Power generation and structural change: Quantifying economic effects of the coal phase-out in Germany

Abstract In the fight against global warming, reduction of greenhouse gas emissions is a major objective. particular, decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences phase-out Germany, using multi-region dynamic general equilibrium model. Four regional scenarios before end 2040 are simulated. find that worst case scenario would lead an increase aggregate unemployment rate about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 2040. The effect on rates varies between [0.13; 0.22] and 1.07 [1.00; 1.13] lignite regions. A faster can recovery. leads migration German regions non-lignite reduces labour force 10,100 [6,300; 12,300] people until 2035 not worse terms welfare, consumption employment compared coal-exit