Germany's Shift from Coal Offers Lessons for 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. 

The first case study conducted by DIW Berlin 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 at the latest by 2038.  

“Germany is a particularly interesting country to examine because its transition has been underway for decades and it has strong social support policies,” said Claudia Kemfert, coauthor and head of the Department of Energy, Transportation, Environment at the German Institute of Economic Research.

“Major coal consuming countries joining the Powering Past Coal Alliance, the COP26 statement on phasing down coal power and the newly founded Beyond Oil and Gas Alliance will accelerate the phase-out of fossil fuels over the next years. Understanding past transition approaches can help to improve policies governing upcoming fast transitions for communities all around the globe” said Hanna Brauers, coauthor and post-doctoral guest researcher at DIW Berlin.

Based on their analysis, the authors established five “key lessons” from Germany’s transition efforts: 

• 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 simply 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. 

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); 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.