Here are 3 big lessons from Germany’s transition off of coal power.
Right before the Covid-19 pandemic, Jeremy Richardson took a trip to Germany where he did some unconventional sightseeing: visiting a vast strip mine in Lusatia, a coal region in the country’s east. A West Virginia native who’s a senior energy analyst at the Union of Concerned Scientists, Richardson had seen many coal mines in his lifetime. But this mine was different.
At home, he had witnessed mountain-top removal mining that left rivers and valleys clogged and contaminated below. In Lusatia, he saw the opposite. As coal was mined, the dislocated dirt was moved directly to restore a nearby strip of land that had already been stripped bare. “We were just marveling at that and frankly really sad because you can’t imagine anything like that happening in Appalachia,” he said.
Germany’s careful planning for the future of coal was exactly what Richardson and the other Americans on the tour had come to study. Last year, Germany established itself as a model when it passed two laws committing to completely phasing out coal power and providing $47.3 billion in funding to help coal regions like Lusatia diversify their economies.
Meanwhile, “In the United States, the transition is … happening, it’s just that it is happening with no planning and no foresight,” Richardson said. “That’s what has caused all the economic upheaval.”
Over the past decade, US coal production dropped by 25 percent, and nearly one-third of coal power capacity was retired. In March alone, a coal plant on the Yellowstone River in Montana shut down, and the Sierra Club struck a deal with utility company Entergy Arkansas to take two coal plants offline in the coming years.
Competition from natural gas and solar and wind farms is a major driver of this trend. But as the US and other countries aim to zero out carbon emissions by 2050, climate policies will also speed up the transition away from this carbon-intensive energy source.
So far, the closure of coal plants in the US has happened without a significant national effort to protect affected regions and communities. In 2015, the Obama administration launched the POWER Initiative, a set of policies to aid coal communities, but described it as only “a down payment.” When Donald Trump was elected in 2016, he vowed to bring the coal industry roaring back, but the opposite happened. Coal mining jobs dropped 25 percent during his presidency, and Trump did not increase efforts to support these communities.
“It’s been four years of wandering in the wilderness, honestly, and watching other countries figure it out,” said Lee Anderson, the director of government affairs for the Utility Workers Union of America.
For communities from Appalachia to Wyoming, that has meant the loss of tens of thousands of mining jobs, with replacement jobs often providing a lower salary. It has also led to the loss of local tax revenue from coal operations, which is critical for maintaining public services in rural communities where the industry has historically dominated the economy.
Now, with President Joe Biden about to lay out his $2 trillion infrastructure and jobs plan in a Wednesday speech, Democrats have a big opportunity to address the economic distress in these communities and fund a more ambitious plan to support coal regions going forward as the country draws down its carbon emissions.
As Congress hashes out a vision for coal’s future in the bill, here’s what we can learn from Germany about pursuing climate goals without leaving communities dependent on fossil fuels behind.
Setting expectations for the decline of US coal
Like the US, coal still plays a sizeable role in supplying power to Germany’s grid. One-quarter of Germany’s electricity was generated using coal in 2019. Germany is the fifth-largest consumer of coal in the world, and around 20,000 people work directly in the coal mining, power plant, and mine remediation industries.
To meet its climate goals, German leadership knew the country needed to phase out coal. In 2018, the government created a Coal Commission — including coal company representatives, coal region government officials, trade unions, environmental groups, and affected community members — to determine the path forward.
The commission introduced recommendations for two laws passed in July 2020: One set the timeline for the coal phaseout, and the other determined the funding for coal regions (the “Structural Change Law”).
The debate over the phaseout date was fierce and polarizing, Rebekka Popp, a policy adviser at climate think tank E3G in Berlin, told Vox. Ultimately, the German parliament passed a 2038 date into law for the complete phase-out of coal power, with an opportunity to move that up to 2035 during forthcoming review periods.
E3G, other environmental NGOs, and activist groups including Fridays for Future, the youth movement started by Greta Thunberg, strongly opposed the phaseout trajectory for being too slow — calling for a total phase-out by 2030. “It is not in line with the Paris agreement, so Germany isn’t doing its fair share,” Popp said.
Nonetheless, Popp added, the process has provided important clarity for affected communities. “I think, from a just transition perspective, it’s essential to have a coal phase-out date because otherwise there’s no planning security for the region, for the coal industry.”
The phase-out will occur through auctions and direct compensation to coal companies to reduce capacity over time. For many of the coal plants, an exact retirement date has been set, giving communities and the companies time to prepare.
Meanwhile, in the US, coal communities have been left in limbo as the message on the future of the industry changes from president to president.
A new study from Montana State University surveyed economic development experts and policymakers in western US coal regions and found that the lack of a consistent national strategy on coal has led to two divergent paths. Some states are accelerating the transition to clean energy through climate policy, while others like Wyoming are fighting to protect the coal industry.
In the latter case, communities are left more vulnerable to sudden shutdowns because their regions don’t have a post-coal economic roadmap. That was the case in Adams County in Ohio when two large coal plants gave short notice of their shutdown in 2016, according to ProPublica. The rural community around the plants had depended on their tax revenue to fund the schools and other county services. With the shutdowns, workers were forced to leave home and budgets were slashed — hollowing out the town.
Germany is giving coal regions money … to move past coal
Through Germany’s coal phase-out process, the country has decided to take a very different approach: getting ahead of the transition and investing in coal regions before they are left bankrupt.
Through the German Coal Commission, affected stakeholders negotiated successfully for a big pot of money for coal regions. The total signed into law is $47.3 billion to diversify the regions’ economies and create new jobs over the coming two decades as coal is phased out. By comparison, former President Obama secured an initial annual budget of approximately $30 million for the POWER initiative, which supplied grants for business development and emergency funds for displaced workers.
“That was a program in the millions, and we are going to need a program in the billions,” said Brandon Dennison, an eighth-generation West Virginian and the founder of Coalfield Development, a group that fosters social enterprises in the state.
What’s critical about the German fund is that the coal regions themselves get a large role in deciding how to spend it. Around $30 billion of the fund goes to infrastructure and other projects determined by the national government, and $16.5 billion is set aside for regional investment. The regions can apply for investment in projects across nine categories from tourism to research, allowing each area to decide how to grow its economy according to its own strengths rather than a top-down vision.
We thought the better question is really how do we just restructure our whole economy to not have to depend on one industry to survive?
The diversity of grant categories reflects the fact that moving past coal doesn’t merely involve transitioning to one new industry. Heidi Binko, executive director of the Just Transition Fund, a US philanthropic organization that supports communities transitioning away from coal, said that is a common misunderstanding she encounters.
“I think that there is a meme out there that we are going to shut down all the coal plants and coal mines and replace them with clean energy,” she said. Renewable energy is one piece of the puzzle, she added, but “these communities need to have a diversified set of industries that they can rely on.”
Dennison holds similar views. After coal started to lose out to natural gas a decade ago in West Virginia, people began asking what would replace it, Dennison recounted. “We thought the better question is really how do we just restructure our whole economy to not have to depend on one industry to survive?”
As part of an effort coordinated by the Just Transition Fund, Coalfield Development and 80 other organizations in coal regions created the National Economic Transition Platform, which lays out how the federal government can support coal communities to create more diversified economies. The planadvocates for the government to build on Obama’s POWER initiative, increasing financial and technical support for small businesses suited to each region’s strengths, supplying incentives for mine reclamation and renewable energy projects, and investing in broadband and other infrastructure to make remote work in rural areas more feasible.
Germany coal workers have a strong social safety net to fall back on
Germany’s coal regions will be getting billions of euros, but what about the coal workers themselves?
One clear provision for workers in the Structural Change Law is that the government will provide up to $5.9 billion to laid-off coal mine and power plant employees over age 58 to support them until their pensions kick in. That is a harsh contrast to Adams County in Ohio, where ProPublica’s Alec MacGillis described one coal plant worker — who had been with the company for 26 years — scrambling to relocate to a new company site because he would otherwise lose almost half of her pension.
Beyond the funding for older workers, though, Germany’s new laws are conspicuously absent on details for the worker transition. But that doesn’t mean workers will be left behind.
“The reason there is not as much stuff in their plan about workers is that that was a much easier problem for them to solve because most of it is already baked organically into their society,” said Lee Anderson.
In other words, the social welfare system in German provides resources for all people experiencing unemployment that the US lacks. “When you lose your job in Germany, you don’t lose your health care and retirement benefits,” said Richardson of the Union of Concerned Scientists. “Here you are losing everything — it’s not just your salary. You’re losing your health insurance and your ability to retire with dignity, potentially.”
Germany also has a successful public job retraining program that pays unemployed people to get a new vocational degree and enter a new field. The US has a national retraining program, but with one major difference — participants have to forego a salary while attending courses. The program is considerably underfunded compared to Germany’s.
Beyond the social safety net that exists for all workers in Germany, the country’s strong labor movement has also helped workers secure protection from coal companies beyond the requirements of the coal transition laws. A spokesperson from IG BCE, a German union that represents energy and mining workers, said the union has struck agreements with all the major coal companies to support early retirement for older workers and offer training to younger workers.
Anderson said the whole coal phase-out process in Germany reflects the “much more central role of organized labor in a country like Germany,” compared to the US where “organized labor has been very marginalized.”
Biden’s infrastructure bill: a big opportunity to reshape the US coal transition
In the coming months, as Congress constructs a massive infrastructure package, just transition advocates are also hoping that lawmakers will take a cue from Germany, Canada, the EU, and others by laying out a clearer vision for moving past coal while keeping communities intact.
In a January 27 executive order, Biden established a coal and power plant transition working group, and it is expected to brief him by the end of the month on the existing resources spread across the federal agencies for communities transiting away from fossil fuel extraction. (Obama’s POWER initiative remained partially funded under the Trump administration despite his efforts to slash the budget.)
Next, the Just Transition Fund and its local partners are advocating for an official office to be set up to facilitate getting these resources to communities.
As for new authorizing funding, Anderson said Biden’s infrastructure legislation could provide a window of opportunity. Members of Congress have already proposed several bills that could be folded into it. Sen. Joe Manchin (D-WV) recently proposed a bill that would authorize $4 billion in tax credits for new clean energy manufacturing projects in coal communities, for instance. House Democrats also reintroduced the CLEAN Future Act, which lays out a comprehensive transition plan for oil, gas, coal, and auto workers — including creating a new White House office to develop and coordinate federal policies.
The infrastructure bill will also clarify Biden’s plan to reach clean electricity by 2035. Coal could still play a role in that clean electricity future through an expanded role of carbon capture and sequestration, Richardson pointed out. However, the technology, which would bury carbon from power plants, has failed to take off so far due to complexity and costs.
Until a federal plan is established, the coal transition will continue, largely without a plan. Over 80 gigawatts of coal power capacity is expected in the next five years, according to the Energy Information Administration.
In the Navajo Nation, where coal plants and mines have historically played a dominant role in the economy, the need for federal support is becoming clearer by the day, Tony Sreklunas told Vox. Skrelunas, the former executive director of economic development for the Navajo Nation, grew up on the reservation with coal mines and coal plants marking the surrounding landscape.
That landscape is now changing. The largest coal plant in the Navajo Nation — and the western US — was demolished in a dramatic explosion a few months ago, and three more coal plants are slated for retirement in the coming years.
“It’s finally to the point where most of our people are convinced we have to transition,” Skrelunas, whose father worked in coal mines and power plants, said, “but that transition is still a little unclear.”
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