On 2 December 2025, the Innovation Regions for a Just Energy Transition (IKI JET) project hosted an Expert Exchange to discuss methods and approaches for economic diversification in coal regions. The session brought together experts from the Global Policy Incubator, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and Colombia’s Ministry of Mines and Energy to explore how coal-dependent regions can identify new economic opportunities and reduce their reliance on coal.

The event marked the launch of the Handbook on Economic Diversification for Coal Regions in Transition, developed under the IKI JET Project. The handbook provides a practical framework to help policy-makers and practitioners to design diversification strategies that are grounded in data, regional analysis, and participatory processes.

The speakers examined how quantitative analysis, qualitative insights, and stakeholder engagement can be combined to identify viable economic alternatives to coal and support long-term regional transformation. The handbook provides guidance for actors in coal regions on how to identify the most promising alternative economic sectors and how these can contribute to social and environmental objectives. It outlines a step-by-step process for developing and implementing regional economic diversification strategies.

Research Insights

Opening the session, Götz von Stumpfeldt from the IKI JET project introduced the rationale behind the handbook and highlighted the challenges faced by coal-dependent regions worldwide. In many regions, coal mining and related activities are still central to employment, local revenue, and regional identity. Therefore, preparing for economic diversification requires careful planning to ensure that communities aren’t left behind as global energy systems transition away from coal.

He emphasised that regions highly dependent on coal and other fossil fuels should begin the process of economic diversification as early as possible, even if the decline of the mining industry has not yet started. Over the coming decades, as countries implement their climate commitments and global economies move towards decarbonisation, coal production is expected to decline significantly. Coal regions therefore need to develop shared strategies that support economic transformation while maintaining social and economic stability.

Marielena Ayala from the Global Policy Incubator and the lead author of the handbook then presented the methodology behind the publication. The handbook provides practical guidance on identifying promising economic sectors beyond coal and on developing regional diversification strategies. It outlines a structured process that helps practitioners analyse regional economic structures, define strategic objectives, and design policies that support new economic activities. Stage one focuses on analysing the regional economic structure using quantitative data, while also incorporating the knowledge of local stakeholders, such as companies, chambers of commerce, and trade unions. Stage two helps regions clarify the economic, social, and environmental objectives they want to achieve through diversification. Subsequent stages focus on identifying suitable development pathways, defining policy actions to support priority sectors, and establishing monitoring frameworks for implementation.

A key element of the methodology is the combination of quantitative analysis and stakeholder engagement. Quantitative tools can be used to analyse economic structures, measure sectoral concentration, and identify sectors with strong diversification potential. The handbook also provides guidance on the type and level of data required for different analytical approaches, helping practitioners to assess whether relevant information, such as value creation or export data, is available at the national, regional, or district level.

At the same time, the handbook highlights the importance of using participatory processes that involve local businesses, chambers of commerce, trade unions, and regional authorities. Through workshops, interviews, and dialogue processes, local stakeholders can share their knowledge of regional markets and value chains and contribute to developing a shared diversification strategy.

By combining data-driven analysis with local expertise and dialogue, the handbook guides practitioners through the complex process of designing and implementing regional economic diversification strategies.

Applying the Methodology: The Chile Case Study

Tomás Andres Jil Breytmann, technical advisor at GIZ Chile, presented how the handbook’s methodology was applied in Chile, focusing on the Antofagasta region and the municipality of Mejillones. The presentation covered the data requirements for applying the handbook, highlighting their availability across different territorial levels.

Antofagasta has historically been a major mining hub and an important energy generation centre serving Chile’s copper mining industry. However, the rapid expansion of renewable energy in recent years has dramatically reshaped the regional energy landscape. Its installed electricity capacity has grown significantly over the past decade, with solar and wind power now accounting for a large share of generation.

Against this backdrop, the case study applied the handbook’s analytical framework to examine new economic opportunities for the region beyond coal. By analysing economic data, sectoral structures, and regional capabilities, the study aimed to identify industries (including export-oriented manufacturing and processing activities, as well as sectors building on existing regional capabilities) that could support sustainable economic growth while aligning with the country’s broader energy transition.

The Chile case demonstrated that quantitative analysis can strengthen economic diversification planning by providing a clearer understanding of the regional dynamics and supporting the prioritisation of sectors with high potential. Using Antofagasta as a starting point, the study also illustrated that data-driven approaches can guide the identification of promising export products.

In addition, the presentation highlighted the key lessons learned during the implementation of the methodology, as well as critical success factors for replicating it in other regions. These lessons underscored the importance of adapting the methodology to different territorial levels—especially where data availability varies—and of complementing quantitative analysis with qualitative insights and stakeholder engagement. The experience also showed that applying such approaches requires adequate technical capacity and that once opportunities have been identified, they benefit from further prioritisation using economic, social, and environmental criteria. Overall, the case emphasised that diversification strategies are most effective when they are based on a combination of sectors and activities rather than a single development pathway.

Country Perspective: Colombia

The discussion also included insights from representatives from Colombia’s Ministry of Mines and Energy. Vladimir Chamat and Julian Alfredo Quintero highlighted the challenges facing the country’s main coal-producing regions, in particular La Guajira and Cesar. These regions remain highly dependent on coal exports and coal-related employment, making economic diversification a critical priority.

Historically, Europe has been the primary destination for Colombian coal exports. However, as many importing countries advance their decarbonisation strategies and reduce coal consumption, global demand for thermal coal is expected to decline. This creates increasing pressure for coal-producing regions to develop new economic activities and reduce their dependence on coal revenues.

In response, Colombia has begun developing diversification strategies for regions such as La Guajira and Cesar through extensive dialogue and participatory governance processes. These initiatives aim to support a gradual transition in mining regions by promoting economic diversification and reducing territorial dependence on coal extraction. The key priorities include: fostering new industrial activities linked to strategic minerals; supporting productive and labour reconversion to promote decent work; and identifying alternative economic sectors based on the region’s specific territorial potential.

The Colombian experience highlights that diversification is not only an environmental necessity but also an economic and social imperative for coal-dependent regions preparing for long-term structural change.

The Importance of Data and Participation

A key theme throughout the discussion was the relationship between quantitative evidence and local knowledge. Participants emphasised that access to reliable data is essential for diagnosing regional economic structures and identifying diversification opportunities. At the same time, data limitations remain a challenge in many regions, especially at the municipal level.

For this reason, speakers stressed that quantitative analysis must be complemented by qualitative insights and participatory processes. Engaging regional governments, communities, and local stakeholders is crucial for understanding local needs and ensuring that diversification strategies reflect territorial realities.

Ultimately, successful diversification strategies require both technical analysis and inclusive governance processes that enable coal regions to shape their own development pathways.

Key Takeaways

• Economic diversification is essential for coal regions preparing for a long-term decline in coal demand.
• Quantitative tools can strengthen diversification strategies by analysing regional economic structures and identifying promising sectors.
• Data analysis should complement, not replace, qualitative insights and stakeholder participation.
• Reliable regional data remain a challenge in many contexts, especially at the local level.
• Effective diversification strategies must combine technical evidence with participatory governance and long-term monitoring.

Speakers

Götz von Stumpfeldt, IKI JET, GIZ, Germany
Marielena Ayala, Global Policy Incubator, Ecuador
Tomás Andres Jil Breytmann, IKI JET, GIZ, Chile
Vladimir Chamat, Ministry of Mines and Energy, Colombia
Julian Alfredo Quintero, Ministry of Mines and Energy, Colombia
Veronica Vukasovic, GIZ, Chile (moderator)

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