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A role model for European coal phase out? Five lessons from the German Coal Commission

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Photo by Diana Parkhouse on Unsplash

Multi-stakeholder commissions can play a role in shaping sectoral transitions, but they are not a silver bullet to unlock transformative change.

When the EU’s Coal Regions in Transition Platform meets next week, the recent coal phase out deal in Germany will feature high on the agenda. The Commission on Growth, Structural Change and Employment (or Coal Commission) was formed in June 2018, bringing together industry, trade unions, coal regions, environmental NGOs, research institutes and affected communities to facilitate a German coal phase out and transition process. A hard-fought compromise was reached in January 2019 to phase out coal by 2038 at the latest and shut down significant capacity of hard coal and lignite plants by 2022. The recommendations are expected to be translated into German law by the government in the coming months.  

The lessons from Germany’s Coal Commission are relevant for other coal consumers and producers grappling with their own coal transitions, such as China, Japan and Poland. The German experience with the Coal Commission shows multi-stakeholder commissions can play a role in managing transitions, but they are not a silver bullet to unlock transformative change. Commissions cannot replace political leadership, and ambitious targets for emissions reduction are inevitable for any long-term planning and outcome in line with the commitments under the Paris Agreement.  

Here we draw five key lessons from the German Coal Commission:  

  1. Multi-stakeholder engagement is essential for countries where phase out debates are complex and contentious: Including relevant stakeholders in a participatory institution provides legitimacy and ownership for the managed transition. This also ensures good representation of specific regional challenges and opportunities. However, while large groups boost inclusiveness, transformative change is unlikely if specific interests hold blocking minorities. The same holds true if consensus must be reached in a polarised political constellation. 
  2. Commissions should be mandated to lay out multiple policy options: By mandating a commission to explore feasible policy pathways it can inform public debate and political decision-making. Ultimately, the government has the responsibility to opt for a specific pathway. This requires political leadership and the transparent choice of a specific outcome. If commissions are misused to delegate political responsibility or delay climate action, they create the risk of high transition costs and reduce the legitimacy and stability of the eventual outcome. 
  3. Multi-stakeholder commissions need a strong regional component: In order to develop fast and just transition strategies for affected regions, regional stakeholders need to be brought to the table. Leveraging regional strengths and identifying challenges is key for developing regional priorities and tailored transition strategies. Creating clear visions and actionable pathways for affected regions and communities should be at the core of such processes to ensure economic competitiveness and social stability. At the same time, climate policy should not be made responsible for the effects of a lack of structural policy in these regions in the past. 
  4. Effective financing of the transition is a key challenge: The German transition relies on the domestic public budget, whereas the EU budget and international finance, for example, from multilateral development banks play an important role in financing transition processes in other countries. Funding for regional transition strategies is a unique opportunity to create innovative low carbon economies. A rigorous assessment and monitoring of projects are key however to ensure these are sustainable investments for affected communities in line with the Paris Agreement and the Sustainable Development Goals. Additional compensation payments for fossil energy producers pose a threat by driving up costs of the transition. Potentially high compensations in Germany are a roadblock for just transitions elsewhere.  
  5. Outcomes of expert commissions are not set in stone: The German case shows that ambiguities in the final report can fuel continuous public and political conflict instead of channelling and resolving it. In the medium to long-term, the stability of a deal can be impacted by factors such as public support, government changes, as well as domestic and international economic and climate policy trends. Ongoing engagement of progressive or conservative actors can result in a further delay or acceleration of the process. 

This blog also appears on Just Transition.