Is the EU ready and equipped to tackle its coal problem?
Given its strong decarbonisation policy, why has the EU not acted so far to solve this coal problem? The answer can be found in the EU Treaties, and in particular in Article 194 of the Treaty on the Functioning of the EU (TFEU), which defines energy policy as a shared competence between the EU and its member countries, but which provides the right for each member country to “determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply”3.
The EU has tried circumnavigate the Treaty’s energy limitations and reshape the EU energy mix on the basis of its competence for environmental policy. In particular, the EU has adopted over time four major initiatives with the aim of promoting an electricity sector based more on renewables and less on coal: i) the Renewable Energy and Energy Efficiency Directives4; ii) the emissions trading system (ETS)5; iii) the Industrial Emissions Directive (IED);6 iv) the Environmental Performance Standard (EPS)7.
Figure 2: CO2 emissions, electricity and heat sectors of EU countries
Source: Bruegel based on European Environment Agency (2017b).
As coal remains persistently present in the EU energy system, it is clear that these initiatives have not yet delivered the coal phase-out the EU needs to unleash decarbonisation. This reflects coal’s political sensitivity for several coal-reliant EU countries.
For instance, supporting ‘coal jobs’ is a key priority of Poland’s ruling Law and Justice party. It was the key element behind the trade unions’ backing for the party in the October 2015 elections (Bloomberg, 2017). In 2017, Poland and Greece refused to sign Eurelectric’s pledge not to build new coal power plants after 2020 (Platts, 2017). In Germany the threat of job losses and wider economic repercussions have also so far deterred politicians from committing to a deadline to ditch coal. Despite growing public pressure, the German government has continued to tacitly support the country’s coal industry (DW, 2017).
In general, two arguments are used by governments to support coal – or at least to procrastinate over its phase-out:
- Energy security and competitiveness;
- Job losses and wider economic repercussions for coal-mining regions.
The first argument – energy – is reasonable. A country that is highly reliant on coal for its electricity cannot switch overnight to other cleaner sources of electricity. However, many EU countries have already successfully phased out coal without compromising energy security and competitiveness, showing that a transition away from coal is feasible.
The second argument – socio-economic – is illusory and should not be accepted. Coal mining employment in Europe no longer represents a sizable issue either at national or regional levels. Production of hard coal in the EU has been decreasing since 1990. In 2016, only 36 percent of EU hard coal consumption was covered by domestic production, with the remainder imported from Russia, Colombia, Australia, the United States and other minor suppliers. Only the lignite consumed in the EU is almost entirely supplied by domestic production.
Phasing-out coal would therefore not have substantial implications in terms of job losses. Given the relatively small scale of the challenge, the EU could well provide a solution for the (limited) ‘coal jobs’ that will be lost in the transition. Providing such a solution would be beneficial to:
- Re-focus the coal transition debate on the only area it should belong to, energy economics;
- Provide an incentive to coal-reliant countries to start or accelerate coal phase-out plans. That is, the EU should openly propose to member states a speedy phase out of coal, and should concurrently put in place a scheme to guarantee social support for coal industry workers who would face losing their jobs.
The EU country with the highest number of coal mining jobs is Poland, with around 115,500 people employed in coal mines and related businesses.
This represents a mere 0.71 percent of Poland’s total employment. In all other countries coal mining employment stands below 30,000, always representing less than 0.6 percent of total employment (Figure 3).
Even at regional level, loss of coal-mining jobs would no longer represent a sizeable hit. In coal-mining regions across Poland, the Czech Republic, Bulgaria, Greece and Germany, coal-mining employment generally stands below 10,000 jobs – and below 1 percent of total regional employment.
Only in Poland’s Silesia do coal mining jobs exceed 50,000, representing 5 percent of regional employment (Figure 4).
Europe can manage the transition in coal-mining regions. To ensure their social and economic cohesion during the phase-out, the EU should put in place a mechanism to provide assistance – as is already the case in the United States and Canada, and as was the case in Europe during the coal-mining transformation of the 1950s.
Europe’s 1950s transition mechanism for coal-mining regions was the European Coal and Steel Community (ECSC) Fund for the Retraining and Resettlement of Workers. It was created on the basis of Article 56 of the ECSC Treaty, to facilitate re-employment opportunities for those coal and steel workers who lost their jobs as a result of the introduction of new technical processes or new equipment8.
The fund represented the first attempt at a European social and regional policy. With the 1957 Treaty of Rome, this fund was transformed into the European Social Fund (ESF), which in its early stages was indeed used to support workers who lost their jobs in sectors that were modernising, such as coal mining (European Commission, 2007).
