Coal is also the most important energy source in the production of electricity. Around 40.3 per cent of electricity generation is covered by coal (lignite - 23.1 per cent, hard coal - 17.2 per cent).
Consumption and supply
The main consumers of hard coal in Germany are power plants and the steel industry. In 2016, power plants accounted for 78 per cent of total hard coal consumption, the steel industry 20 per cent, with roughly two per cent divided among the other goods-producing sector, domestic heating and small-scale consumers. Hard coal mining in Germany has been undergoing a process of restructuring for a number of decades now. There have been steady decreases not only in the support provided for hard coal mining but also in the number of mines and people employed in this sector. In light of this trend, about 90 per cent of the German market's supply of hard coal and hard coal products is now imported (54.1 million tonnes in 2016).
Subsidies for domestic hard coal mining
Hard coal mining in Germany (3.8 million tonnes in 2016) is unable to compete internationally and is therefore subsidised. The purpose of the subsidies is to balance the difference between production costs on the one hand and revenues generated from the sale of the coal produced on the other - coal subsidies per tonne must not exceed the difference between production costs and the average prices of coal in third countries - as well as cover the costs of mine closures. State aid for hard coal mining must be approved by the EU Commission based on the as decided on 10 December 2010 by the Competitiveness Council.
Phasing out of subsidised hard coal mining in Germany
On 7 February 2007, the Federal Government, the Länder of North Rhine-Westphalia and Saarland as well as the German Hard Coal Corporation (RAG Corporation) and the Mining, Chemical and Energy Industrial Union (IG BCE) reached an agreement on the socially acceptable phasing out of subsidies for hard coal in Germany by the end of 2018. This process is regulated by a corresponding framework agreement concluded on 14 August 2007 between the Federal Government, the coal-mining states and the RAG Corporation, and by the which came into force in December 2007. The repealed the original provision for a review by the German Bundestag of the decision to phase out subsidies (review clause).
On the basis of these regulations and on subsequent funding decisions, the maximum subsidies to be provided by the Federal Government and the Land of North Rhine-Westphalia (NRW) for the period from 2014 to 2019 (in million euros) are as follows:
The funding provided by the RAG Corporation itself over this period will amount to 192 million euros.
Long-term liabilities of hard coal mining
With regard to the RAG Corporation's long-term liabilities from coal mining operations (pit water management, permanent mining-related damage, ground water purification), a separate arrangement reflecting the specific responsibility of the coal-mining states has been made. Established on 10 July 2007, the RAG Foundation guarantees the financing of the long-term liabilities by realising the assets of Evonik Industries AG (formerly RAG Beteiligungs AG). Should the Foundation's funds prove to be insufficient, financing of the long-term liabilities is guaranteed by the Länder of North Rhine-Westphalia and Saarland, based on a corresponding Legacy Agreement between these three parties. Under the agreement reached with North Rhine-Westphalia and Saarland, the Federal Government will cover a third of any guarantee to be furnished by these Länder, hereby safeguarding the financing of the long-term liabilities.
In terms of domestic energy resources that are available in sufficient quantities and can be extracted without the need for subsidies, lignite is the most important. The reserves and resources of lignite that are known to exist today are enough to last a very long time. In licensed open-pit mines, deposits total around five billion tonnes.
Lignite is mined in four areas, namely the Rhineland, Lusatia, Central Germany and Helmstedt districts, and is done so exclusively in open-pit mines where deposits are found close to the surface of the ground. Annual output has remained broadly stable in recent years, totalling around 171.5 million tonnes in 2016.
Germany is the world's largest producer of lignite, followed by Australia, Russia and the United States.
About 90 per cent of lignite is used to generate electricity and district heating in public and industrial power plants. It therefore accounts for 23 per cent of electricity generation in Germany.
Due to lignite's specific properties, open-pit mines and power plants work together in order to exploit it commercially, close to where deposits are found. In this way, they are able to ensure maximum efficiency and security of supply. As a result, there is no international market for lignite. Just under ten per cent of the lignite produced is upgraded into solid or pulverised fuels (lignite briquettes, pulverised lignite and fluidised bed lignite, lignite coke), for use either commercially or in the home.
Lignite mining changes the landscape permanently and is constantly linked to damage caused to both human and animal habitats and to nature in general. As part of licensing procedures in relation to regional planning and mining legislation, an attempt is made to strike a balance between the interests of the energy industry on the one hand and social, technical and environmental concerns on the other. In so doing, the public - for example, citizens, specialist authorities, environmental groups - are also given the opportunity to both influence and play a part in the process.
Since operations began, around 176,490 hectares of land in total have been used for lignite mining, approximately 69 per cent of which has already been recultivated. Around 19 per cent of the recultivated area has been reassigned as agricultural land, approximately 30 per cent as forest and woodland areas and around 13 per cent has been made into water areas.