Blogs

Life after coal: the renaissance of Bilbao

By Matt Finch, business and energy analyst

Bilbao is an ancient city in Spain, dating from the 14th century. It has always been a major trading post and for most of the 20th century it was known for its iron, steel, and shipbuilding industries. The raw energy to fuel these industries came from coal. Whilst the coal was not directly mined in the area, the port of Bilbao was heavily rebuilt to unload coal, and railroads were laid to take this directly to the iron and steel factories.

As a result, Bilbao was very reliant on these heavy industries. When these industries in Bilbao went into decline (for a number of reasons, including the oil shock in 1973 and a major flood in 1983), the city was hit hard. Around 60,000 manufacturing jobs were lost between 1975 and 1995, with a further knock-on effect to the local services industry.

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Old Bilbao shipyard (photo: Teresa Avellanos, Flickr Creative Commons Licence)

To turn itself around, the ‘Strategic Plan for the Revitalisation of Metropolitan Bilbao’ was agreed between various political leaders, including the city mayor, and launched in 1991. This plan was deliberately not aimed at an individual segment of the city’s population or industry sector. Instead, the plan sought to renovate the look and feel of the city, whilst transforming the city from an industrial centre into a knowledge and services centre. Two agencies were launched: Bilbao Metrópoli-30, and Bilbao Ría 2000. Both agencies are owned by the Basque and Spanish governments, but are wholly independent from them. This setup was partly to ensure that decisions should be taken for the long-term.

Perhaps the most striking symbol of rehabilitation is the landmark Guggenheim Museum. Since it opened in 1997, it has been calculated that the museum has attracted an average of 700,000 extra non-Basque visitors to Bilbao per year. Where the museum is sited is as a direct result of Bilbao Ria 2000’s planning.

Despite some local opposition to the museum, the political leaders of the time decided to go ahead with the plan. They saw the museum as a central tourist attraction and symbol of the long-term rehabilitation of the city, and their long term planning proved to be a winning strategy. 

Bilbao Guggenheim

The Guggenheim museum in Bilbao (Photo: Flickr/Thierry llansades, Creative Commons Licence)

Both Bilbao and Leipzig themselves, and the transitions described thus far, share similar characteristics. Both cities preceded the industrial age, and so have reinvented themselves a number of times out of necessity. Whilst coal came to be a major part of city life in both cities, there were other industries which could be leant back on. Both cities also suffered a ‘shock’ (German reunification and the 1983 flood) that forced them to think about the future. That thinking led to long-term strategic decisions.

Both cities also benefitted from access to finance. Bilbao could directly raise and spend taxes, whilst Leipzig benefitted from ‘Aufbau Ost’, the set of government policies that were applied to post-reunification East Germany. Finally, both cities recognised that their future was in a more service / knowledge based economy, and put in place long-term policies to achieve that goal.

These two examples prove that, handled well, transitions can be positive. It’s clear that there are lessons to be learned. The Coal Transitions project is currently taking an in depth look at historical transitions in the UK, US, Spain, Czech Republic, Poland and the Netherlands, with a view to promoting knowledge and understanding of positive transition policies.

(Edited by Germana Canzi)

 

Urban life after coal: Leipzig

By Matt Finch, business and energy analyst

Many countries are reducing the amount of coal burnt in power stations while coal mines are closing down in some parts of the world. However, there are thousands of people worldwide whose livelihood is threatened by this reduction, not to mention the millions of dollars invested in assets that will become stranded.

So far, there is a popular perception that the transitions away from coal that have happened so far (many of which were not related to climate policy) have not been handled well in socio-economic terms. The first part of the Coal Transitions research project – which will see a major report published in the Spring of 2017, accompanied by a series of national case studies – sets out to not only examine what has really happened. But it also aims to learn lessons from these transitions, in the hope that they can be applied to the upcoming global transition away from coal and form part of a dialogue between the research community, industry, governments and stakeholder on this.

However, in advance of the results of the academic research, we will examine here some interesting examples of positive transitions that should be considered, with a specific focus on urban areas. The first blog of the series will look at Leipzig in Germany. The second, to be published next week, will look at Bilbao in Spain.

Leipzig

The City of Leipzig existed long before coal was mined heavily in the region, and with the phase-out of coal mining now proceeding in the region, will obviously exist long after coal has gone.

The city has long been a cultural and economic powerhouse. Indeed, the University of Leipzig opened its doors in 1409, and the first German railroad was opened between Leipzig and Dresden in 1839. Open pit coal mining began in the area to the south of the City in 1924, and rapidly expanded. Following the division of Germany after the second World War, the city quickly became the industrial centre of the German Democratic Republic (East Germany). Out of 300,000 employees, 100,000 were employed in heavy industry, including coal mining.

However, German reunification hit the City, and the local coal mining industry, hard. Since West German coal mine safety and environmental standards were higher, many of the mines were closed very soon after 1990. Across East Germany as a whole, 113,000 people were employed in East German lignite mines, but this shrank to 26,000 just five years later. In the space of a decade following 1989, the population of Leipzig decreased by 100,000.

Leipzig run down building

Run down building in Leipzig. (photo: Flickr/Joerg Schubert Creative Commons Licence)

The situation has however now reversed. Leipzig is now Germany’s fastest growing city, and the coal mines themselves have become tourist attractions, albeit in another form. The area the mines inhabited is now known as ‘Neuseenland’ – literally “new lake land”, and the lakes are systematically arising, phoenix like, from the ashes of the old coal mines. This is no accident.

A wholly-owned government company – Lausitzer und Mitteldeutsche Bergbau-Verwaltungsgesellschaft mbH (LMBV) – was set up with the express purpose of rehabilitating the mines. Furthermore, local (private) businesses mean that the lakes are carving out their own personalities – Lake Markkieeberg, formerly part of the Espenhain mine and one of the first lakes completed includes an artificial whitewater canoe and kayaking slalom course. Lake Kulkwitz is known for its scuba diving. Lake Cospuden has developed a reputation as the ‘party lake’. The redevelopment of the region is not planned to finish until 2050.

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Leipzig Triathlon on Lake Kulkwitz (photo: Flickr/Felix Abraham Creative Commons Licence)

Not only did LMBV rehabilitate the mines, it also had another purpose. It initially employed 20,000 employees within East Germany – 20,000 jobs that were brand new and provided a route directly back into employment for at least some coal miners. This combined well with the German government’s policy of offering ‘adjustment money’ to miners who were over 50 and found themselves out of work. This money is paid for up to 5 years and equals €13,500 per year on average. In effect, this payout was a form of early retirement payment.

The second major notable policy that rehabilitated Leipzig was the deliberate attempt to develop ‘clusters’ in central Germany. Clustering involves deliberately trying to bring together universities, research institutions and business players in the same sectors into the same geographic area. This is named ‘Regionenmarketing Mitteldeutschland’ (Regional Marketing for Central Germany).

Sunset over Leipzig

Sunset over Leipzig (photo: Polybert49, Flickr, Creative Commons Licence) 

The City’s economic recovery plan focused on five sectors; healthcare and biotech; logistics; media and creativity; automotive and suppliers; and energy and environment. Companies were offered incentives to move to the region, and the needed infrastructure was put in place. For instance, Leipzig airport was expanded so it could operate 24 hours a day, and this encouraged DHL and Amazon (amongst others) to base their cargo operations there. This is reflected in the City’s unemployment figures: the rate has dropped from 21% in 2005, to 11% in 2012.

As Leipzig is proving, transitioning away from a coal-focussed economy towards something else need not be accompanied by negativity and pain. However every place is different and other places will obviously not have the unique combination of factors and characteristics that have made Leipzig a success. Our next blog will look at the City of Bilbao, Spain, which has also undergone a successful transformation of itself, to see if we can identify the commonalities between the two transitions.

(Edited by Germana Canzi)