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Coal Subsidies To Stay

  • May 22nd, 2007
  • Posted by EUEditor

eu-industry-scape3.jpgA report recommending that subsidies on the European coal industry be left intact has been accepted (21.5.07) by the European Commission.

The Commission said the industry had been subject to special state aid rules since the end of the former European Coal and Steel Treaty in 2002.

It acknowledged that the industry had been unprofitable for many years in most of the member states, and said the special rules had been introduced to assist with restructuring.

These were set to run to 2010 as an exception to the EU’s general prohibition on state aid for non-agricultural industries; and there had to be a review before the end of 2006.

In this review governments and stakeholders were consulted, and the resulting report, now adopted, said there was no need to change the existing rules.

The EU Energy Commissioner, Andris Piebalgs, said that nine member countries were mining coal, mainly for electricity production, steel-making and heat production.

“Domestic coal production reduced the energy dependency of the Union and contributes to a diversification of our sources of energy supply,” he said.

“Coal can be part of a low carbon energy future, provided we develop the necessary low carbon technologies.”

He said subsidies were being paid to the industry in Germany, Hungary and Spain, where production costs were twice the world market price for coal.

Mines in the Czech Republic, Poland, Slovakia and the United Kingdom were “more or less competitive on the world market”, and received no subsidies.

The two new states, Bulgaria and Romania, had yet to inform the European Commission of any need for subsidies to their mines

The report to the European Commission described changes to state aid policies and examined the types of assistance being provided; it also considered impacts of the subsidisation on the internal European market – in relation to production of coal, coke, electricity and steel.

A statement from the European Commission said:

“In view of the fact that the global coal market appears to function efficiently the report concludes it is not necessary to propose amendments to the Coal Regulation.”

More consultation has been invited from the European institutions and stakeholders.

Reference: European Commission Report on State Aid to the Coal Industry; (21.5.07)