European Policy on State Aid to the Coal Industry

In this article we take a closer look at the argumentation behind subsidies to the European coal industry, the actual EU regulations and strategies on the subject, and the effects on both Western and Eastern European coal producers. We find that the European coal production is far from competitive. The total coal production in the EU as well as the total absolute amount of subsidies given to the indigenous coal producers, has declined dramatically over the past ten years. There has been a shift in types of aid given, from operating support to support for reduction of activity and the implementation of environmentally friendly technology. The argumentation behind the subsidizing of the European coal industry has also shifted, from employment and regional autonomy arguments to the argument of energy supply security outlined in the European Commission’s Green Paper on Security of Energy Supply. The strategy outlined in this Green Paper stands in sharp contrast to the goal of the European Steel and Coal Community, namely to eliminate the subsidies to the European coal industry by the end of 2010.