Breakthrough Deal May Eliminate German Coal Subsidies | Business| Economy and finance news from a German perspective | DW | 29.01.2007
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Breakthrough Deal May Eliminate German Coal Subsidies

After months of negotiations, politicians and leaders from the coal industry reached a breakthrough Sunday night. Government subsidies -- not jobs -- are to be cut back drastically and may be history as early as 2018.

Coal subsidies currently total up to 2.5 billion euros ($3.2 billion) per year

Coal subsidies currently total up to 2.5 billion euros ($3.2 billion) per year

Germany cannot afford long-term subsidies for the coal industry, Economics Minister Michael Glos told public broadcaster ZDF on Monday.

"It's much better to take those economic resources and invest them in more modern, renewable energies," he added.

After extensive negotiations, the premiers of North Rhine-Westphalia and Saarland, two of Germany's particularly coal-rich regions, and representatives of the coal union and the mining conglomerate agreed Sunday on a plan to phase out German coal subsidies.

Deutschland CDU Parteitag in Dresden Jürgen Rüttgers

Rüttgers said subsidy cuts were necessary in part due to inexpensive coal imports

Though no official deadline was set, 2018 was mentioned as the year the last check would arrive. The situation, however, will be subject to reevaluation in 2012, according to the wishes of the Social Democratic Party, the junior party in the ruling grand coalition of Christian and Social Democrats. Traditionally, the party has staunchly opposed cutting coal subsidies.

Politicians promise no layoffs

Both Glos and Jürgen Rüttgers, premier of North Rhine-Westphalia, said in the ZDF interview on Monday that no layoffs would be made and that coal workers shouldn't be worried about their livelihood.

"We want to make the associated restructuring of labor as tolerable as possible," Glos said.

Rüttgers added that investments needed to be made in new jobs that would be more secure in the future.

Steinkohle, Symbolbild

Some 25 million tons are mined annually in Germany

"In reality, it's about starting a new chapter in the history of the Ruhr Valley," he said.

Currently, some 34,000 miners extract 25 million tons of coal annually from eight mines in Germany. State and federal governments pay up to 2.5 billion euros ($3.2 billion) per year in coal subsidies.

Merkel to continue talks Monday

According to the agreement made Sunday, subsidy cutbacks are to be financed by putting up parts of the mining conglomerate RAF for an initial public offering. The stock revenues will then be transferred to a foundation.

Chancellor Angela Merkel will continue negotiations on the future of the coal industry with the government coalition Monday evening. A final decision may be reached as early as this week.

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