1.1 Transition of the energy sector

Due to its high economic, social and ecological importance, the energy sector is central to the necessary transformation. This is particularly evident in the case of coal combustion, as important global sustainability goals (especially clean energy, sustainable economic growth, climate protection, health) can only be realised by phasing out coal as a central energy source.

With more than one third of global emissions, coal combustion is the most important source of climate-damaging greenhouse gases. If all countries were to stop burning coal, the world would be much closer to its emissions target of keeping global warming below 2°C³. At the same time, the extraction and burning of coal damages the natural and cultural landscape and biodiversity worldwide. It also affects public health and human rights in many places – for example through displacement, worsening water scarcity or through disgraceful and harmful working conditions.

From a purely economic point of view, phasing out coal would be a worthwhile undertaking if all social costs, including the estimated damage to people and the environment, were actually taken into account: Then a net saving of about 1.5 % of global economic output could be achieved by 2050, and in particularly coal-intensive economies this effect could occur much earlier⁴.

The global coal phase-out is not only urgent and sensible, but also comparatively easy to achieve. Since renewable energies can largely replace coal as an energy source, the coal phase-out could be achieved primarily with innovative technologies, without necessarily requiring a comprehensive change in awareness and behaviour on the part of a great many people.

Nevertheless, a global coal phase-out is not in sight: despite all the variously motivated phase-out processes in some industrialised countries, there has been a veritable renaissance of coal since the 2000s, especially in emerging economies with partly growing numbers in the production and consumption of coal, above all in the Australasian region.⁵ China and India have long relied on supposedly cheap coal-fired power. Their economic stimulus programmes to overcome the Corona pandemic are reinforcing this development⁶, while in sub-Saharan Africa a real coal boom could still be in the offing. The development of the corresponding infrastructure would create long-term path dependencies and block the transition to a sustainable and decentralised energy supply, which would make sense in combating energy poverty, especially in rural regions.⁷

 
So there are obviously very powerful factors that stand in the way of a rapid departure from fossil energy supply: Coal is still very attractive because it is a relatively cheap source of energy, as long as the high ecological and social costs continue to be ignored and passed on to others, i.e. externalised. Likewise, the health costs are often ignored and not causally associated with coal.⁸ A decisive economic incentive for the transformation would therefore be the consistent and globally coordinated pricing of all costs and the end of all direct and indirect subsidy payments. As long as this is not done to a sufficient extent and in an internationally coordinated manner, the expansion of renewable energies promoted in many countries can even lead to a paradoxical effect: As a result, fossil energy sources could become even cheaper, if their (mostly state-owned or government-affiliated) owners exhaust all possibilities to sell their own resources as extensively as possible while this is still possible.

Countries with large coal reserves of their own often justify burning coal by referring to security of supply and independence from other countries. This is often reinforced by a high symbolic significance, as industrialisation and prosperity often went hand in hand with coal extraction in the past. This is usually associated with conflicts over distribution, as individual regions fear economic and social consequences and therefore resist a supposedly hasty exit. However, coal mining in Germany shows that the phase-out of an outdated energy supply can be made unnecessarily more expensive and delayed by state subsidies. Already in 1957, every second coal mine in the Ruhr area was no longer covering its costs, but between 1950 and 2008 a total of more than 300 billion euros was spent on financial aid, tax relief and other subsidies. Still in 2008, the annual subsidies for the coal industry amounted to 233,000 euros per job.⁹ The number of employees in the coal industry fell from 600,000 to 30,000 during this period. In comparison, according to the Federal Environment Agency, at least 2.8 million people were employed in the environmental sector in 2017.¹⁰

For many developing and emerging countries, a coal-based energy supply still represents a supposedly simple and cost-effective development model, also because future cost reductions (e.g. through positive learning curves) for renewable energies are often underestimated. Many political actors still see the development of energy-intensive heavy industry with its associated infrastructure investments and agglomeration effects as the easier step towards industrialisation and overcoming poverty.¹¹ Moreover, coal seems to be particularly advantageous for these countries because currently more climate-friendly alternatives such as renewable (and mostly decentralised) energies often have much higher investment costs than coal. While interest rates in the EU, the USA and parts of Asia are at a record low, in sub-Saharan Africa they are sometimes even in double digits due to the scarcity of capital and higher investment risks. The high cost of capital makes it difficult to expand renewable energies in precisely those places where they would be particularly necessary and effective.¹²

The decisive factor for the still great attractiveness of coal worldwide is likely to be its high availability. The following diagram illustrates the enormous reserves of coal compared to other fossil energies – and especially in comparison to the small CO2 budget that still may be emitted at all with respect to climate change (Fig. 3).

Coal would still be available for a very long time even if consumption remained high. At the same time, however, the diagram also illustrates the aforementioned urgency of phasing out coal: to comply with the 1.5°C or 2°C warming limit, only a limited CO2 budget¹⁴ (visible at the bottom right of the diagram) may still be consumed. This can only be achieved if the majority of fossil fuels remain unused in the ground. The fact that a changeover is nevertheless possible is shown by experience from the Netherlands. There, the initially highly controversial phase-out of coal production was achieved surprisingly quickly and efficiently through a well-moderated participation process involving the various interest groups in the 1960s. In the UK, the appropriate and long-term predictable pricing of emission certificates has contributed significantly to a well-ordered and relatively quiet coal phase-out in recent years.¹⁵