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Germany: Retreating On Coal

  • December 20th, 2007
  • Posted by EUEditor

eu-industry-scape6.jpgThe drive against climate change provides the right setting to close off on the old economy that made Germany great – underground coal mines in the Ruhr feeding into heavy industry.

(By Lee Duffield and Nina Plonka).

GOVERNMENT DECISION

The remaining eight mines (seven in North Rhine – Westphalia, one in Saarland) are being phased out after the Bundestag voted (11.11.07) to end state subsidies for the industry, effective from 2018. (Subject to a review set for 2012).

That will ring the final curtain on enterprises which, fifty years ago were delivering 150-million tonnes of coal to power stations and steel mills, and employing well over 600 000 miners – driving the post-war “economic miracle”.

Limitations ranging from trouble with geology to stiff competition from steel makers overseas have seen production drop to a little over 25 millions tonnes p.a. and 35 000 on the payroll.

Black coal from these mines will still supply about 20% of Germany’s electricity but industry overall has long since moved on, famously, to precision equipment and high-tech.

HEAVY COSTS

After 1961 the industry became dependent on subsidies, now costing €2.5-billion a year (A$4.2-billion, dcerates.com, 20.12.07).

The European Union, having begun life as an economic bloc for coal and steel, permits this expensive breach of its liberal-economic dogma; it says state aid to coal industries can be justified, and so remains legal, where it promotes restructuring.

An extensive report published last May by the European Commission said subsidies paid in Germany, Hungary and Spain, and possibly also in the new member-states Bulgaria and Romania, should be allowed to continue to 2010. (See EUAustralia, Coal Subsidies To Stay, 22.5.07).

In Germany black coal at the pithead, even with subsidies, costs substantially more than it could be delivered by outside producers, like Australia – which can benefit from cheaper open-cut operations. (Cost differential, €50 versus €180 per tonne).

The phasing-out of aid, and so the end of the underground mines, will be made less painful by stretching it out over ten years.

All-up the extension of subsidies and other costs of the retreat from the field will be €30-billion (A$50.2-billion).

Open-cut mining for brown coal continues across both Eastern and Western parts of Germany.

The opposition Social Democrat Party, which traditionally had a strong constituency among the miners, accepted the underground shut-downs after a deal was reached with unions on compensation for workers made redundant.

Continuing opponents of the move want at least some mines kept going for the sake of security of supply in times of emergency, but most admit they have lost the battle.

The final decade now begins.

Reference:

BBC, German coal plans under threat, 1.2.07. www.bbc.com, (11.11.07)

DW Radio, 9.11.07. http://www.tagesschau.de/inland/bundesrat10.html,(11.11.07).

SpiegelOnline International, End of an Industrial Era: Germany to close its coal mines, 30.1.07. http://www.spiegel.de/international/0,1518,463172,00.html, (20.12.07).

WRD, 9.11.07. http://www.wdr.de/themen/wirtschaft/wirtschaftsbranche/steinkohle/uebersicht.jhtml, (11/11/07).

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