European Union is considering 12 more years of state aid for coal

EU Mulls 12 Years More State Aid For Coal: Draft

Pete Harrison

PlanetArk

25 June 2010

BELGIUM - The European Union is considering 12 more years of state aid for coal, a draft European Commission document showed, even as the Group of 20 prepared to discuss phasing out fossil fuel subsidies this weekend.

The current EU subsidy regime expires this year, and European Competition Commissioner Joaquin Almunia has said he intends to put forth a new plan in about two weeks.

A draft seen by Reuters reveals a gradual phase-out of state aid for coal mining between the start of 2011 and the end of 2022 and cites concerns about employment.

"The immediate closure of the mines that could take place after a sudden end of subsidies would overburden the regional labor markets with a flood of redundant mine workers," says the draft. "Taking into account jobs in related industries, up to 100,000 jobs may be at stake."

Hardest hit would be Germany's Ruhrgebiet region, northwest Spain and Romania's Jiu Valley.

But environmentalists say it would be the sixth such extension of state aid since 1965 and makes a mockery of G20 pledges last year to phase out subsidies for carbon-spewing fossil fuels in the medium term to slow climate change.

Leaders of the G20 group of major economies meeting in Toronto this weekend are set to agree to continue working to phase out such subsidies, a draft document shows.

About 3.2 billion euros ($4.3 billion) of subsidies will be handed to the coal mining industry in six EU member states this year -- Poland, Germany, Spain, Romania, Hungary and Slovakia -- according to a draft European Commission impact assessment, also seen by Reuters.

Greenpeace said western countries currently disburse about $100 billion a year in subsidies to fossil fuel companies.

"Governments passing $100 billion a year of taxpayers' money to big oil and coal is immoral when compared to their refusal to provide the same amount of money for the poorest countries for climate change adaptation and mitigation," said Kumi Naidoo, a Greenpeace director.

The draft showed that European state aid for coal mines should drop by at least a quarter every three years until 2022 and that additional financing could be available to help with cleaning up sites and underground safety work.

"The only good thing about this draft is that for the first time it accepts there is no strategic need for domestic coal mining for energy security reasons -- but 12 years is unreasonably long," said WWF environment campaigner Mark Johnston.

(Editing by Dale Hudson, Keiron Henderson and Jane Baird)