Subsidies

Fossil fuel subsidies for the coal industry

By Investigate Europe
An aerial view of a coal mine with a yellow machine at the centre

Coal is not just a naturally-occurring fossil fuel whose burning has contributed significantly to climate change. Increasingly, its impacts have been recognized as a human rights issue — the realities of living next to a coal mine have to be experienced to be believed. As coal mines expand into farmland and residential areas, entire communities are sometimes destroyed. These regions are exposed to higher emissions of pollutants such as particulate matter, nitrogen oxides and sulphur oxides. Residents of these areas often live in fear for their safety, or they choose to flee.

Even though European countries have proclaimed their commitment to phasing out subsidies for coal, reports show that the contrary is happening. According to this CAN Europe report, European countries “continue to hand out billions of euros to the coal industry” each year, despite its catastrophic contribution to climate change. Data collated by Investigate Europe shows state aid for coal hidden in many forms of subsidies, which include the following:

  • Subsidies to domestic fossil fuel use
  • Subsidies for fossil fuel generated electricity
  • Fossil fuel exploration/extraction related subsidies
  • State-owned enterprises burning fossil fuels for electricity production
  • State-owned enterprise investment in coal, oil and gas production
  • Subsidies for domestic fossil fuel use

For a detailed breakdown of our data, including sources and figures, please see this table.

Today in Europe, coal-related activities (mining and coal-fuelled power plants) are present in 21 member states. As of 2015, there were 128 coal mines across the continent, with Poland hosting the largest number (with 35 mines). With 26 mines of its own, Spain comes in at second place.

The highest density of coal-fired power plants can be found in the expanse of land that stretches from the Netherlands — through Germany and the Czech Republic — to Poland, and from Romania — across Bulgaria — down to Greece. The most modern power plants exhibiting the highest efficiencies are located in Germany and the Netherlands.

Poland is home to The Bełchatów Power Station, the world’s largest lignite-fired power station

Many uncompetitive coal mines in Europe have remained active over the past years through valuable State Aid subsidies allowed under the EC Regulation No1407/2002. The least efficient power plants are located in eastern and south-eastern Europe. Across the continent, coal activities offer direct employment to around 237,000 people (78% of these jobs are in the mining sector). The regions with the highest number of jobs in the coal sector are located in Poland, Romania, Bulgaria, the Czech Republic, Germany and Greece.

Lignite mining

Lignite — referred to by some experts as the “energy drug of Europe” — is the only energy source that is available in Europe. The brown, sedimentary rock (which is formed from naturally-compressed peat), is widely used for steam-electric power generation and is favoured because of its relatively low cost of extraction. Statistics show that, as of 2017, lignite mining in the EU reached 383 million tonnes. Almost half of this raw material came from Germany, with Poland and the Czech Republic coming in at second and third place, respectively.

The world’s largest lignite-powered plant sits in Bełchatów, Poland. Almost half the raw material in Europe was mined in Germany. And, despite mounting evidence of the highly-polluting nature of lignite, countries such as Poland continue to use it, with some politicians fiercely defending this decision as one of national interest. In an interview with IE, Janusz Kowalski, Poland’s Deputy Minister of State Assets, expressed his scepticism about the EU’s Emissions Trading Scheme, and called for Poland to continue using coal while exploring ways of making it less carbon-intensive.

Edited by Sindhuri Nandhakumar

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