Case Study Details - Coal to Clean - Coal Phase-Out and Structural Development Act, Germany

On 14 August 2020, the Coal Phase-Out Act entered into force in Germany. The law sets out a roadmap for shutting down all coal-powered plants by 2038. The Coal Phase-Out Act includes compensatory measures for workers impacted by plant closure and is further complemented by the Germany Structural Development Act supporting structural change in coal-mining regions of the country, with the aim to open up new opportunities for sustainable economic activities and high-quality jobs.

Key elements

• Early retirement: The Coal Phase-Out Act sets that coal-plant workers (age 58+) will receive a monetary compensation for a maximum of five years until they are eligible for their pension.

• Pensions and benefits: Pension reductions due to early retirement immediately following the end of the compensation payment can be made up for by direct payments to the statutory pension insurance.

• Economic diversification and infrastructure development package: €41.09 billion until 2038 spread across hard-coal mining regions (to meet challenges of structural change and employment security), and lignite coal regions (to invest in economic and digital infrastructure and environmental protection.) Further support measures include highway and rail infrastructure improvement, or the creation of up to 5,000 additional jobs in federal agencies in the coal regions.

Benefits

• Focus on creating new jobs in historic coal regions through general infrastructure development benefitting to all citizens.

• Multistakeholder approach: the programme is directly inherited from the creation by the German Government of a “Coal Commission” (Commission for Growth, Structural Transformation, and Employment) which was characterized by the multitude of stakeholders represented (scientists, politicians, labour unions, environmental-protection organizations…).

Enabling conditions

• Early buy-in from coal states was sought by the Federal Government which was a crucial condition for the passing of the laws.

• Clear timelines for the coal phase-out create legitimate expectations for coal companies and regions tasked with structural transformations.

• Targeted education and training programmes are highly recommended to accompany any structural development measures in order to that former coal workers will be able to transfer their skills or become eligible for newly-created positions.