How Germany closed its coal industry without sacking a single miner


Now Germany is beginning the process of ending its brown coal industry and shutting down the energy plants that it feeds so it can meet its agreements under the Paris climate accord. Some see Germany’s audacious decommissioning of the industry as a model from which Australian has much to learn. Others believe that Australia is simply politically and culturally ill-equipped to do so.

The sheer scale of the German undertaking is hard to even contemplate from the Australian perspective, where coal is still king and where significant political decisions are met with particularly stern punishment.

Miners hold the last lump of coal during a closing ceremony of the last German coal mine Prosper-Haniel in Bottrop, Germany on December 21, 2018.

Miners hold the last lump of coal during a closing ceremony of the last German coal mine Prosper-Haniel in Bottrop, Germany on December 21, 2018. Credit:AP

Germany’s industrial sector has been a force so great that it has shaped the modern world. Germany followed Great Britain into the industrial revolution, but with coal mining and steel manufacturing in its Ruhr Valley it soon caught up. The Ruhr’s heavy industry fuelled German militarism, helping spur it to two terrible world wars and then from the mid-1940s it was the engine that helped a shattered nation recover. It then formed the heart of the European Coal and Steel Community, which evolved into the European Union.

By then Germany was so determined to become a force for good that a distinct form of capitalism – known as Rhenish capitalism – evolved in the mines and steelworks of the Ruhr Valley, says social historian Professor Stefan Berger. Rhenish capitalism was – is – marked by an aversion to conflict. Unions work closely with management and major business decisions are not made without significant community consultation.

At the height of the industry, in 1957, Germany produced 150 million tonnes of black coal and employed 607,000 miners. The nation became an exporter of plant and equipment as well as chemicals and vehicles.

In the decades that followed though Germany had to sink its mines deeper and deeper to reach the black coal, and the government was forced to subsidise the industry to keep it viable. Under an agreement between business, unions and the federal government the mines were consolidated under a single owner, RAG, and long-term plans were put in place to close the industry.

Operating under a slogan that, loosely translated, declares that no one would be left behind in the pits, it was determined that not a single miner would be forced out of work. Instead pits were closed progressively across the region. Workers who wanted to stay on were transferred from mine to mine, while others were offered retraining, or if they were over 50, generous voluntary payouts.

To maintain the communities from which the miners came, new transport infrastructure and universities were built, waterways rehabilitated and mine sites and coking plants were converted into parks, exhibition areas and museums.

The last mine was closed last year and today RAG’s headquarters at what was once Europe’s largest coking plant is part of a complex that is a world heritage site. RAG still employs 5000 staff across the region. Some work in offices dedicated to managing pensions and compensation, many more are engineers, working to rehabilitate the landscape and maintain the pumps that keep the region’s poisoned groundwater below ground, part of RAG’s €220 million ($355 million) annual “eternity fund”. According to one RAG executive, the company expects that more energy will be expended on the pumps than was extracted from the mines in the first place.

With the black coal industry closed, German policymakers turned to the nation’s brown coal, the softer, wetter, dirtier material still burnt to create 37 per cent of the nation’s energy – 41 gigawatts of power. In January this year, the government announced that it would close the brown coal industry by 2038 in order to meet its emissions targets under the Paris agreement. Observing the lessons learnt from the closure of the black coal industry, the transition would be phased and orderly, supported by government and marked by cooperation between unions and industry. It would be a “just transition” that will in the coming 20 years cost 20,000 jobs.

An offshore wind farm operated by RWE. The rapid shift to renewables has shaken up the country's energy market.

An offshore wind farm operated by RWE. The rapid shift to renewables has shaken up the country’s energy market.Credit:Bloomberg

One of the men who has led this transition is Michael Mersmann, director of global affairs with German mining union IG BCE. Mersmann is well travelled, charismatic and blunt.

Asked if he thinks that Australia could manage such a transition when and if the time comes he says “No”.

“One of the biggest problems Australia has is there is no existing relationship between employers, trade unions and states,” he said.

“In your country you are rather heading towards a conflict, not a consensus. What we are trying to do here is have softer negotiations and find a solution at an earlier point.”

But when you explore the notion in Australia, you discover there is another stumbling block. There is simply no acceptance in Australia that coal has a limited future.

Tony Maher, the CFMMEU’s mining boss, has worked closely with Mersmann over the years and admires what Germany has achieved with transition. Indeed he notes that his German colleagues are often appalled by the state of industrial relations in other Western nations. “They see it as a problem in the English-speaking world, this culture of ‘sack them and forget them’.”

But he points out that much of Australia’s coal is destined for markets in Asia, which are not bound to the same emissions reductions agreements as Germany. Coal, he says, has a long future in Australia.

Nonetheless, Maher acknowledges that in a generation or so – sometime after 2040 – Australia’s thermal coal industry might begin to wind down. He does not believe there is anything to be gained by scaring the communities that depend on the industry now, but when the time comes, he says, Australia should take note of Germany’s transition process.

Maher does not believe that the current government – or one like it – would be able to do so, though, because it has no culture of working with industry and unions. He believes Australian unions would have more luck building a just transition program directly with employers in the energy sector and proving that it works. Such a model might even be deployed across other industry sectors as needed.

When the Sun-Herald and The Sunday Age approached the Minerals Council of Australia – the mining industry’s peak body – the council referred us to Coal21. Coal21 is funded by a voluntary levy on coal production and dedicated to commercialising so-called “clean coal” technology with a view to ensuring that the industry can survive in a low-carbon economy.

Coal21’s chief executive is Mark McCallum, who also serves as an executive in charge of energy and climate at the Minerals Council of Australia and was formerly head of government relations with Shell.

He says that with clean coal technology carbon generated by burning coal can be harnessed for uses as varied as hardening concrete to help extract oil from oil fields more effectively, safely keeping it out of the atmosphere.

Dr Martin Rice, acting chief executive of the Climate Council, which provides independent climate and energy advice in Australia, scoffs at the very notion of “clean coal”, likening it to “dry water”. “It is a fossil, you can’t burn it cleanly,” he says.

Coal21’s upbeat assessment of the future of coal is at odds with the view of the industry in Germany too, where executives of both NAG and the giant brown coal miner RWE both told the Sun-Herald and Sunday Age that the industry has no future.

One sunny afternoon earlier this month Guido Steffen, a spokesman for the brown coal mining giant RWE, stood before a vast open pit at Hambach mine, not far from Cologne in western Germany. To this day RWE produces 35 million tonnes and over Steffen’s shoulder vast earth-moving equipment scraped up the ore.

Steffen said it had shocked the company when earlier this year the government’s expert coal commission recommended phasing out the industry by 2038 at the latest. The company, he said, had expected operations to continue into the 2050s.

“It will mean major cuts to our assets and our crew, they will be hard cuts,” he said. “But there is a consensus, there is a direction [about climate change] and now governments and politicians should transform those recommendations into law, into contracts.

“We have to do a lot for climate protection, and if society says we want to phase out coal, then we can’t work against it.”

It is hard to imagine Australian miners sharing that view.

Nick O’Malley travelled as a guest of the Climate Council.

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