As of 2004, Germany had 7.4 billion short tons (Bst) of recoverable coal reserves, the largest in the EU. Over 97 percent of these coal reserves are lignite (brown coal), with the remainder composed of bituminous and anthracite (hard coal). Brown coal is Germany’s most important domestic energy source. According to Statistik der Kohlenwirtschaft, a German coal industry association, brown coal production represents over 40 percent of Germany’s total domestic energy production. Coal is an important part of Germany’s energy consumption mix, meeting 24 percent of Germany’s total energy needs in 2004.

Germany is the seventh largest coal producer in the world. In 2004, it produced 232.7 million short tons (Mmst), of which the large majority was lignite. The country operates ten mines, employing some 45,000 people. However, German coal production has declined rapidly since reunification in 1989-1990; in 1990, West and East Germany produced a combined 513.7 Mmst of coal. The closure of older, inefficient mines in the former East Germany has been the principle cause of this decline. Currently, over one-half of Germany’s lignite production occurs in the Rhineland region in the western part of the country.

Most of Germany’s hard coal deposits are deep below ground and difficult to access, making their extraction problematic and expensive. As a result, the government must provide large subsidies to the industry to maintain production. The German government plans to give the hard coal industry $3.6 billion in subsidies in 2005, down from $3.7 billion in 2004. According to an agreement reached with the coal industry in 1997, coal subsidies will fall to $2.3 billion by 2012. Brown coal production, on the other hand, is mostly feasible without subsidies.

Germany is the world’s fourth-largest coal consumer, at 279.9 Mmst in 2004. Germany’s coal consumption has declined from 407.9 Mmst in 1991, due to the closure of many coal-fired power plants in the former East Germany following reunification. Almost all of Germany’s brown coal consumption fires power plants, while the steel industry uses most of the hard coal.

With domestic coal production declining, Germany depends in part upon coal imports to meet domestic demand. According to the International Energy Agency (IEA), Germany imported an estimated 38.2 Mmst in 2005, of which 99 percent was hard coal. Poland was the single largest source of these imports, contributing 23 percent, followed by South Africa (22 percent) and Russia (20 percent).