitions.files.wordpress.com/2018/07/2018-historical-coal-transitions-in- germany-report1.pdf

• SRU. Start coal phaseout now. (2017).

https://www.umweltrat.de/SharedDocs/Downloads/EN/04_Statements/2016_2020/2017_10_s tatement_coal_phaseout.pdf?__blob=publicationFile&v=4 European Commission, Joint Research Council (2018) EU coal regions: opportunities and challenges ahead. https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical- research-reports/eu-coal-regions-opportunities-and-challenges-ahead Göke, L., Kittel, M., Kemfert, C., Oei, P.-Y. & von Hirschhausen, C. Scenarios for the Coal Phase-out in Germany – A Model-Based Analysis and Implications for Supply Security. (DIW Berlin, German Institute for Economic Research, 2018). DIW Berlin, Wuppertal Institut & Ecologic Institut. Die Beendigung der energetischen Nutzung von Kohle in Deutschland: Ein Überblick über Zusammenhänge, Herausforderungen und Lösungsoptionen. (2018).

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Appendix

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The German Coal Commission: Recommendations and implications

Programme on structural change

• infrastructure (transport, digitization)
• investment support
• innovation (set-up and funding of research institutions in the mining regions,

demonstration projects, innovation zones)

• settlement of government agencies (incl. military)
• early retirement/adaptation allowance mechanisms (labour market policies following

the blueprint of hard coal mining phase-out)

• civil society and community support programmes

Financial resources for cohesion policies

• €1.3b annually for 20 years for specific measures (controlled by federal legislation),

€0.7b annually for 20 years at the disposal of the States

• funds will be only partly additional (mostly re-distribution of existing funding

mechanisms)

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5

The German Coal Commission: Recommendations, implications and the broader context

• Electricity price compensation

− contribution from federal budget to transmission network access fees − potentially starting in 2023

• Cancellation of EU ETS

emission allowances

− basic legal EU framework exists, implementation provisions pending, volume to be fixed

• Modernisation of taxes, levies

and surcharges and carbon pricing

− evaluation and revision process need to be started soon − major implications for electricity costs, self-consumption, storage, power-to-X

Source: Matthes (2019).

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Kick-of of Discussions: Open Questions & Further Research

How to

link different interdisciplinary research questions? learn from experiences of regional case studies? improve cooperation within academia (different research projects and institutions) and practitioners

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Motivation: 70-90% of coal, 30-60% of gas and 30-60% of oil reserves has to stay unmined to reach the 2°C target

Source: McGlade & Ekins (2015)

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Experiences from Germany: Employment in coal industry

Hard coal: 500.000  10.000 Lignite: 150.000  30.000

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Germany: Hard coal phase-out was economically driven and replaced by cheaper imported hard coal

• Domestic hard-coal was up to

four times more expansive compared to imported coal

• Substitutional processes in

households and industry

• Production and employment in

Germany peaked in 1957

• Germany spent at least €330

billion on direct and indirect hard coal subsidies

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Official projections for coal power plants in Europe 2016-2030

Source: EC-JRC (2018).

Existing aging European coal fleet

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Coal power plants & emissions of CO2, PM, Nox, SO2 in Europe

Source: EC-JRC (2018).

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Effect of a coal phase-out on employment in Europe

Source: EC-JRC (2018).

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Unemployment rates in coal regions; Greece & Spain face biggest problems

Source: EC-JRC (2018).

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Renewable Energy potential in coal mining regions

Source: EC-JRC (2018).

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Bottom-up solutions External support Top-down framework

Enabling bottom-up approaches through top-down support

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Safe & Stable Environment

Supporting structural change in mining areas

Research Industry People Innovations Infrastructure External Support Support by national & regional governments

Source: Oei et al (2019).