German Lignite - an Unsubventioned Energy? (Short study)

  • Project no.2211
  • Duration 01/2004 - 10/2004

Production and use of lignite (brown coal) with its economic, social and ecologic implications interact with numerous aspects of public life. In consequence, it is subject to various public regulations. Like in other economic sectors, many of these regulations are advantageous or disadvantegous for the relevant companies.
The aim of the present short study is - according to the call for tenders issued in 2003 (UBA 2003) - to get a first overview on preferential treatments (subsidisation) of the lignite industry compared to other industrial branches. In this study, the term subsidy is construed extensively, covering a broad range from explicit supports (i. e., subsidies having a direct effect on public budgets, e.g., direct financial aid or tax reductions) to implicit supports (having an indirect effect on public budgets) and external costs.
In view of all uncertainties, which are connected with the present analysis, the most striking supports of the German lignite industry arise from

  • the different taxation of natural gas, coal and uranium
  • the regulations for privatisation of the East-German lignite industry, including
  • the support of investments into power plants which has been granted in East Germany and
  • the external costs, which will be paid to a large extent, by the public and by future generations
  • the indirect support of sales of lignite products and lignite power and the use of finite resources at a reduced price or free of charge should not be forgotten.

The above listed public support for lignite mining and lignite use amounts to a total volume of about 4.5 billion Euro/year (conservative estimate). About 3.5 billion Euro of this amount are external costs.

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