Coal's long farewell

Brown coal (lignite) is Germany's only abundant domestic fossil fuel resource. And business is thriving for lignite-fired power plants in Germany at the moment. That's because the discharge of greenhouse gas emissions in Europe costs virtually nothing.

This ensures that lignite-fired power plants are cash cows for the energy companies that own them. The plants are sunk-cost assets which generate a steady stream of profits for power companies - alongside parallel streams of electricity and of greenhouse gas emissions.

It's the cash-cowness of lignite power plants that drives energy companies such as RWE or Vattenfall to lobby for keeping these power plants in operation as long as possible. The only catch: Electricity production from lignite-burning emits more climate-damaging carbon dioxide than any other way of generating power.

That runs directly contrary to a core objective of German energy policy, which is to move steadily toward a 100 percent renewable energy powered economy for the sake of global climate stability.

That's why the fight for greenhouse gas emissions reduction has become, for lignite miners and coal-fired power plant operators, a zero-sum struggle for economic survival. This struggle has recently acquired a new focus: the government's proposed new climate levy (Klima-Abgabe).

Structural change is on its way

By introducing a special fee, the climate levy, on lignite fired power, Economy and Energy Minister Sigmar Gabriel has signaled that things cannot continue as they are. Environmental NGOs find that Gabriel's move has come very late in the day. But it's a good step that moves things in the right direction.

The energy ministry hopes to induce emissions reductions of 22 million tonnes of CO2 by making carbon emissions from older coal-fired power stations more expensive. A special levy will have to be paid on emissions that exceed a quota set for each coal-fired power plant. The payments will ensue via purchase of emissions certificates. Details aside, the idea is to make lignite-fired electricity more expensive.

The price mechanism is, in the end, the key to the clean-energy future. Doing the wrong thing has to become more expensive than doing the right thing.

Germany will fail to reach its ambitious climate policy goals if stronger policies and incentive measures aren't adopted now. That's not a claim that comes from the usual suspects critical of lukewarm climate and energy policies - environmental NGOs - it's the conclusion the government itself came to last autumn, after studying the issue in detail.

The inadequacy of existing policies is particularly embarrassing in light of the fact that Chancellor Angela Merkel will be meeting with the leaders of the G7, the club of leading industrial nations, in Elmau in Bavaria in June, where she'll be hoping to receive renewed accolades as "the Climate Chancellor" - an informal title she had embraced in the past, beginning in 2007.

The trouble is that after a good PR start, the chancellor followed up with very little in the way of effective new policies against greenhouse gas emissions.

By 2020, Germany is meant to reduce its CO2 emissions by 40 percent compared to those of the year 1990. That's the goal the government has formally committed to. At the moment, the country is nowhere near on track to meet the goal.

One of the main reasons: The boom in lignite-fired power production. More than a quarter of Germany's electricity last year came from brown coal. That's hard on the country's CO2 budget, because even the most modern lignite-fired power station produces more than twice as much CO2 into the air as does a gas-turbine power plant.

That's why the heated arguments over the pros and cons of Minister Gabriel's new levy are just hot air. One way or another, a structural change away from lignite-fired power plants is coming, because it has to come. The levy will merely speed the transition a bit. There's no way around abandoning lignite - other than abandoning the country's climate policy goals.

That's an unavoidable reality, even if politicians have done their best to avoid saying so directly - because they know that the change will cost jobs in lignite mining, including in high-unemployment regions with few other industries.

Re-employ the displaced workers

Trade unions and energy company CEOs are putting up a stiff joint fight against the climate levy. That's understandable, but it's also very short-sighted.

Germany's energy policy around lignite has been dishonest. Everyone who is now issuing apocalyptic warnings about the alleged doom of Germany's status as an industrial nation if brown coal-fired power plants are replaced by cleaner energy sources are wildly exaggerating.

Horrific scenarios , circulated by mining unionists, claim 100,000 jobs would be lost - even though only 22,000 people work in jobs directly linked to lignite. It seems they made use of a special mathematical instrument, let's call it a "drama multiplicator," to inflate the number, the better to bully politicians.

That doesn't mean the government can or should ignore the employment consequences of an end of lignite mining in Germany. Trade unionists warn of a "social blackout" in coal-mining regions. That's not a bad phrase. But if fear of job dislocations becomes the driving factor in making climate and energy policy decisions, then the transition to a low-carbon future will fail - and the global rush twoard a climate catastrophe will continue.

Germany's coal-mining regions in the Rhein and Ruhr valleys, and in the Lausitz region of southern Brandenburg, must prepare for the inevitable shift away from lignite. That's true regardless of whether lignite mining continues for another 20, 30, or 40 years.

There are ways to reconcile the interests of opponents and supporters of the climate levy. Unfortunately, so far, no-one has been talking about them. One obvious policy pathway would be to take a portion of the money raised by the levy, and pour it directly into non-coal-related job-creating structural investments in the lignite-mining regions that would be hardest hit by the coming shift to clean energy.

In that way, rather than lignite-fired electricity generation remaining the cash cow for Germany's lignite mining regions, the exit from lignite would become the transitional cash cow for those regions - used to build a new infrastructure that could be milked for jobs and revenue in future. Those investments should be structured to benefit the local people, rather than merely profiting the big coal and power generation companies.

In that way, coal's long goodbye could be both shortened and sweetened.