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EU State Aid And The Coal Sector

  • April 27th, 2007
  • Posted by EUEditor

industry-resize.jpgThe European Union is reviewing state support for national coal industries, producing a report for Poland this week (24.4.07), with other documents, including a general European industry statement, on the way.

The European Commission announced this week it would agree to an extension of state payments to cover “exceptional costs”, for this year, to help sustain coal mining in Poland.

The Commission had agreed to the payments for the period 2004-06, and has now decided on the Polish government’s application to keep them going until the end of 2007.

It argued that it would be using unallocated proportions out of money it had planned to spend.

Figures given by the Commission are in Polish currency:

Budgeted state aid for 2004-06, EC approval 22.10.05: PON 6 234 706
(A$2 718 080;, 26.4.07)

State aid delivered 2004-06: PON 3 873 289 (A$1 688 600)

Planned spending now: PON 623 294 (A$271 730)

A spokesperson for the EC said (24.4.07) reports would be forthcoming in May on support for the German coal industry, and for the general situation on state aid for European Union coal production.
The practice has a vexed history with trade competitors proposing to deliver coal to European pitheads, discounted against even subsidised EU prices, if tariff blockages were cleared.

Present action by the European Commission is in the context of competition rules that are now binding on member state governments of the EU, under their treaty obligations.

This week a set of announcements was made concerning regulatory action:

The Polish government has undertaken to put an end to the unlimited state guarantee of liabilities incurred by the country’s postal service. The EC noted that the guarantee, unlimited by amount of money or time, gave the service an open advantage over competitors, and therefore would have a distorting effect on the European single market.

The Commission has closed an investigation of German public service broadcasting after it received formal commitments from the German government that funding would be applied strictly to the “public service mission” entrusted to those broadcasters. Competitors had complained that the state-supported broadcasters were being given trading advantages. New rules will be made to block support outside of the competition guidelines for new media activities, “over-compensation and cross-subsidisation” , and sublicensing of sports rights.

Slovenia has been authorised to continue with an electricity tariffs structure which was under investigation, for “feed-in” of so-called “green electricity” from renewable sources and efficient combined heat and power installations. The EC as regulator accepted the justification for the tariffs as being for security of supply, and in line with permitting state aid for environmental protection.

The EC has also authorised public funding as part of two major rehabilitation and development projects for Tallinn airport. It says the work will be co-financed by the EU Cohesion Fund, being justified by keeping the airport in compliance with European agreements including ones related to air safety and environmental protection. As well the investment will be shared with the operating company Tallinn Airport Limited.