Power generation and structural change: Quantifying economic effects of the coal phase-out in Germany

Arbeitspapier

In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6,300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 16/2019

Classification and Topics

• Classification: Wirtschaft ; General Aggregative Models: Forecasting and Simulation: Models and Applications ; Macroeconomic Analyses of Economic Development ; Planning Models; Planning Policy ; Environment and Growth ; Renewable Resources and Conservation: Government Policy
• Subject: dynamic general equilibrium model ; labour market friction ; energy ; structural change

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heinisch, Katja ; Holtemöller, Oliver ; Schult, Christoph
• Event: Veröffentlichung
• (who): Halle Institute for Economic Research (IWH)
• (where): Halle (Saale)
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/227087
• URN: urn:nbn:de:gbv:3:2-137603
• Last update: 10.03.2025, 11:42 AM CET