Commission to rule on Spanish coal subsidies
Joaquín Almunia to decide whether Spain can impose electricity companies to use certain amounts of Spanish coal in their production.
The European Commission’s competition authorities are poised to rule on whether Spain can favour domestic coal over cheaper foreign imports.
The sensitive decision is expected next Wednesday (29 September), when Joaquín Almunia, the European commissioner for competition, is to announce whether a Spanish government plan to oblige electricity companies to buy domestic coal is in line with EU state-aid rules.
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General strike
Almunia’s decision coincides with a planned nationwide general strike in Spain, including a second 48-hour stoppage by Spanish coal miners over allegedly unpaid wages.
Spain produces some of Europe’s most expensive coal. Coal from the state-run company Hunosa can cost up to €400 per tonne of coal equivalent (tce), according to a study prepared for the European Commission earlier this year. Competitors in Poland can mine bitumen for €48 (tce), while coal from Slovakia can cost as little as €29 (tce).
‘Public-service obligations’
In May, Spain wrote to the Commission to ask whether it could impose an obligation on electricity companies to use certain amounts of Spanish coal in electricity production, to reduce dependency on foreign energy sources. Companies would be compensated for meeting this “public-service obligation” until the end of 2014.
Environmentalists are opposed to subsidies for what they see as a dying industry. The claim that Spain’s electricity supply is at risk is “not credible”, the head of WWF Spain and WWF’s European Policy Office wrote in a letter to Almunia last week. WWF is calling on the Commission to draft new guidelines to stop governments from using security of supply “as an excuse for disguised sectoral aid”.
The Commission has approved similar schemes in the past, for coal, lignite, peat and combined heat and power in Austria, Ireland and Spain (all in 2001) and in Slovenia (in 2007).
WWF contends that the situation is different today because the Commission has new powers under the Lisbon treaty to judge whether member states have secure sources of energy or not.
On Tuesday (21 September), national experts held their first meeting on new state-aid rules for the coal industry. The Commission has proposed phasing out subsidies by October 2014. But in an interview with FT Deutschland last week, Günther Oettinger, the European commissioner for energy, said there was “a realistic chance” that the date could be moved to 2018 – which would bring the Commission into line with German government thinking. New rules must be agreed by the end of the year, when the current regime expires. Spain and Germany, the two biggest losers from the Commission’s proposals, both raised objections to the draft proposals at the meeting on Tuesday.