The German government on Wednesday cleared the way — finally — to phase out the mining of hard coal in Germany.

As explained by this Associated Press article in the International Herald Tribune, the heavily subsidized German hard coal industry still employs about 33,000 people in eight underground mines. The plan is to phase out hard-coal mining starting in 2009, and for miners to receive compensation if they are laid off prematurely.

Hard-coal mining “has no future” in Germany, declared Economy Minister Michael Glos. “A great, long era is coming to an end in a socially responsible way.”

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For decades, the German government has propped up the industry, which at its peak employed 500,000 — unwilling to risk massive layoffs and reluctant to eliminate a domestic source of energy. But after spending more than $200 billion in subsidies since the 1960s, it has finally decided that the subsidies have become unaffordable.

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The phase-out is expected to cost nearly €30 billion (US$41 billion), with €21.6 billion (US$30 billion) of that financed by federal and Land (state) governments. Current subsidies are running at around €3.3 billion a year, or €100,000 per miner.

Proceeds from the initial public offering of the energy conglomerate RAG’s profitable chemicals, electric-power generation, and real-estate operations, which are expected to be in the neighborhood of €5 billion, will go to phasing out coal operations … and mitigating the continuing environmental costs that are and will continue to be the legacy of coal mining in the region.

However, there is a catch:

The bill, which is based on an agreement reached in February by the government, unions and RAG [the owner of the coal mines], includes a clause providing for the phase-out plan to be re-examined by parliament in 2012 in the light of market conditions. Wednesday’s Cabinet decision still requires parliamentary approval.

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Back in the 1980s, the Kiel Institute had showed that the subsidies were so high per worker that it would have been cheaper to pension off all the coal miners than to keep subsidizing coal production. At the least, the government could have disallowed new recruiting (which only delays adjustment to the future), and let the industry contract through attrition.

Nonetheless, I suppose we should regard this latest decision as progress … and hope that the German Parliament does not change its mind in 2012.


P.S. The title is not in good German, I realize. I think it should have been “In Deutschland wird Kohle beendet.” But I reckoned more people would understand “ist kaputt.”