Coal subsidies

MEPs today voted on a European Commission proposal on phasing-out state aid to uncompetitive coal mines (1). Green MEPs criticised the outcome of two key committee votes (2), which called for prolonging the current coal subsidy regime (under which state aid to uncompetitive coal mines is exempted from EU state aid rules) even further than the period proposed by the Commission: to 2018 instead of 2014. Following the vote, French Green MEP Yannick Jadot, who followed the proposal on the EP energy committee said:

"Today's vote flies in the face of the EU's energy and climate change goals, and fails to address the legitimate concerns of coal workers for their futures. It is high time that state aid to uncompetitive coal mines was finally phased-out and that member states instead support the development of sustainable energy solutions in these coal-producing regions, thereby creating sustainable jobs.

"Subsidising uncompetitive coal mines is a waste of billions of Euro of public money (3), particularly in the context of current pressures on public finance. These subsidies also create unfair competition both among EU countries and as regards investments in renewables and in energy efficiency.

Responding to concerns on the social impact of mine closures, Philippe Lamberts, Green MEP and shadow rapporteur in the ECON committee added:

"Closing uncompetitive mines raises employment concerns and it is important that, for this reason, the Commission's proposals foresee funding to ensure a fair social transition until 2026, notably funding retraining of workers. Prolonging state aid to uncompetitive mines is not in the interest of the workers however. The transition towards a green economy, with a future energy sector based on energy efficiency and renewable energy, will ensure the creation of thousands of new jobs in former coal-producing regions. Investing in this energy revolution and retraining coal workers must be the priority in order to avoid a social disaster. The sooner this takes place, the better for all involved.

"The Greens/EFA group hopes that the EP plenary vote and the Council will not be taken hostage by the coal lobby, and calls on the Commission to continue to resist the weakening of its proposal. It is important to recall that the Council can only change this proposal by unanimity. In addition, exaggerated demands could lead the Commission to withdraw its proposal meaning there would be no further state aid to coal mines beyond 2010."

(1) The European Commission has proposed a regulation to extend state aid to uncompetitive coal mines beyond 2010 (effectively an exemption from EU rules on state aid), while making crystal clear that by 2014 only state aid to ensure a fair social and environmental transition would be authorised (until 2026).
(2) The proposal is being discussed by the Council and EP has a consultative role. The lead EP committee - economic affairs - voted on the proposal, as well as the EP's industry and energy committee.
(3) Subsidised coal represents around 5% of the EU's energy mix. State aid to coal amounts to around €3 billion per year.