German coal phase out agreement and how that relates to their - PowerPoint PPT Presentation

German coal phase out agreement – and how that relates to their energy transition plans and policies Parallel Session 4-1: Challenges and opportunities from fossil energy to renewable energy; LCS-RNet 11 th Annual Meeting; Rome, 17./18.10.2019 Follow our research Dr. Pao-Yu Oei (pyo@wip.tu-berlin.de) @PaoYuOei Research Group CoalExit, TU Berlin and @CoalExit German Institute for Economic Research (DIW Berlin) @CoalTransitions Pao-Yu Oei - 0 - CoalExit Group; DIW Berlin and TU Berlin

Public reactions to climate change vary Source: The Guardian (2018), Berkeley (2019), Mendelevitch et al. (2019) Coal Trends in the USA never-the-less plummit Global temperatures keep rising Pao-Yu Oei - 1 - CoalExit Group; DIW Berlin and TU Berlin

Coal Phase-out within most OECD countries is clearly visible The share of coal is shrinking in OECD Americas and Europe. An uncoupling of coal consumption and GDP growth can be observed. Coal consumption within OECD Asia Oceania and non-OECD is increasing Source: IEA (2018). Pao-Yu Oei - 2 - CoalExit Group; DIW Berlin and TU Berlin

Many European countries have decided (green) or consider a coal phase-out by 2030 (blue) or by 2035/38 (violet) 50 France 2022 2025 2029 Sweden 40 United Kingdom France Austria Finland Sweden The Netherlands Italy Ireland 30 Italy Ireland 2030 Austria United 20 Kingdom Netherlands Denmark Portugal Finland 10 Denmark Portugal 0 GW 50 2038/2035 40 30 20 Germany 10 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Source: Matthes (2019). Source: Europe beyond Coal (2019) Pao-Yu Oei - 3 - CoalExit Group; DIW Berlin and TU Berlin

Germany: Long history starting with the European Coal and Steel Community in 1951 and coming to an end in 2018 Pao-Yu Oei - 4 - CoalExit Group; DIW Berlin and TU Berlin

Only Increasing Renewables is not sufficient - Development of coal and RES employment and electricity share in Germany Source: Own calculations and illustration based on DIW et al (2018).. Pao-Yu Oei - 5 - CoalExit Group; DIW Berlin and TU Berlin

The carbon lock-in of coal regions and actors originates from various sources  Source: Oei et al. (2019). Pao-Yu Oei - 6 - CoalExit Group; DIW Berlin and TU Berlin

So who is in charge of managing a coal phase-out? ‘Commission on Growth, Structural Change and Employment’ Source: Agora Energiewende (2019). Pao-Yu Oei - 7 - CoalExit Group; DIW Berlin and TU Berlin

Composition of the commission Pao-Yu Oei Source: Agora Energiewende (2019). - 8 - CoalExit Group; DIW Berlin and TU Berlin

5 The ‘coal commission‘s’ decision • 12.5 GW of coal capacity will go offline by 2022, only 17GW remain by 2030 (of currently ~42 GW) • Phase-out date 2038 with option of early phase-out by 2035 • A total of €40 billion in transition measures in German coal regions for next 20 years • Costs and conditions for compensating utilities subject to negotiations with the government • Confirming target of 65% renewable electricity production by 2030 Pao-Yu Oei - 9 - CoalExit Group; DIW Berlin and TU Berlin

Finding 1: The upcoming coal phase out affects countries differently Need to differentiate between countries: that only mine coal (e.g. Colombia) that only mine coal (e.g. Colombia) • employment • employment • income from exports • income from exports those burning coal (e.g. UK and many countries in Europe) those burning coal (e.g. UK and many countries in Europe) • energy security • energy security • (employment) • (employment) those doing both (e.g. US, China, India, South-Africa, Germany) those doing both (e.g. US, China, India, South-Africa, Germany) • energy security • energy security • employment • employment • (income from exports) • (income from exports) Pao-Yu Oei - 10 - CoalExit Group; DIW Berlin and TU Berlin

Finding 2: Political instruments need regional adjustments e.g. e.g. e.g. e.g. e.g. e.g. Europe or Europe or China or China or Colombia Colombia Financial payments Financial payments US US India India as compensation for as compensation for Moratorium on new Moratorium on new Moratorium on new Moratorium on new a moratorium on a moratorium on mines; maybe linked mines; maybe linked mines mines new mines and new mines and with compensations with compensations export losses export losses Existing coal power Existing coal power Moratorium for new Moratorium for new -------------------- -------------------- plant fleets need to be plant fleets need to be plants to prevent plants to prevent closed closed (stranded) assets (stranded) assets Support for RES to Support for RES to Support for RES to Support for RES to meet rising energy meet rising energy Support for RES to Support for RES to meet rising energy meet rising energy demand, enable demand, enable replace fossil capacities replace fossil capacities demand, enable energy demand, enable energy energy access & energy access & & create jobs & create jobs access & create jobs access & create jobs create jobs create jobs Active & passive Active & passive Active & passive labour Active & passive labour Active labour market Active labour market labour market labour market market instruments to market instruments to instruments to create instruments to create instruments to enable instruments to enable enable a just transition enable a just transition new jobs new jobs a just transition a just transition Pao-Yu Oei - 11 - CoalExit Group; DIW Berlin and TU Berlin

Finding 3: The energy system is just one element of a ‘just transition’ Pao-Yu Oei - 12 - CoalExit Group; DIW Berlin and TU Berlin

Kick-of of Discussions: Main Findings We need to enable a timely CoalExit to meet climate targets Different challenges prevail for countries and regions Technical solutions are comparably easy & well researched Crucial to prevent coal investments from emerging countries Only possible if developed coal countries set a positive example Pao-Yu Oei - 13 - CoalExit Group; DIW Berlin and TU Berlin

We encourage academic scholars, research International research platform projects, or institutions to contact us if coaltransitions.org - independent from they want to be included on the website. funding institution or project duration. Pao-Yu Oei - 14 - CoalExit Group; DIW Berlin and TU Berlin

Selected References Brauers, H. et al. Coal transition in Germany - Learning from past transitions to build phase-out pathways . (IDDRI and Climate Strategies, 2018). https://www.iddri.org/sites/default/files/PDF/Publications/Catalogue%20Iddri/Rapport/20180 609_ReportCOAL_Germany.pdf Herpich, P., Brauers, H. & Oei, P.-Y. An historical case study on previous coal transitions in Germany . (IDDRI and Climate Strategies, 2018). https://coaltransitions.files.wordpress.com/2018/07/2018-historical-coal-transitions-in- germany-report1.pdf SRU. Start coal phaseout now . (2017). https://www.umweltrat.de/SharedDocs/Downloads/EN/04_Statements/2016_2020/2017_10_s tatement_coal_phaseout.pdf?__blob=publicationFile&v=4 European Commission, Joint Research Council (2018) EU coal regions: opportunities and challenges ahead. https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical- research-reports/eu-coal-regions-opportunities-and-challenges-ahead Göke, L., Kittel, M., Kemfert, C., Oei, P.-Y. & von Hirschhausen, C. Scenarios for the Coal Phase-out in Germany – A Model-Based Analysis and Implications for Supply Security . (DIW Berlin, German Institute for Economic Research, 2018). DIW Berlin, Wuppertal Institut & Ecologic Institut. Die Beendigung der energetischen Nutzung von Kohle in Deutschland: Ein Überblick über Zusammenhänge, Herausforderungen und Lösungsoptionen . (2018). Pao-Yu Oei - 15 - CoalExit Group; DIW Berlin and TU Berlin

Appendix Pao-Yu Oei - 16 - CoalExit Group; DIW Berlin and TU Berlin

The German Coal Commission: Recommendations and implications Programme on structural change • infrastructure (transport, digitization) • investment support • innovation (set-up and funding of research institutions in the mining regions, demonstration projects, innovation zones) • settlement of government agencies (incl. military) • early retirement/adaptation allowance mechanisms (labour market policies following the blueprint of hard coal mining phase-out) • civil society and community support programmes Financial resources for cohesion policies • €1.3b annually for 20 years for specific measures (controlled by federal legislation), €0.7b annually for 20 years at the disposal of the States • funds will be only partly additional (mostly re-distribution of existing funding mechanisms) Pao-Yu Oei - 17 - CoalExit Group; DIW Berlin and TU Berlin