Coal is an energy source with high carbon intensity. In addition to CO2 emissions, its combustion also releases other harmful substances into the atmosphere (e.g. sulphur dioxide and solid particles), which have an adverse effect on human health and ecosystems. Nevertheless, coal is still a major source of energy and its global production, mainly driven by the growing demand for energy in Asia, has grown every year (with a few exceptions) over the last 40 years.
In Europe, there are still countries whose energy mix largely depends on coal production and combustion, notably Germany, Poland, the Czech Republic, and Bulgaria. However, if the EU is to meet its decarbonization goals and the 2050 carbon neutrality target, coal extraction and coal-fired energy production will have to be phased out and must be replaced by renewable and low-emission sources.
Due to this, EU countries have already moved to end coal extraction, or have announced plans to discontinue coal production and combustion. Most EU countries plan to do so by 2030; however, countries that are more dependent on coal will need more time and have postponed this deadline to 2040. Slovakia has already announced that coal production in the Upper Nitra region will be ended in 2023.
The end of coal extraction and coal consumption has significant impacts not only on companies operating in the mining and energy sectors, but also on regional and national economies. Therefore, it is necessary to have a clear strategy and an action plan on how to proceed with the coal production phase-out. On the one hand, there needs to be a strategy for the companies concerned (related to the phase-out of coal extraction and production, revitalization of coal sites, and business diversification). On the other hand, there must be a strategy for the region – how to ensure regional development and economic diversification after the mines close.
Strategies for the phase-out of coal production focus on three main aspects – people, assets, and finances. The end of coal mining means the loss of an entire sector of the economy and the loss of jobs, so new jobs will need to be found for ex-mining industry employees, with the young generation being a particular priority. As regards assets, opportunities will be opened up for the revitalization and new utilization of mining and industrial facilities. Last but not least, finances and subsidies from various programmes will also be important, as many measures taken during the phase-out will require public financing.
As regards strategies for the phase-out of coal extraction, we assist governments and companies from the mining and energy sectors in various areas, for example, we:
- Analyse and draft measures to be taken in connection with the phase-out of coal production;
- Analyse the social and economic impacts of the phase-out of coal production;
- Prepare strategies and action plans for the phase-out of coal production and the development of coal regions;
- Prepare strategies and implementation plans for companies from the mining and energy sectors related to the phase-out of coal production;
- Assist them with the identification of available financial support from various grant programmes for coal mining phase-out projects and diversification projects;
- Analyse the land and assets of the companies concerned and propose possibilities for recultivation and future utilization.
Our experience
Our team at PwC Slovakia specializes in the transformation of coal and climate intensive regions in the CEE. In 2018, we worked on the preparation of an action plan and strategy for the transformation of the Upper Nitra coal region, which was a pilot region in the EU within the Coal Regions in Transition initiative for which an action plan was prepared. Subsequently, based on this experience, our team assisted with the preparation of a similar action plan and strategy for the Jiu Valley coal region in Romania.
In Slovakia, we are engaged in two additional projects addressing the same issue. We advise the Slovak Ministry of Investments, Regional Development and Informatization on the preparation of the Just Transition Plan which defines priorities for drawing finances from the Just Transition Fund. In the second project, we are preparing a plan for using land and assets after the end of coal extraction and coal-based energy production in the Upper Nitra coal region.
Thanks to our experience, we also provide support for the preparation of Just Transformation Plans in other countries – Bulgaria (coal regions), Italy (coal region and steel industry region), Poland (coal regions), and Latvia (peat industry).
Areas of experience
Action plans and strategies for the transformation of coal regions
Preparation of just transition plans in various countries
Analyses and strategies for the revitalization of coal and industrial sites
Energy efficiency, renewable resources, and regulation
Financing, state aid, and project preparation
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