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Hard coal subsidies: A never-ending story?

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  • Frondel, Manuel
  • Kambeck, Rainer
  • Schmidt, Christoph M.

Abstract

In Germany, hard coal has been subsidized for almost half a century. Despite the declining significance of hard coal production for the domestic labor market, the magnitude of subsidies increased until the middle of the last decade. In 1996, they peaked at ¤ 6.7 bill.While German hard coal subsidies have been shrinking to ¤ 2.7 bill. in 2005, it is very likely that they will be extended well into the next decade and even beyond. This article discusses the feeble arguments raised by the proponents of hard coal subsidization in Germany and other EU countries. Most importantly, in addition to the drain imposed on public budgets, these subsidies imply a substantial opportunity cost, leading funds away from alternative, more beneficial public investments. From a social welfare perspective, we therefore recommend the rapid abolition of these subsidies not only in Germany, where in nominal terms the accumulated amount of subsidies has now by far exceeded ¤ 130 bill., but all across Europe.
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Suggested Citation

  • Frondel, Manuel & Kambeck, Rainer & Schmidt, Christoph M., 2007. "Hard coal subsidies: A never-ending story?," Energy Policy, Elsevier, vol. 35(7), pages 3807-3814, July.
  • Handle: RePEc:eee:enepol:v:35:y:2007:i:7:p:3807-3814
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    References listed on IDEAS

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    2. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    9. Jacobi, Lena & Kluve, Jochen, 2006. "Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany," RWI Discussion Papers 41, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    1. repec:zbw:rwirep:0052 is not listed on IDEAS
    2. Cherp, Aleh & Vinichenko, Vadim & Jewell, Jessica & Suzuki, Masahiro & Antal, Miklós, 2017. "Comparing electricity transitions: A historical analysis of nuclear, wind and solar power in Germany and Japan," Energy Policy, Elsevier, vol. 101(C), pages 612-628.
    3. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2014. "„Grüner“ Strom gleich guter Strom? Warum Solarförderung ein teurer Irrtum ist," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 19, 04.
    4. Manuel Frondel & Christoph M. Schmidt, 2008. "Measuring Energy Security – A Conceptual Note," Ruhr Economic Papers 0052, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2012. "Germany’s Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 0353, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2008. "Germany's solar cell promotion: Dark clouds on the horizon," Energy Policy, Elsevier, vol. 36(11), pages 4198-4204, November.
    7. Manuel Frondel & Christoph M. Schmidt & Nils aus dem Moore, 2010. "Eine unbequeme Wahrheit – Die frappierend hohen Kosten der Förderung von Solarstrom durch das Erneuerbare-Energien-Gesetz," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, December.
    8. Berumen, Sergio A. & Pérez-Megino, Luis P., 2016. "Ranking Socioeconómico para el Desarrollo de las Regiones Carboníferas en Europa || Socioeconomic Ranking for the Development of coal-mining regions in Europe," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 21(1), pages 39-57, June.
    9. repec:zbw:rwirep:0104 is not listed on IDEAS
    10. repec:zbw:rwirep:0353 is not listed on IDEAS
    11. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2009. "Measuring Energy Supply Risks: A G7 Ranking," Ruhr Economic Papers 104, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. repec:zbw:rwipos:057 is not listed on IDEAS
    13. Frondel, Manuel & Schmidt, Christoph M. & aus dem Moore, Nils, 2010. "Eine unbequeme Wahrheit: Die frappierend hohen Kosten der Förderung von Solarstrom durch das Erneuerbare-Energien-Gesetz," RWI Positionen 40, RWI - Leibniz-Institut für Wirtschaftsforschung.
    14. Frondel, Manuel & Schmidt, Christoph M., 2008. "Measuring Energy Security – A Conceptual Note," Ruhr Economic Papers 52, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    15. Frondel, Manuel & Schmidt, Christoph M. & Vance, Colin, 2014. ""Grüner" Strom gleich guter Strom? Warum Solarförderung ein teurer Irrtum ist," RWI Positionen 57, RWI - Leibniz-Institut für Wirtschaftsforschung.
    16. repec:zbw:rwipos:040 is not listed on IDEAS
    17. Frondel, Manuel & Schmidt, Christoph M., 2014. "A measure of a nation's physical energy supply risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(2), pages 208-215.
    18. repec:zbw:rwirep:0040 is not listed on IDEAS
    19. Manuel Frondel & Christoph M. Schmidt, 2009. "Am Tropf Russlands? Ein Konzept zur empirischen Messung von Energieversorgungssicherheit," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(1), pages 79-91, February.
    20. Liu, Wei & Li, Hong, 2011. "Improving energy consumption structure: A comprehensive assessment of fossil energy subsidies reform in China," Energy Policy, Elsevier, vol. 39(7), pages 4134-4143, July.
    21. Frondel, Manuel & Schmidt, Christoph M. & Vance, Colin, 2012. "Germany's Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 353, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    22. Manuel Frondel & Nolan Ritter & Christoph M. Schmidt, 2008. "Germany's Solar Cell Promotion: Dark Clouds on the Horizon," Ruhr Economic Papers 0040, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    23. Manuel Frondel & Nolan Ritter & Christoph M. Schmidt, 2009. "Measuring Energy Supply Risks: A G7 Ranking," Ruhr Economic Papers 0104, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

    More about this item

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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