‘Low-carbon’ EU set to prolong coal subsidies
- March 30, 2020
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The European Union would maintain special subsidies for the coal industry until 2023, under proposals being drafted by the European Commission’s competition department.
The plans are to be published by Joaquín Almunia, the European commissioner for competition, on 6 July, but the draft is running into strong opposition inside the Commission.
Connie Hedegaard, the European commissioner for climate action, and Janez Potocnik, the European commissioner for the environment, believe that the proposals contradict the EU’s ambition to move to a low-carbon economy. Hedegaard argues that the proposals are also at odds with the declared ambition of the leaders of the G20 developed and developing nations to phase out fossil fuel subsidies.
“We would make the link with the G20 Pittsburgh declaration where it is specifically said that we will phase out fossil fuel subsidies,” said one source in the Commission.
Hedegaard has told Almunia that the phase-out period is far too long.
Pit closures mean that hard coal has a diminishing place in Europe’s energy mix, but still accounts for around 18% of EU electricity generation.
Almunia’s proposal attempts a revision of the state aid regime for “hard coal”, the black anthracite. Softer ‘lignite’ falls under general rules that outlaw state aid.
A copy of the draft regulation seen by European Voice, says that subsidised coal is marginal for security of supply and “no longer justifies the maintenance of such subsidies” – the historical justification that has kept the regime in place since 1965.
State aid would be renamed “closure aid” and all support for mining would have to end by 2023.
According to Almunia’s proposal, subsidies to help the coal industry pay for clean-up operations would be allowed until 2030. But other Commission departments argue that such clean-up subsidies conflict with the ‘polluter pays principle’. “This is an unhelpful signal,” said the source. “It is a question of accountability that companies should be required [to pay] to restore the site.”
Poland accounts for more than half of hard coal production in the EU, but Germany and Spain hand out the biggest subsidies, expected to be worth around €2 billion and €1bn respectively in 2010. The Commission believes that 100,000 jobs are at stake, mainly in Germany’s Ruhr valley, north-western Spain and the Jiu valley in Romania.
Six countries give subsidies to their hard coal industry. Of these, Spain, Slovakia, Hungary and Romania are in favour of prolonging subsidies, while Poland wants a new regulation to allow new investment. Germany has passed a law to phase out subsidies by 2018.
Claude Turmes, a Luxembourgeois Green MEP who sits on the Parliament’s industry committee, said that the EU would look “ridiculous” and undermine its credibility if it allowed countries to continue supporting “the most dirty forms of energy”.
He accused Almunia of failing to act independently from the Spanish government. “A Spanish Socialist is basically tabling something from the Spanish socialist prime minister [José Luis Rodríguez Zapatero].” “This is purely Spanish electoral politics,” said Turmes.
A spokeswoman for Almunia said the conflict-of-interest claim was “ludicrous”. She pointed out that any proposal would need to be unanimously agreed by the Council of Ministers. The approval of the European Parliament would also be required.
Thomas Schneider of the German Hard Coal Association said the proposals would be “a lifeline for the next 12 years”.
He defended lengthy phase-out times: “Mining activities take place in certain areas that do not provide good replacement jobs.”
Mark Johnston of WWF said: “Uneconomic coal mines can be closed in three years or less. The Commission must avoid widening the credibility gap between our climate rhetoric and our climate actions. Public money would be better invested in energy sources of the future, not those of the past.”