European Commission proposes to extend coal subsidies for a further eight years

Despite heavily criticising the US over its anti-Kyoto stance, the European Commission proposed on 25 July an extension to its coal industry subsidy programme for a further eight years, designed to cut Europe’s dependence on outside sources of energy.

The programme is due to end next year, but the extension to 2010 is designed to enable European coal to compete with imports from third countries, helping to maintain access to coal reserves and guaranteeing that a certain level of coal is available to cover any contingencies which could effect the energy market in the long term. However, the Commission also states that the programme must lead to a gradual closure of those pits which make the biggest losses.

On the same day that the proposal was announced, the Commission also approved a UK grant of over €34 million (£21 million) to the country’s coal industry in order to cover operating losses throughout 2001.

“It is essential to maintain a minimum level of primary energy production in Europe over the coming years in order to guard against the uncertainties of too great a dependence on the outside world for energy supplies,” said Commission Vice-President and the Commissioner responsible for energy and transport Loyola de Palacio. “The European Community cannot lose its know-how and skills, and coal has to be potentially available in order to guarantee, along with measures to promote renewable sources of energy, greater energy dependence.”

However, the Commission is also proposing a mid-term assessment of the programme in 2007, in order to evaluate the effectiveness of the scheme, and to allocate aid from 2008 onwards.

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