The rise and fall of German hard coal subsidies

Beginning with the coal crisis of 1958, the survival of the German hard coal mining sector has been heavily dependent on subsidies for several decades. These subsidies are a complex system of almost 60 different measures often with conflicting objectives. Annual financial support for this subsidy system grew from €0.6 billion in 1958 to €7.5 billion in 1989 with the majority of the funding financed outside the public budget by a special fund based on the “coal penny” (Kohlepfennig). In 1995, the abolishment of the “coal penny”, in connection with budget constraints, led to a significant subsidy decrease to €3.5 billion. A recent agreement between the Federal government and the mining state of North-Rhine Westphalia in 2003, however, seems to have fixed German hard coal subsidies at the €2 billion level for the time after 2012.