The German Coal Market after 1992

Abstract

On January 1, 1993 the Single European Internal Market (SEIM) will come into effect1. As discussed by the working document Internal Market for Energy, presented in 1988 (Commission of the European Communities, ed. 1988), the energy market is a vital part of this integration process. The SEIM will have severe consequences for the German hard coal industry, one of the most densely regulated and subsidized sectors of the German economy. In 1991, for example, subsidies reached more than DM 11 billion2. Meanwhile, the industry faces additional though closely linked difficulties: (i) high production costs will continue to translate into low competitiveness; (ii) strategies to reduce carbon-dioxide emissions will make subsidies to this sector increasingly less justifiable. Thus, German coal is facing an especially bleak future. To evaluate German coal's future after 1992 in detail, it is not sufficient, however, to study only its supply conditions. As a primary energy product, coal can be converted into other forms of energy, i.e. electricity, or used in the production of industrial raw materials. A look at the