Germany's Shift from Coal Offers Lessons for US Just Transition Policy

As COP26 drew to a close earlier this month, almost 200 nations agreed to “phase down” coal power in the coming years. How this is done, for coal and other fossil fuels, will have implications for individuals and communities that depend on these resources for their livelihoods.

Building on their work about the United States’ energy transition, Resources for the Future (RFF) and Environmental Defense Fund present a set of studies about European regions that have experienced, or are experiencing, energy transitions. The series will analyze past and present policies in Germany, the United Kingdom, Poland, and the European Union to assemble key lessons that could help the United States transition away from fossil fuels.

The first case study focuses on Germany and the efforts it has undertaken to support coal workers and communities since the late 1960s. Germany, which once had a booming coal industry, has since seen that industry decline—and in 2020, the German government passed a law ending all coal production and use in the country by 2038 at the latest.

“Germany is a particularly interesting country to examine because its transition has been underway for decades and it has strong social support policies,” said Hanna Brauers, coauthor and post-doctoral researcher at the University of Flensburg. “We were curious to examine Germany’s specific transition policies and see how well they worked within the German context, in order to inform the establishment of energy transition programs in the United States and elsewhere.”

The report explores a host of German transition policies to understand their goals, how they were designed and carried out, how they interacted with each other, and their effect on coal-dependent communities.

In Germany, the authors found, policy support typically came in the form of economic reorientation and diversification, workforce support, initiatives focused on social well-being and quality of life, and environmental remediation and protection. These policies were usually carried out via financial support for public organizations, businesses, and workers; public services and assistance to coal workers and communities; or direct investment in structural change in coal regions.

Based on their analysis, the authors established five “key lessons” from Germany’s transition efforts that could be applied to US policy:

• Adopt an anticipatory approach to transition policy. Since the 2000s, German policies began to proactively steer the transition away from coal. This anticipatory approach had a positive impact on job creation and in the formation of new industries in coal regions, in contrast with unsuccessful policies in the late 1900s that sought to extend the life of coal.
• Focus on large-scale regional industrial policy. Governments should focus on diversifying economies and attracting new industries in regions undergoing energy transitions. In Germany, this has included taking a “cluster” approach to develop local networks of businesses and research institutions.
• Tailor policies to local circumstances. In Germany, “bottom-up” approaches led by communities have been more successful than “top-down” ones led by the federal government. This includes providing local governments with a degree of autonomy and financial assistance to implement transition measures.
• Combine different policy objectives into an integrated approach. Germany focuses on structural policies that operate together to achieve an overarching goal. Working to reach a common goal—the wellbeing of citizens and communities—through multiple methods can be an effective approach to facilitating a just transition.
• Recognize the importance of baseline policies. Germany’s strong labor laws, unemployment protections, national equality goals, and other policies have provided an immediate safety net that has supported workers and communities in transition. Nations will need broad support systems that underline policies that target fossil fuel communities.
  
  

“The world needs to pick up the pace of transition to avoid the worst effects of climate change,” coauthor and RFF Senior Research Associate Wesley Look said. “Insights from Germany’s experience phasing out coal can help us build the robust system needed to support those in the US and elsewhere who also face the challenges of an energy transition.”

For more, read the report, German Just Transition: A Review of Public Policies to Assist German Coal Communities in Transition, by Andrea Furnaro, PhD student at the University of California, Los Angeles; Phillipp Herpich, research associate and part of the research group CoalExit (a collaboration between the Berlin Institute of Technology, University of Flensburg, and DIW Berlin) at the Berlin Institute of Technology and the University of Flensburg; Hanna Brauers, post-doctoral researcher at the University of Flensburg; Pao-Yu Oei, professor at the University of Flensburg and head of CoalExit; Claudia Kemfert, head of the Department of Energy, Transportation, Environment at the German Institute of Economic Research; and Wesley Look, senior research associate at Resources for the Future.

To learn more about previous work in this topic area, click here.