If one can believe a recent BBC poll, Germany is the most admired country in the world.

Germany's industrial skill and innovation, from sleek Bosch refrigerators to the global engineering acumen of Siemens, are the envy of the planet. Devoted to sound banking, progressive labor practices and a working social safety net, Germany largely dodged the Great Recession while still remaining the European Union's economic anchor.

But lately it is Germany's bold environmental policies that have attracted world attention. The country is striving to generate 80 percent of its energy from renewable sources by 2050—a goal bolstered by chancellor Angela Merkel's decision, in 2011, to phase out the use of nuclear power within a decade. Germans even have a bouncy portmanteau word for their ambitious efforts: the Energiewende, or energy transition.

Yet beneath that feel-good image of green stewardship and social justice is an ongoing unhealthy reliance on the dirtiest of fuels, soft lignite coal. Even as wind turbines and solar panels have sprouted all over Germany, giant strip mines continue to obliterate rural communities and foul the nation's air. In order to gain access to shallow lignite seams, mining companies have since World War II bought up and destroyed well over a hundred villages in Germany. They have relocated tens of thousands of people. And if they have their way, they will uproot still more people in coming decades.

"Across Germany, 10,000 people are threatened with being moved if the future plans of the lignite mining industry are realized," says Daniela Setton of the environmental group KlimaAllianz. "When you go to those places, you'd hardly think you're in Germany anymore, in the land of the Energiewende."

(Read: Clean Break: The Story of Germany's Energy Transformation and What Americans Can Learn From It)

Since the Nazi era, Germany's powerful lignite industry has been able to mine where it wants to, in broad disregard of environmental and human-rights consequences. And supported by legislation passed in 1937, which declared the mining of raw materials a "national priority," industry is still able to relocate people and communities at will. But now an upsurge in the generation of renewable electricity, a rising groundswell of public opposition and a surprising David-vs-Goliath legal case are providing glimmers of hope to those who would like to end Big Coal's swagger.

Strip-Mining: Legal Relic of the Bad Old Days

Last year, despite nearly a three-fold increase in the use of renewable energy sources over the last decade, about 45 percent of Germany's domestically produced electricity still came from coal—20 percent from hard coal and 25 percent from lignite. Lignite, called brown coal in Germany, is an inefficient form of coal usually found near the surface and most often extracted through strip mining. When burned, a ton of it produces a third more emissions of carbon dioxide than does an equal amount of hard coal.

Soft coal is a relatively low-value fuel, so it makes little economic sense to transport it any substantial distance. Mining companies have gotten around this problem by burning it near the source to produce electricity.

In the former East German state of Lusatia, a power plant owned by the utility Vattenfall is the second-largest single source of CO2 emissions in Germany and the third largest in the entire European Union. The European Environment Agency says it's also the third-most damaging industrial facility in the EU, responsible for between $1.5 and $2.6 billion a year in damage to human health and the environment.

The long-term negative impacts of mining are substantial. In order to reach buried lignite, mining companies have to wall off vast areas of minable terrain from the flow of groundwater. When the groundwater returns to formerly mined areas, it leaches heavy metals into streams and rivers. Some tracts of land near strip mines face problems with land subsidence, as well as dust and noise from ongoing mining. And the gently rolling terrain that's left after mining companies have restored the land is alarmingly subject to landslides.

And then there's the less quantifiable human cost.

Mathias Berndt is a Lutheran pastor who, for the past four decades, has ministered to residents of Lusatia. A wiry, plainspoken 63-year-old, Berndt has an intriguing job title—it translates more or less as "caregiver for the souls of those affected by strip mining"—and a unique vantage point on the human costs of relying on coal.

Years ago Berndt, from his home in a village named Atterwasch, experienced first hand how Lusatian lignite produced much of communist East Germany's electricity—and a big proportion of its worst air pollution. Local people couldn't complain for fear of being branded enemies of the state. Since the reunification of Germany in 1990, the most obvious air pollution—dense black soot and corrosive sulfur dioxide—has been cleaned up, and opposition to mining no longer results in jail time. But mining continues to hold sway over Lusatian farms and fields, and local people continue to be consumed by uncertainty about whether their villages will be there to stay.

Many Lusatians grew up hearing the refrain: God created Lusatia, but it was the devil who put the coal under it.

In 2007, Vattenfall proposed to expand its Lusatia operation with a new strip mine that would consume Atterwasch and the other two villages. The Brandenburg state government, which would need to approve permits for new mines, isn't expected to decide the matter for at least two years. In the meantime, mining continues unabated at Vattenfall's three existing mines in Lusatia, two of which are slated to be active at least through the 2030s.

The uncertainty about his village's future, Berndt says, carries a heavy social cost. Tempers often flare between Vattenfall workers and those who oppose the company. Economic development is stalled. Facing an uncertain future, many young people simply move away.

"People get aggressive toward one another, or they get depressed," said Berndt during a talk at a church in Hamburg this spring. "Either way, the village community is destroyed. There's no baptism, wedding or eulogy at which brown coal doesn't come up."

If Vattenfall has its way, Atterwasch's 900 residents will be relocated to houses the company will build in a new settlement. The houses will be comfortable, the village infrastructure updated. But the Atterwaschers will lose the sense of continuity that comes from knowing their houses and their village have been lived in—often by members of the same families—for centuries. It's a deeply unsettling process that Berndt saw 20 years ago, when residents of a nearby village named Horno were relocated after losing a long legal battle.

"The new place is built nicely enough, but the spirit hasn't come along," he said. "It's a soulless village. People say, 'Yes, we have a new house, but it's not really ours.' The thing that makes up the village's quality of life is lost."

It rankles Berndt that Horno was supposed to be, according to a promise by Brandenburg state officials in 1998, the last Lusatian village to be leveled for strip mining. Then came Vattenfall's 2007 request. State government officials claimed that they should not be bound by a promise made by a previous generation of officials.

Adding insult to injury, Berndt says the corporation's letter to village residents announcing the proposed destruction of their homes ended with the traditional German miner's greeting—"Glück auf!" It's a phrase that underground miners often exchange, meaning, "I hope you get to see daylight again."

For Berndt, "It might as well have read 'Sieg Heil!,'" he says.

The reference is not gratuitous. The law that allows mining companies to relocate residents, even entire villages, was passed in 1937. That year the Nazi government declared the extraction of vital raw materials a national priority because they were needed for the war effort. That legislation remains in force, allowing mining companies to relocate people and communities at will.



Favorable Economics—for Now

Vattenfall and other lignite-mining firms have other advantages, too. In Germany, mining companies typically have to pay royalties on what they extract from the ground—but coal mining is exempt from that regulation. It's also exempt from a regulation that charges fees for the diversion of groundwater, which has to happen on a vast scale to make way for strip mining.

As a result, says Swantje Kuchler of the think tank Green Budget Germany, lignite mining has benefited from an unrecognized public subsidy that she assesses at over $6 billion a year.

"Mining companies say they produce lignite without any public subsidy," Kuchler told InsideClimate News. "But the external costs that these energy sources have are not truly reflected in the price. Brown coal produces the most emissions—a third more than burning hard coal. If you would attach the full price of these costs to the fuel, it wouldn't be feasible anymore."

Lignite is an economic powerhouse in Lusatia, where more than 8,000 people were working for Vattenfall in mining and power generation in 2010, according to the consulting firm Prognos. But more local residents are questioning whether a continued reliance on a fossil fuel represents a sustainable economy or lifestyle for their region. Rene Schuster, an activist with the local environmental group Grune Liga, says some of that doubt crystallized in 2009 when a massive landslide carried part of the village of Nachterstedt into an old lignite mining basin in Saxony-Anhalt, killing three people.

"There is a change of mind taking place in Lusatia, but only slowly," says Schuster. "People used to think they were leaving a stabilized landscape behind. The landslide really helped change that impression."

In one modest way, lignite-based utilities do pay for their CO2 emissions. Under the European Union's emissions trading scheme, polluters pay for permits allowing them to emit greenhouse gases. But prices for permits are so low that they barely impinge on profit margins.

Stefan Lechtenböhmer, a researcher at the Wuppertal Institute who recently conducted a review of Germany's energy needs, thinks that lignite's favorable economics are a short-term blip. He points out that Germany's states have set goals for the expansion of renewable energy that far exceed even the nation's ambitious federal goals. Federal law gives renewable electricity priority on the grid; as more renewables come on line, that will have the effect of bumping out electricity from other sources.

(Read: German Law Gave Ordinary Citizens a Stake in Switch to Clean Energy)

"The golden time for lignite will be very short, maybe three to five years," says Lechtenböhmer. "If we get CO2 prices back up, it will be over."



The Soft End of Hard Coal

Germans who long for an end to lignite mining don't have to look very far for a potential model, for the nation's hard-coal mining industry is currently dying with scarcely a whimper. During the 1950s the underground extraction of hard coal employed more than half a million miners. But today only three underground mines are left, and the last is scheduled to close in 2018.

Unlike the country's move away from nuclear power, the decision to shut down hard coal mining stems less from environmental considerations than from economic ones. Germany's hard coal lies deep under the surface, necessitating labor- and equipment-intensive underground mining. In the 1960s, federal and state governments began subsidizing coal production in the name of assuring a domestic supply of energy and continued employment.

By 2000, the overall costs of this subsidy came to exceed $5.5 billion a year—more than $100,000 annually for every coal mining job. In negotiations with the European Union, which opposes the subsidy as an example of unfair competition, the nation's political parties agreed to end federal and state subsidies over a series of years.

Since mining companies can't turn a profit without the subsidies, that's had the effect of shutting down mine after mine. The transition has been accomplished within what has broadly been referred to as a "socially acceptable framework" with the aid of early retirements, retraining and job-placement programs for miners.

Germany's utilities have not taken the long winding-down of domestic coal production as a reason to quit burning the fuel. Rather, they've compensated by importing cheap hard coal from Russia, the United States and Colombia, and building new coal-fired power plants like Vattenfall's new facility in Hamburg. And because the domestic mining of lignite remains cheap, politicians have had no impetus for a phase-out like the one involving hard coal.

(Read: Why Is Germany's Greenest City Building a Coal-Fired Power Plant?)



'The Right to a Home'

The changing economics of Germany's electricity market, and public opposition to more strip-mining, haven't threatened lignite's dominance yet. But the biggest threat to strip-mining may be a case soon to be decided by the nation's highest court.

In the Rhineland area near Cologne, the utility company RWE plans to demolish a village named Immerath that stands in the way of its Garzweiler II strip mine. It's business as usual: the 38-square-mile pit has already swallowed 14 other villages where more than 7,500 people once lived. Most of Immerath's residents have already moved away. Businesses are boarded up, houses stripped of valuables down to the plumbing pipes.

A stubborn local resident named Stephan Pütz stands in the way. Together with the German environmental group BUND, the 50-year-old police officer filed suit against the utility, claiming that its appetite for his home conflicted with rights outlined in the so-called "Basic Law" that established the legal framework for West Germany after World War Two.

"It's really a matter of the right to a home," said Pütz's attorney, Dirk Tessmer, in a phone interview. "German law says that one can go where one wants to, and can stay where one wants to. It's a matter of people saying, 'we don't want to leave, we want to remain where we are.'"

The eight judges in Germany's Federal Constitutional Court—the nation's highest—held a hearing on the case on June 4. They heard Pütz describe what it was like for elderly neighbors who had to leave their homes and move to houses in a new settlement whose inelegant government name, Immerath (new)—yes, with parentheses—indicates just how unsettled it is.

An attorney for BUND told the court that the group's right to land ownership had been damaged when it was forced to abandon an orchard that it maintained on land to be mined. Various government and business interests also weighed in, testifying that lignite mining is responsible for providing 34,000 jobs in North Rhine-Westphalia, and that lignite remains a "vital domestic energy source."

Just how vital is up to the judges.

Under German law, governmental bodies have the right to lay claim to private property through eminent domain—but only in the service of the common good. Tessmer argued on June 4 that lignite mining does not fall into that category. Rather, he said, it enriches a few companies at the cost of community well-being—and the global environment.

It's the first time that the constitutional court judges have heard a case pitting mining rights against citizens' rights. Their decision won't be made public for a few more months.

That's a short time in the long history of Germany's relationship with lignite. But it will not be enough for one of the local landmarks Stephan Pütz cherishes. On October 13, the last service will be held at the so-called "Cathedral of Immerath"—a large 19th-century church that is a beloved local landmark.

Expecting demolition, church officials have sold the place. They plan to build a much smaller substitute—a chapel—in their tidy new village.