The European Commission has approved a proposal for a Council Regulation on State aid to facilitate the closure of loss-making hard coal mines in the EU by 1st October 2014. The Commission's objective is to establish the appropriate mechanisms to facilitate the closure of non competitive mines, ensuring the lowest possible social impact. This measure would affect a sector currently employing 100.000 people in Europe.

The aim of Commission's proposal to cut aids is to end operating subsidies to uncompetitive mines, very much as has been done for the shipbuilding and steel sectors. Instead, any state subsidies should increasingly go towards the financing of the social and environmental consequences of the closure of those loss-making mines. The proposed Regulation concerns hard (black) coal. Lignite is a different form of coal, which cannot receive operating subsidies.

Under the proposed Regulation, the operating subsidies would need to be clearly digressive over time, with a reduction of at least 33% per fifteen-month period and, in case the loss-making mine would not have been closed by 1st October 2014, the beneficiary would have to pay them back to the State. Any closure aid would be conditional on the presentation by the Member State a plan of appropriate measures, for example in the field of energy efficiency, renewable energy or carbon capture and storage, to mitigate the negative environmental impact of aid to coal.

The proposed Regulation would continue to give Member States a common and legal framework to address the costs of counselling and training the workers of loss-making mines for other jobs, the costs of early retirement for those that will leave the active population and the impact on related sectors such as mining technology, geology or environmental technologies. Besides the social costs, there are also the environmental costs involved in the cleaning up of the mining sites, the removal of waste water, underground safety work and other rehabilitation costs.

For a gradual adjustment in coal mining

Banning operating aid from the end of 2010, when the current Regulation ends, would have dire social and economic consequences for a number of regions where employment in coal mines remains important, at a time when countries are still mired in recession or only just emerging from it. It could also result in an increase of climate emissions as more coal would need to be transported from outside the EU to make up for the drop in European production.

The sector employs around 100.000 people in Europe: 42.000 in the coal sector itself and over 55.000 in related industries. The mines that rely on operating subsidies are located mostly, but not only, in the Ruhr region, in Germany, in north-west Spain and in the Jiu Valley in Romania.

Towards cleaner and more sustainable energy sources

The EU is moving rapidly towards cleaner and renewable energy, an objective in which it is leading the world, for both environmental and security of supply reasons. As highlighted by the recent report published by the European Joint Research Centre, renewable energy (hydro power followed by wind, biomass and solar) accounted for 62% of the new electricity generation capacity installed in the EU in 2009, up from 57% in 2008. If the current rates are maintained, approximately 35-40% of the overall electricity consumed in the EU would come from renewable sources, well above the 20% target the EU has set itself. That percentage is 15.4 % and 20.6 % respectively and at present in Germany and Spain.