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Coal



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State aid to the coal industry

Community frameworks and individual decisions on the granting of state aid to the coal industry:

|Overview
 

|2002-2010 Community framework

 Individual state aid decisions by country:
[CZECH REPUBLIC]  [FRANCE]  [GERMANY] [
HUNGARY]  [POLAND] [SLOVAKIA] [SPAIN] [UNITED KINGDOM]

 

|1993-2002 Community framework two

 Individual state aid decisions by country:
[FRANCE]  [GERMANY]  [SPAIN] [UNITED KINGDOM]


1993-2002 Community framework two

State aid to the coal sector: January 1994 - July 2002

Legal framework

Following the unanimous assent of all the twelve Member States meeting in Council, the European Commission approved, on the 28 December 1993 and pursuant to Article 95 of the ECSC Treaty, Decision 3632/93/ECSC on the Community rules for State aid to the coal industry covering the period from 1994 until July 2002.

The commission recognized that, despite the extensive restructuring process that had been in progress for many years and the aid given which, since 1965, had totaled more than 75 thousand million ECU, the Community coal industry remained in a very critical situation and heavily dependent on State aid. Whilst there had been important productivity gains in certain coalfields, which led to production costs approaching the world market price, average Community production costs during 1993 were still approximately 114 ECU per tonne of coal equivalent, compared to an average world market price of just over 38 ECU per tonne of coal equivalent.

Prohibition under the terms of Article 4(c) of the ECSC Treaty of any form of support would quickly have condemned a large part of the Community's coal industry, and the social and regional consequences of such an approach would have been unacceptable. The Commission therefore accepted the necessity of continuing to suspend, under certain conditions, the ban on State aid to the coal industry until 23 July 2002, when the ECSC Treaty expired. The framework therefore covered the transitional period necessary to allow the coal sector to be fully integrated into the EC Treaty.

Whilst the Commission accepted that aids were indispensable for the foreseeable future, it had a duty to observe a strict discipline to ensure compatibility with the completion of the internal energy market and the common market in coal. It was therefore deemed vital to increase the transparency of the existing aid schemes and to ensure that measures were taken to prevent the perpetuation of the situation which required that aid be granted.

The Commission also recognized that, since the gap between the average production costs in the Community and world market prices for coal had widened considerably in recent years, the restructuring, modernization and rationalization programs had to be stepped up in order to ensure a degressivity of the aid by cutting the costs of production, the sine qua non for improving the economic viability of the Community's coal industry.

The Decision allowed for a gradual approach, taking into account the specific social and regional problems and the lead times needed in order to adapt existing energy structures to the economic demands for a diversification of energy supply and suppliers. The Commission therefore felt that, in addition to the specific criteria applicable to each category of aid, it was necessary that each measure planned in the future should contribute towards attaining at least one of the following objectives :

  • to make, in the light of coal prices on international markets, further progress towards economic viability with the aim of achieving a degression of aids ;

  • to solve the social and regional problems created by the total or partial reductions in the activity of production units;

  • to help the coal industry adjust to environmental protection standards.

The aid was grouped into different categories : operating aid, aid for the reduction of activity ; aid to cover exceptional costs ; aid for research and development and aid for environmental protection. Two general measures were designed to enhance the transparency of aid :

  • after a transitional period not exceeding three years (therefore ending on 31st December 1996), aid would only be authorized if it was entered in the national, regional or local public budgets of Member States or channeled through strictly equivalent mechanisms ;

  • from the beginning of 1994, all aid received by undertakings was to be shown together with their profit-and-loss accounts as a separate item of revenue, district from turnover.

 

last update: 21-08-2008