Council extends state aid regime for coal mines until 2018

Ministers meeting within the Competitiveness Council held in Brussels on 10 December adopted a decision aimed at facilitating the transition of the specific state aid regime currently applying for the coal sector to the general state aid rules applicable to all sectors in the EU. This Decision will extend under certain conditions the possibility to grant aids to coal mines until December 2018.

The existing rules laid down by Regulation 1407/2002 on State aid to the coal industry, which are in force since 2002, will expire on 31 December 2010. The non-renewal of the special state aid regime granted would force some member states to close immediately uncompetitive hard coal mines, a situation which would entail serious social, technical and regional consequences.

For that reason, the European Commission initially proposed in July 2010, after carrying out an impact analysis and a public consultation, to maintain a transitory period provided that the aid granted to non-sustainable mines should form part of a closure plan. Commission's proposal on State aid provided to facilitate the closure of loss-making hard coal mines in the EU by 1st October 2014. Further to that proposal, the European Parliament proposed to extend this period to maintain aid for coal sector under certain conditions until 2018.

The decision now adopted by the Council includes the following main elements:

  • The possibility to continue to grant, under certain conditions, public aid to the coal industry with a view to facilitating the closure of uncompetitive hard coal mines until December 2018.
  • The modalities for the phasing-out of the aid, under which the overall amount of aid granted by a member state must follow a downward trend, in order to prevent undesirable effects of distortion of competition in the internal market.
  • The obligation for member states granting aid to provide a plan on intended measures to mitigate the environmental impact of the production of coal.
  • The possibility to allow subsidies, until December 2027, in order to cover exceptional expenditure in connection with the closure of mines that are not related to production, such as social welfare benefits and rehabilitation of sites.