Putting off the coal in Europe: Socio-economic trade-offs across the European regions

Abstract

This study quantifies the socioeconomic and environmental repercussions of complete substitution of coal and lignite in the EU27 providing insights for policymakers. The analysis is conducted at the NUTS-2 level, using the EUREGIO-2017 multiregional input-output table, and considers the substitution of coal and lignite for electricity generation and household heating. The results reveal winners and losers at the regional level, with job losses in coal-reliant regions but gains in areas with alternative energy sectors. A pronounced reduction in CO2 emissions emerges as a key positive outcome, with significant abatements concentrated in Central-Eastern European regions where coal and lignite were historically more intensively utilized. This study emphasizes the importance of adopting balanced policies that strike an equilibrium between environmental goals and mitigating adverse socioeconomic effects, including at the subnational level. Policymakers are strongly encouraged to conduct comprehensive analyses, considering direct and indirect impacts on variables such as value-added, employment, and CO2 emissions. Moreover, compensatory measures, such as the Just Transition Mechanism, should be tailored to provide targeted support to the most affected regions, fostering fair and equitable social change.