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Europe is – finally – starting to deal with the losers of the energy transition

by Sonja van Renssen

Source: energypostweekly.eu

The EU and national governments are stepping up to help Europe’s coal regions find a future in a low-carbon economy. New lignite plants cannot make up for planned closures, is the lesson from Greece. Failure on jobs could doom climate action, is the warning from Germany. “Advanced coal technologies” (with CCS) still merit attention, is the belief at the European Commission, which has created a Platform for Coal Regions in Transition.

“We want to be at the table, not on the menu,” said Benjamin Denis, an advisor at the European Trade Union Confederation (ETUC), at an event on a “just”- in other words, fair – transition for coal mining regions in the EU at the European Parliament in Brussels on 21 June.

The event was organised by WWF and Globe, a network within the Parliament that campaigns to mainstream sustainability. With speakers from Greece, Germany, Bulgaria and Brussels, the aim was to discuss the challenge that European coal mining regions face as Europe commits to decarbonise completely, and how they might respond.

Ten European countries have now announced coal phase-outs – Austria, Denmark, Finland, France, Ireland, Italy, the Netherlands, Portugal, Sweden and the UK – and the EU as a whole has just signed up to a fresh bout of climate action with two more deals on its Clean Energy Package (see accompanying article). In a new energy governance regulation, it asks Member States to draw up strategies to reach “net zero” greenhouse gas emissions “as soon as possible”.

Europe is only starting to deal with the less glamorous side of the energy transition, however: its potential losers. “Transition” means change and inevitably as some move forward, others are left behind. Coal miners are emblematic of this plight, although many energy-intensive industries such as steel and cement are also struggling to adapt.

Both in Brussels and at national level, governments are waking up these problems, but help remains slow and uncertain.

New lignite vs. new activities

The challenge that coal mining regions face in Europe was set out by Nikos Mantzaris, Head of Energy and Climate Policy at WWF Greece, in a presentation on Western Macedonia at the Parliament event. WWF is running a “Just Transition” project in Germany, Greece, Bulgaria and Poland, funded by the German environment ministry. The NGO is developing “quantitative” transition plans for coal regions in Bulgaria and Poland – i.e. calculating potential impacts on jobs and GDP – based on a Greek blueprint for Western Macedonia and best practices in the Ruhr region in Germany.

In Western Macedonia, a lignite heartland, nearly half the GDP and jobs depend on coal mines and power generation. But 3500MW of coal are due to close between now and 2030. Inaction is not an option, Mantzaris stressed: that would result in the loss of over 6,000 jobs and €1.1 billion in GDP. Nor is the construction of new lignite plants going to solve the problem: the one that is already being built (Ptolemaida V) will only recover 20% of the losses, WWF calculates. Add aspirations for a second (Meliti II) and the recovery rate rises to 30%. And that for a price tag of €2.5 billion.

Instead, WWF suggests a series of alternative development scenarios that target non-coal activities from developing renewables to saffron production to eco-tourism. The most ambitious of these would require a comparable investment to the Ptolemaida V + Meliti II plan, but it would create twice as many jobs and more than double the GDP that will be lost from plant retirements. And no, a decision to forego new coal plants would not cause problems for the energy system, Mantzaris said in response to a question from Energy Post – a separate WWF study shows that technically, the system can handle it and economically, energy would actually become cheaper.

Mantzaris welcomed a new “just transition fund” announced by the Greek government that will be based on EU carbon allowance sales, the first in Europe, he said, but pointed out that the €20 million per year foreseen is much less than that for energy-intensives (€50 million) or electricity providers (€100 million). Lefteris Ioannidis, the Mayor of Kozani, capital of Western Macedonia, added that municipalities have been asking for such a fund since 2015.

Societal task

The country that everyone is looking to however is Germany. Germany is Europe’s wealthiest nation and its lignite powerhouse. The country’s climate targets demand a coal phase-out. It is the job of a new “Commission on growth, structural change and employment” – informally called the “Coal Commission” – to work out by when Germany should do this and how to deal with the consequences.

As German environment minister Svenja Schulze said as she opened the 9th annual Petersberg Climate Dialogue in Berlin at the start of last week, failure on jobs could doom climate action: “I am firmly convinced that the transition must be socially just to be successful, otherwise it will fail.”

The Coal Commission was officially created on 5 June and is due to hold its first meeting today, 26 June.

It’s not just about coal either, noted Stefan Gärtner, head of “spatial capital” research at the Institute of Work & Technology in Gelsenkirchen (the Ruhr) in Germany, at the Parliament event: it’s also about associated industries such as steel production. Germany is looking to learn from past experience of change in the Ruhr region to meet these new challenges.

Structural change is a “societal task”, Gärtner said. The later we leave it, the more expensive and disruptive it usually is. He suggested that the finite nature of lignite supplies could help make the case for action.

Post coal vs. clean coal

The good news is that governments are moving. And not just the Greek or German governments, but the EU as a whole. At the end of last year, the European Commission launched an “EU Platform for Coal Regions in Transition” with the explicit aim of making sure no regions are “left behind” as the EU moves away from fossil fuels.

It’s another brainchild of Klaus-Dieter Borchardt, the Commission’s straight-talking internal energy market Director. He reportedly came up with the idea in a brainstorming session with Poland’s energy minister. Saxony (Germany) heard about it and wanted in and others followed.

The Platform held its first meeting in February this year. A second is due on 12-13 July. The Commission has identified 42 regions across 11 Member States that work with coal. The sector provides direct employment to about a quarter of a million people, most of those (about 40%) in Poland. Brussels wants to get countries thinking about how to transition out of coal and come up with concrete projects to make this happen. Industry and NGO stakeholders are supposed to be part of the process.

The Platform has two working groups: “Post coal economy and structural transformation” and “Clean air, eco-innovation and energy system transformation”. The former is for “those regions that want to stop coal”, in the words of Anna Colucci, who heads up the Platform in DG Energy; the other is “more dedicated to technologies”, for example to help countries improve air quality. These technologies must be compatible with long-term decarbonisation, Colucci stressed at the Parliament’s just transition event.

That doesn’t stop NGOs like WWF from worrying about the Commission’s reference to “advanced coal technologies” however. Carbon capture and storage (CCS) comes to mind. Skeptical NGOs argue that this a dangerous fantasy that we have no time for.

Colucci acknowledged that there is a tension between working groups one and two in the sense that the first is clearly about moving away from coal, while the second could extend its lifespan, for example through CCS. She said that the two groups “encapsulate the situation in Member States”. As things stand now, the Commission’s official view is that “clean” coal could be part of a Paris-compatible European energy mix. Although a flagship European CCS demonstration programme has gone nowhere.

New narrative and funds

Transition is not a foreign concept to many in Europe. Svetoslav Malinov, a Bulgarian MEP, reminded the Parliament’s event about the transition from state to market in Central and Eastern Europe. And identified one big problem: “Those reforms were easy to sell. The Paris Climate Agreement is a much more difficult sell than EU membership.”

The coal sector generates “good” jobs, Malinov argued. Denis from ETUC agreed: a Polish coal miner typically earns 7000 zloty (€1600) gross a month vs. an average salary of just over 4000 zloty (€900). Changing jobs could entail a serious pay cut. Coal miners are strongly unionised too, which helps put a spotlight on their plight. “We lost 80,000 jobs in the last decade in renewables, but no one knew i.e. cared,” said Juliette de Grandpré, a Senior Advisor on climate and energy at WWF Germany.

The Commission is inviting pilot regions to present coal transition strategies and projects. In response, it is creating “operational country teams”. So far there are four: in Slovakia, Poland, Greece and Romania. The Czech Republic will follow this month, and Bulgaria and Spain are next in line. The Commission intends to create a central secretariat for its Platform this year.

Critically, there are no dedicated funds for this just transition work in either the current EU budget or the next one. The Commission is dipping into regional development funds and the EU’s R&D programme, Horizon 2020, for the moment. For the next multiannual financial framework, which will run from 2021-27, Colucci pointed to a stronger focus on climate action as a good sign. She noted too that the Parliament may yet try to secure a dedicated just transition fund (as they tried – and failed – to do in the EU ETS reform).

Denis held up Canada as an example of a country that’s taking the just transition seriously. It has a dedicated task force, deadline and budget (€23 million), and Europe needs the same, he said. If policymakers don’t take the lead, populism will decide what kind of transition we get.

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