European Commission Proposes Early End to Coal Subsidies

Joaquin Alumnia, European Commission vice president, calls for an early end to coal subsidies.
During July, the European Commission approved a proposal for a Council Regulation on State aid to facilitate the closure of loss-making hard coal mines in the EU by October 1, 2014. “The aim of the proposal is to ensure a definitive closure of uncompetitive mines. Companies need to be viable without subsidies. This is a question of fairness vis à vis competitors that operate without state aid. This is also in the interest of taxpayers and of government finances that are considerably constrained. The Commission will only allow operating aid to mining companies that have a closure plan and the subsidies should go increasingly toward supporting the social and environmental costs of doing so,” said Joaquín Almunia, Commission vice president in charge of competition policy. “Renewable, clean energy is the way to go, but we cannot ignore the dire regional economic and social consequences that would follow a sudden closure of the loss-making mines at this time of low or no growth and high unemployment.”

Hard coal production in the EU is small compared with demand and falling (147 million mt in 2008 or 2.5% of world production). The EU depends on imports for more than half of its use in coal-fired power stations. Total aid to the hard coal sector has been halved to €2.9 billion in 2008 from €6.4 billion in 2003.

The proposed regulation addresses the costs of counseling and training the workers of loss-making mines for other jobs, the costs of early retirement and the impact on related sectors.

The coal sector employs around 100,000 people in Europe: 42,000 in the coal mining itself and more than 55,000 in related industries. The mines that rely on operating subsidies are located mostly, but not only, in the Ruhr region, in Germany, in northwest Spain and in the Jiu Valley in Romania. More than 40% of electricity in Germany is produced from coal.

As featured in Womp 2010 Vol 07 -