EN    EN EN 
EN    EN  EUROPEAN COMMISSION 
Brussels, 20.7.2010 
SEC(2010) 850 
  
COMMISSION STAFF WORKING DOCUMENT 
IMPACT ASSESSMENT  
 
 
Accompanying document to the  
  
Proposal for a  
 
COUNCIL REGULATION  
 
on State aid to facilitate the cl osure of uncompeti tive coal mines 
  
{COM(2010) 372 final} 
{SEC(2010) 851} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction ................................................................................................................ .. 4 
2. Procedural issues and consulta tion of interested parties .............................................. 5 
2.1. Organisation and timing ............................................................................................... 5 2.2. Consultation and expertise ........................................................................................... 6 3. Problem definition........................................................................................................ 7 3.1. What is the issue or problem that may require action and how will it evolve?............ 7 
3.1.1. Lack of competitiveness of hard co al mining in some Member States........................ 7 
3.1.2. Likely mine closures after the expi ry of the Coal Regulation in 2010....................... 10 
3.1.3. Spill-over effects on other industries.......................................................................... 13 
3.1.4. The social impact of mine closures ............................................................................ 13 3.1.5. Is there a risk for the security of energy supply? ....................................................... 17 3.1.6. Impact on coal-fired power stations ........................................................................... 18 3.1.7. Environmental impact of immediate mine closures at the end of 2010 ..................... 18 
3.2. What are the underlying drivers of the problem?....................................................... 19 3.3. Who is affected, in what ways, and to what extent? .................................................. 19 3.4. Should the EU act? ..................................................................................................... 20 4. Objectives.................................................................................................................. . 20 
5. Policy options............................................................................................................. 2 2 
6. Analysis of impacts .................................................................................................... 25 6.1. The current market situation....................................................................................... 25 6.1.1. Hard coal production in the EU.................................................................................. 25 6.1.2. State aid to the hard coal industry .............................................................................. 25 6.2. Affected markets and impact on comp etition in the internal market ......................... 25 
6.3. Economic impacts of the policy options .................................................................... 27 6.3.1. Impact of the policy opti ons on the public budget ..................................................... 27 
6.3.2. Option 1: the baseline scenario  - general State aid rules............................................ 29 
6.3.3. Option 2: Guidelines .................................................................................................. 29  
6.3.4. Option 3: production aid............................................................................................. 29 6.3.5. Option 4: aid to cover exceptiona l cost (inherited liabilities) .................................... 29 
EN 3   EN 6.3.6. Option 5: combination of options 3 and 4.................................................................. 30 
6.3.7. Option 6: prolongation of the current Coal Regulation.............................................. 30 6.3.8. Overview of economic impacts.................................................................................. 32 6.3.9. Uncertainties with respec t to the economic impact.................................................... 36 
6.4. Social and regional impact s of the policy options...................................................... 36 
6.4.1. Option 1: Baseline scenario........................................................................................ 36 6.4.2. Option 2: Guidelines .................................................................................................. 36  
6.4.3. Option 3: Production aid ............................................................................................ 37 6.4.4. Option 4: Aid to cover exceptional cost..................................................................... 37 
6.4.5. Option 5: combination of options 3 and 4.................................................................. 38 
6.4.6. Option 6: temporary prolongation of  the current Coal Regulation ............................ 38 
6.4.7. Overview of social impacts ........................................................................................ 38 6.4.8. Uncertainties with respect to th e social and regional impact ..................................... 41 
6.5. Environmental impacts of the policy options............................................................. 42 
6.5.1. Overview of the environmental aspects ..................................................................... 42 6.5.2. The impact of the policy options................................................................................ 45 6.6. Impact on SMEs ......................................................................................................... 47 6.7. Impact on administrative costs................................................................................... 48 7. Comparing the options ....................................................................................................... .. 49 
8. Monitoring and evaluation ................................................................................................... 50 
EN 4   EN 1. I NTRODUCTION  
Aid to the EU hard coal industry is regu lated by a sector-specific legal instrument: 
Council Regulation (EC) No 1407/2002 of 23 July 2002  on State aid to the coal 
industry  (the "Coal Regulation"). The historical  background to this Regulation is given 
in annex 1. 
It applies to hard coal only, as shown in th e following figure. Other types of coal, such 
as ortho-lignite, are covered by the general State aid rules of the EU. 
 
Out of the 10 hard coal-producing Member Stat es, 6 countries are giving at least some 
form of State aid under the Coal Regulation until 2010: mainly Germany and Spain, 
and to a lesser extent also Hungary , Poland , Romania  and Slovakia . 
The Coal Regulation expires on 31 December 2010. In the absence of a new sector-
specific legal instrument, the general State aid rules will apply to hard coal (as is already 
the case today for ortho-lignite). The possibiliti es to provide State aid to the hard coal 
industry are much more restricted under the general State aid rules than under the Coal 
Regulation. But according to recent studies, the hard coal mines of some Member States 
would still need State suppor t after 2010 in order to survive. Without a new coal-
specific legal instrument allowing the kind of  State aid which is available under the 
Coal Regulation, these coal mines would have to close. 
This report assesses whether a specific policy instrument is needed to cushion the 
negative effects of coal mine closures, espe cially the social and environmental impact. COAL
HARD COAL ORTHO - LIGNITE
Anthracite 
Bituminous Coal 
Sub-Bituminous Coal 
Meta - Lignite Peat Oil Shale
Covered by current Coal Regulation NOT covered by current Coal Regulation 
EN 5   EN 2. P ROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
2.1. Organisation and timing 
Work on these issues already started in 2006 in view of the Commission report under 
Article 11 of Regulation (EC) No 1407/20021. The Commission's report was adopted in 
May 2007 and concluded against a revision of  the existing Regulation. The work on the 
present impact assessment was taken up in 2009 in view of assessing the need for a new 
legal instrument after 2010.  
This impact assessment has been prepared by DG Energy and Transport (TREN) with 
the contribution of an Inter-services Steeri ng Group in which the following Directorates 
General participated: the Secretariat Gene ral, the Legal Service, DG Competition, DG 
Enterprise, DG Environment, DG Regional Po licy, DG Employment, Social Affairs and 
Equal Opportunities. 
The Commission's Impact Assessment Board examined a preliminary draft of this 
Impact Assessment Report at its meeting of  21 October 2009. A revised version of the 
report was examined by the Board in Decem ber 2009. This revised report takes fully 
account of the Board's Opinions adopted on 26 October and 18 December 2009, mainly on the following points: 
- It clarifies that the main problems addressed by this initiative are of a social and 
environmental nature and that the impact on the internal market and on competition is limited. Detailed figures on intra-EU trade of hard coal confirm the limited internal market dimension. This fact has been taken into account in  the analyses and 
conclusions. 
- The specific problems of the concerned regions and the social problems faced by 
redundant coal miners have been analysed more in depth. 
- Given that it was the preferred option of  a large part of the stakeholders, a 
prolongation of the current Coal Regulation ha s been analysed as a full option along 
side the other policy options. 
- The content of the policy options  has been explained more fully. 
- The extent of the environmental problems in  case of sudden closure of the mines and 
similar budgetary impact of the various po licy options have been better explained. 
This proposal is part of the Commi ssion's work programme for 2009 (number 
2009/TREN/047). 
                                                
 
1 Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of the Regions – Commission Report on the 
Application of Council Regulation (EC) No 1407/2002 on State Aid to the Coal Industry – COM(2007) 253, 21.5.2007;  
http://eur-lex.europa.eu/LexUriServ/LexU riServ.do?uri=COM:2007:0253:FIN:EN:PDF 
EN 6   EN 2.2. Consultation and expertise 
Outside expertise The Commission commissioned tw o studies. The first one, ca rried out by the consulting 
firm Europe Economics
2, evaluated the application of the Coal Regulation up to 2006 
and assessed options for the futu re. The second one, carried out by Ecorys3, assessed 
more specifically the options in the absenc e of the coal-specific State aid instrument 
after 2010. 
Public consultation 
The preparation of this report has been pr eceded by a public consultation in order to 
gather as many comments and suggestions as  possible from the i ndividuals and bodies 
concerned. This exercise respected the mini mum standards for consu ltation of interested 
parties as defined in the Communication from the Commission of 11 December 2002 - 
COM(2002) 704. 
An open internet consultation was carried out between 13 May an d 15 July 2009. To 
this effect, the Commission servic es published a consultation paper 
(http://ec.europa.eu/competition/ consultations/2009_coal/index.html ). The paper 
described the problem at hand, the policy ob jectives and various policy options which 
stakeholders were invited to comment. In  addition, the Sectoral Social Dialogue 
Committee " Extractive Industries" was consulted in a plenary meeting on 4 June 
2009. 
The Commission received 60 contributions. A su mmary of the contribut ions is given in 
Annex 3. The main views expressed are reproduced here. 
The respondents of the coal industry  and of the mining equipment industry  generally 
argue in favour of the conti nuation of the State aid catego ries currently allowed under 
the Coal Regulation. The social partners  stress that such c ontinuation would be 
necessary to support the sector's restructurin g efforts, to limit its social and regional 
impact, and to ensure the security of suppl y of energy by guaranteeing the access to coal 
as an indigenous energy sour ce. They call for a prolongation of the Coal Regulation and 
ask at least for a new Community regime on State aid for the reduction of activity as 
well as for mine closures and inherited liabilities. 
Several respondents emphasize that a pa rt of the electricity power plants  were 
specifically designed to be fired with the coal  of a given (nearby) mine. The adaptation 
of these power plants to other coal types or  even to other energy sources would be very 
expensive and in some cases even technically  impossible. If the expiry of the Coal 
Regulation led to the closure of the near by mines, then these power plants would 
encounter difficulties to continue their production. 
                                                 
2 Evaluation of State aid for the coal industry, a report by Europe Economics and Fraunhofer ISI 
with BSR Sustainability and the Krakow Institute for Sustainable Energy, October 2006. 
3 An evaluation of the needs for State aid to the coal industry, Ecor ys, December 2008, study 
prepared for the European Commission, see  
http://ec.europa.eu/competition/consultations/2009_coal/index.html 
EN 7   EN Conversely, the environmental organisations do not favour a new s ector-specific State 
aid regime for the coal sector. They argue th at State aid to coal mining has a negative 
impact on the energy production from clean, su stainable and renewable sources and it 
does not provide incentives for the energy effi ciency and savings. According to them, if 
coal mines were to close, this would have a medium-term favourable environmental impact, by the increasing use of alternativ e energy sources. Finally, these organisations 
also believe that, by not prolongi ng this specific regime, subsid ies could be redirected at 
supporting the workforce of the coal mines in retraining and finding other jobs. They 
argue that more jobs could be created in the renewable energy sector than would be lost 
in the coal sector. 
The governments
 of Spain, Slovakia, Hungary and Romania  are in favour of a 
prolongation of the current Coal Regulation. Th ey refer to the necessity to ensure the 
security of energy supply by continuing the production of indigenous coal and to the 
impact that mine closures would ha ve on regional unemployment. Poland  pleads for a 
new Regulation allowing investment aid a nd aid for inherited liabilities. Germany  
favours sector-specific rules that would allo w State aid in the context of the gradual 
closure of its mines until 2018; this would a llow using all possibilities of retraining and 
(early) retirement in order to avoid direct job losses. 
The Czech Republic and Bulgaria  currently do not grant State aid based on the Coal 
Regulation, but they concede that a coal-speci fic legal instrument ma y become useful in 
future years. The United Kingdom  prefers the issue of an information note or 
Commission Guidelines on the application of general State aid rules to the hard coal 
sector instead of new sector–specific rules. However, the UK acknowledges that 
circumstances may arise in which an appr opriate programme of well-defined and time-
limited aid could be justified to  secure the survival of an  otherwise viable undertaking. 
Furthermore, well defined investment aid coul d help potentially vi able undertakings to 
maintain access to reserves. 
3. P ROBLEM DEFINITION  
3.1. What is the issue or problem that  may require action and how will it 
evolve? 
This section will show that, in the absence of sector-specific rules after the expiry of the 
Coal Regulation on 31 December 2010, a number of coal mines in the EU will remain 
uncompetitive and will have to close. This would result in up to 100000 job losses – of 
which 42000 job losses in the coal industry and more than 55000 job losses in related 
industries - and a considerab le social impact concentrated on a few regions.  
3.1.1. Lack of competitiveness of hard c oal mining in some Member States 
In some Member States, hard coal mines remain uncompetitive after the expiry of the 
Coal Regulation in 2020. A recent study carried out by Ecorys4 for the Commission 
                                                 
4 An evaluation of the needs for State aid to the coal industry, Ecor ys, December 2008, study 
prepared for the European Commission. 
EN 8   EN looked at the European coal production costs an d compared them with market prices, as 
far as available5. 
Table 1: overview of Unit Production Co st by Member State, by Coal Type 
Country  Coal Type Year Unit Production Cost (€ / tce) 
WORLD PRICE Hard Coal (CIF ARA) 2008 50-80 € / tce 
BULGARIA Hard Coal  N/A (competitive) 
CZECH REPUBLIC Hard Co al  N/A (competitive) 
GERMANY Hard Coal 2008 151 € / tce 
HUNGARY Meta-Lignite 2006 70,62 € / tce 
ITALY Bituminous  N/A 
POLAND Bituminous 2006 47,74 € / tce 
ROMANIA Hard Coal 2007 159,57 € / tce 
Sub-Bituminous 2007 29,4 € / tce  
SLOVAKIA 
Meta-Lignite 2007 Approx. 72 € / tce  
SPAIN Hard Coal 2007 120-150 € / tce (non-HUNOSA) 
400 € /tce (HUNOSA) 
UK Hard Coal 2006 56 € / tce 
 
Source: Ecorys study 
The unit production costs vary considerably between Memb er States, dependent upon 
the geological mining conditions, the quality of the extracted coal and labour costs. 
From this table, it appears that some Memb er States face very high unit production costs 
compared to current world market prices and therefore  have  an economically 
uncompetitive production of hard coal today a nd most likely in the future: especially 
Germany, Romania and Spain stand out.  
The Ecorys study has anal ysed the necessity  of production aid post-2010 based on 
forecasted unit production costs versus various potential world coal price scenarios. The 
following chart from the study shows the thre e considered scenarios (each horizontal 
line stands for a different hypothe sis for the price evolution). 
                                                 
5 For ortho-lignite, there is no world market price because there is virtually no trade of such coal: 
due to high transportation costs and low calorific value, low-grade coal needs to be consumed in 
geographic proximity to the place of production. 
EN 9   EN Chart 1: world coal price scenarios (CIF ARA) vs. pr edicted unit production costs, 
(adjusted for inflation)  
Germany
GermanyHungary
Hungary
HungaryPoland
Poland PolandRomania
Romania
RomaniaSlovakia
SlovakiaSpain (HUNOSA)
Spain (HUNOSA)
Spain (HUNOSA)Spain (Non-Hunosa)
Spain (Non-Hunosa)
Spain (Non-Hunosa)Germany
Slovakia0 €50 €100 €150 €200 €250 €300 €350 €400 €450 €500 €
2007 2010 2015Unit production cost estimate (€/tce)
 
Source: Ecorys study 
This graph shows that Poland under none of the future coal price sc enarios is likely to 
require production aid. Polish un it production cost is forecaste d to remain just below the 
baseline scenario in the time period of concern, unless labour costs (i.e. salaries) 
increase faster than currently assumed (mor e than 7% per annum). On the other end, 
Spain’s public production (HUNOSA), which re presents approximate ly 9% of total 
Spanish hard coal production, is predicted to require production aid under any of the 
future coal price scenarios. 
The remaining currently coal-subsidising countries, as well as Spain’s private 
production, would all be able to produce compet itive coal only if the world coal price 
would rise to at least €150. According to th e Ecorys study, at a lower world coal price 
of €100, in addition to Poland, also Hungary, Slovakia and potential ly Spain’s private 
production could be competitive. But in th e same €100 scenario, Germany, Romania 
and Spain’s public production (HUNOSA)  would still remain uncompetitive. 
If world prices stay around today's leve l of around €50-80, only Polish mines will be 
able to produce competitive hard coal. Without any  subsidies, at least some hard coal 
mines in the other five (currently subsidisi ng) countries would have to cease production, 
resulting in a production shortf all of up to 22 million tce or  about 20% of the EU hard 
coal production6. 
                                                 
6 It should not be assumed that all this production would continue even in case the Coal 
Regulation would apply after 2010. Indeed, even if aid is allowed, there is no obligation for 
Member States to subsidize uncompetitive mines. Ecorys low price 
scenario Ecorys medium 
price scenario Ecorys high 
price scenario 
EN 10   EN In this context, it must be noted that recent forecasts7 with regard to coal prices are 
rather at the lower end as they are expected to remain below €100 until 2020.  
Table 2: predictive situation in 2010 in coal subsidising Member States8 
 Production 
(tce) Jobs Production 
aid (mio €) Investment 
aid (mio €) Aid for 
exceptional 
costs (mio €) Share of 
subsidised 
coal in national 
electricity 
generation (2006) 
Poland 74 300 000* 110 713 0 0 80 42.5%9 
Germany 13 325 000 21 200 1 150 0 868 9% 
Spain 5 900 000 5 800** 425 0 600 14% 
Romania 2 295 000 9 770 70.3 0 3 7% 
Hungary 935 500 1 300 27.1 0 0 3.6% 
Slovakia 891 500 4 000 0 0.7 2.1 22% 
Total 97 647 000 152 783 1 672 0.7 1 553.1  
Source: Ecorys study + Commission 
* figure for 2007 
** does not include sub-contractors 
3.1.2. Likely mine closures after the exp iry of the Coal Regulation in 2010 
The Coal Regulation expires on 31 Decemb er 2010. In the absence of a new legal 
framework allowing for certain specific types of State aid to the coal industry, Member 
States could grant aid only within the limits foreseen by general State aid rules applicable to all sectors.  
Compared to the Coal Regulation, the genera l State aid rules significantly reduce the 
possibilities for State aid to the coal industr y, especially but not only with regard to 
production aid. However, as shown above, th e hard coal production of some Member 
States is likely to remain uncompetitive in future years and would only survive with 
continued State support beyond 2010. 
Germany has notified a closure plan to the Co mmission that foresees the gradual closure 
of all German hard coal mines by 2018. The gr adualism of the plan is designed to 
cushion the social impact by avoiding lay-offs as far as possible. But in the absence of a 
new sector-specific legal instrument for the period after 2010, the plan cannot be approved as it goes beyond what is allowed u nder general State aid rules. Also the 
                                                
 
7 Global Insight – global steam coal trade and price outlook (March 2009), International Energy 
Agency – World Energy Outlook 2009 (November 2009). 
8 Based on past trends or on production plans. 
9 In this particular case, a relatively small amount  is distributed over a high number of production 
units. 
EN 11   EN Spanish and the Romanian authorities have  signalled that they need to provide 
continued support to their hard coal mines after 2010. 
The general State aid rules do o ffer some possibilities, but th ey are far more restrictive 
than the rules enshrined in the current Coal Regulation: 
• Operating aid  to accompany the process of closur e of undertakings is foreseen in 
other sectors such as shipbuilding10 or the steel industry11, but it is strictly limited; it 
cannot be excluded that similar measures co uld be declared compatible in the coal 
sector on the basis of Art. 107(3)(c) TFEU (via the adoption of EU rules for such 
measures; see policy option 2 in section 5). 
• Investment aid  could only be authorized in re gions which are e ligible under the 
Regional Aid Guidelines, should the substan tive rules of these gui delines be applied 
to the coal mining sector12. Investment aid refers to the setting-up of a new 
establishment, the extension of an existing establishment, the diversification of the output of an establishment into new, addi tional products, or a fundamental change in 
the overall production process of an existing establishment. Replacement investments are excluded
13. 
• As far as the State aid for inherited liabilities14 is concerned, aid for the 
rehabilitation of former mining sites could in certain circumstances be eligible under 
the Environmental Aid Guidelines15, insofar as " the person responsible for the 
pollution is not identified or cannot  be made to bear the costs ". Certain aid for social 
inherited liabilities could perhaps be d eclared compatible on the basis of Art. 
107(3)(c) TFEU, via the adoption of EU rules for such measures, taking account of 
similar measures existing for the steel and shipbuilding sectors; this concerns payments to workers made redundant or accepting early retirement, the costs of 
counselling services to workers made redundant  or retired before the legal retirement 
age and costs for vocational training
16. Furthermore, aid for the retraining of former 
coal miners could up to a certain extent be  authorised based on the rules for training 
                                                 
10 Framework on aid to shipbuilding (OJ C 317, 30.12.2003, p. 11), see §3.3.2 (closure aid). 
11 Communication from the Commission: Rescue and restructuring aid for the steel sector (OJ C 
70, 19.3.2002, p. 21), see § 2.2. 
12 The Guidelines on national regional aid cover low grade C coal production but currently exclude 
the rest of the coal sector from their scope as the latter is subject to special rules laid down by the 
Coal Regulation.  
13 This has been confirmed by the Commission decision in the case C 57/2007 (ex-N 843/2006) – 
Slovakia  (OJ L 248, 17.9.2008, p. 19). 
14 According to the Guidelines on rescue and restructuring aid, in certain sectors, restructuring aid 
may be allowed in the case of closure of a compan y. This concerns aid to alleviate the social 
costs of restructuring and the environmental aid to clean up polluted sites which might otherwise 
be abandoned. The coal sector is currently ex cluded from this measure. Community guidelines 
on State aid for rescuing and restructuring firms in difficulty (OJ C 244, 1.10.2004, p. 2), see 
§42. 
15 Community Guidelines on State aid for Environmental Protection (OJ C 82, 1.4.2008, p.1). 
16 Framework on aid to shipbuilding (see footnote 7), §17, and Rescue and restructuring aid for the 
steel sector (see footnote 8), §2.1. 
EN 12   EN aid in the GBER17. Note that, in so far as inherited liabilities result from statutory 
provisions, the State would need to honour most of these payments even if the 
mining companies were to go bankrupt. It mu st be stressed that when Member States 
pay for inherited liabilities, these paymen ts might not constitute State aid if the 
concerned companies have ceased all econom ic activities and may not resume such 
activities18. Indeed, if a coal company is going through a liquidation process, 
possibly because it cannot honour its social and environmental liabilities, it does not 
mean that the public authorities will be pr evented from dealing with the social and 
environmental consequences of past coal mi ning activities and mine closures in the 
concerned area. Furthermore, if the St ate finances social or environmental 
programmes in coal mining areas, no State aid is involved if such programmes fall 
outside the scope of the social and en vironmental liabiliti es of undertakings19.  
The Ecorys study has analysed which options  would be available to Member States 
under the general State aid rules for granti ng State aid to the coal mining industry20: 
- Regional aid: in some cases, coal mines ar e situated in eligible areas for regional 
investment aid. However, such aid can only be  authorized in specific cases. However, it 
may be significant in the case of Slovakia wh ere already now most of the aid for the 
coal sector is initial investment aid (although its amount is quite small). 
- Rescuing and restructuring ai d would only be applicable if  there is a perspective of 
profitability after restructuring. In most cases, coal mines do not fulfil the conditions for 
this kind of aid. 
- Other types of aid, such as de mini mis aid, training aid or SME training and 
employment aid could be appl ied, but would only have a marginal impact given the 
large subsidy requirements and the size of the coal sector. 
It follows that the expiry of the Coal Regul ation will force some Me mber States to close 
their hard coal mines and to  cope with the social cons equences. Given the regional 
concentration of coal mines (e.g. Ruhrgebiet in Germany, the north-west of Spain, the 
                                                 
17 Commission Regulation (EC) No 800/2008 declaring certain categories of aid compatible with 
the internal market in application of Articles 87 and 88 of the Treaty (General Block Exemption 
Regulation) (OJ L 214, 9.8.2008, p. 3). 
18 The Commission has come to such a conclusion in the decision it took in case N 261/2007 – 
Bulgaria – Support to coal sector . 
19 For example, the State should be able to fina nce traning programmes for former miners which 
the coal mining company is not legally bound to finance.  
20 Ecorys also refers to Article 11 of the Elect ricity Directive 2003/4 5 which enables Member 
States to impose on undertakings operating in the electricity sector to use indigenous energy fuel 
sources for up to 15% of the ove rall energy necessary to produce the electricity consumed in the 
Member State concerned. It refers to Commission decisions concerning el ectricity produced out 
of indigenous coal (Case NN49/99 – Spain – Scheme for competition transition costs - OJ C 268, 
22.9.2001, p. 7), ortho-lignite (Case N34/1999 – Austria – Compensation of stranded costs - OJ 
C 5, 8.1.2002, p. 2) and peat (Case N6a/2001 – Ireland – Public service obligations imposed on the Electricity Supply Board with respect to the generation of electricity out of peat – OJ C 77, 
28.3.2002, p. 26). However, it must be noted that these decisions on ly concern electricity 
producers and that the Commission did not assess thes e cases as indirect subsidisation of the coal 
sector. Such aid would go far beyond the objective of softening the social and environmental 
impact of mine closures by keeping uncompetitive mines indefinitely open. 
EN 13   EN Jiu Valley in Romania), the social impact  of the simultaneous closure of the mines 
could be significant. 
3.1.3. Spill-over effects on other industries 
Indigenous coal production has positive externali ties in the form of spill-over effects on 
other industries, such as increased innova tion in the European mining technology, 
geology and environmental technology sectors. The Europe Economics Study shows 
that the existence of a European coal industr y creates spill-over effects for other sectors 
of the economy, such as the producers of mining equipment and the producers of environmental technologies which are needed  for securing the mine and during the 
clean up of the mine.
21  
If the expiry of the Coal Regulation leads to the close-down of mines, these cannot 
innovate anymore. This may have negative sp ill-over effects on related sectors such as 
mining technology, geology and environmental t echnologies. However, it must be borne 
in mind that the expiry of the Coal Regula tion would not put in jeopardy the entire EU 
coal mining sector and in fact, would only affect a limited proporti on of the existing EU 
hard coal production. Mines that can surviv e with normal State aid possibilities or 
without State aid at all will continue to innovate under the competitive pressures of the 
global coal market, which is expected to keep on spurring innovation. But overall, the 
study reveals that a stop of subs idies seems rather to have net negative spill-over effects 
on other sectors situated in the Member St ates where all hard coal production would 
cease. 
Industry associations consider it important to have a domestic "test bed" for mining 
equipment. They indicate that a complete closure of all domestic mines might harm this industry which has developed it s products in proximity of the mining activities allowing 
it to export its competitive pr oducts worldwide. The extent of these difficulties has not 
been established
22, but one should not dramatize. In particular, the same associations 
have not clarified why such companies would not be able to test their technology in the 
mines of the potential customers in other countries. It must also be remarked that many 
companies active in this sector not only de velop and produce technologies for the hard 
coal sector, but also for the mining of ot her energy sources and raw materials. And 
anecdotic evidence shows that some of thes e companies established in Europe – even 
SMEs - have already successfully redirected  their activities towa rds exporting to third 
countries.  
3.1.4. The social impact of mine closures 
In the absence of any State ai d beyond the general State aid rules, hard coal production 
would probably have to cease – partially or entirely - in Germany and Spain, and 
perhaps in some other Member States, t oo. Under present polic ies, about 27000 mine 
workers will still be employed in Germany a nd Spain in 2010, but might loose their jobs 
in the following years. In Romania and H ungary, a further 11000 mine workers' jobs 
may be threatened by the end of  subsidies. And, according to the Ecorys  study, also coal 
                                                 
21 See Europe Economics Study, Chapter 6 (see footnote 3). 
22 Note that no specific associations of the mine technology sector have responded to the public 
consultation. The above-mentioned comments stem  from associations of coal-mining companies. 
EN 14   EN mining in Slovakia may become uncompetitive without subsidies, which concerns a 
further 4000 jobs. 
These figures only take account of directly a ffected jobs in the coal industry. More jobs 
may be affected in related undertakings. For example, in Spain these figures do not take 
account of the many sub-contractors of the mines and in Germany, the closure of the 
mines may affect undertakings producing mining technologies. Furthermore, the 
multiplier effects on other economic sectors, es pecially in the concerned regions, are not 
taken account of. Industry associations indicat e that for each coal miner, a further 1.3 
employees of related industries may be affected.  
While the jobs lost usually have a limited impact on EU-wide and national 
unemployment figures, their regional and lo cal impact may be very significant, 
especially in Germany, Spain and Romani a. The following table shows the regional 
unemployment rates of the regions  where hard coal production is at risk. It also shows 
the percentage of ha rd coal jobs in the active populat ion which can be seen as an 
indicator by how much the unemp loyment rate would increase in case all coal jobs in 
these regions would be lost (not taking acc ount of indirect job losses though). The last 
column gives an idea of the level of in come per capita for the regions concerned 
(compared to the EU average). 
Table 3: economic indicators for selected23 coal mining regions (2008)24 
Country NUTS 2 
region Region Unemployment 
rate25 Hard coal 
jobs as % of active 
population Per capita 
income at purchasing 
power parity 
(EU=100) 
Germany   7.5% 0.05% 115.8 
 DEA 1 Düsseldorf 7.4% 0.2% 127.7 
 DEA 3 Münster 6.4% 1.0% 98.1 
 DEC Saarland 7.1% 0.8% 112.2 
      
Spain   11.3% 0.03 104.1 
 ES 12 Asturias 8.4% 0.5% 94.2 
 ES 24 Aragon 7.1% 0.1% 111.7 
 ES 41 Castilla y Leon 9.5% 0.2% 99.2 
 ES 42 Castilla – La 
Mancha 11.6% 0.1% 81.1 
      
Hungary   7.8% 0.03% 63.6 
 HU 21 Közep-
Dunantul 5.8% 0.3% 57.6 
                                                 
23 Poland is not shown in this table because the imp act of the Coal Regulation expiry is expected to 
be small given the competitiveness of Polish hard coal. For information, hard coal mines employ over 110 000 persons in Poland, which represents more than 4% of the active population in the 
two regions mainly concerned (the Silesian and Lublin provinces). 
24 The number of coal jobs taken into account is the one expected for end 2010 (see Table 2). 
25 The latest figures for region al unemployment are for 2008. Th ere are more recent figures for 
national unemployment which indicate that unemployment rates have significantly increased in 
2009 due to the economic and financial crisis. For September 2009, Eurostat published the following figures: 7.6% in Germany, 19.3% in Spain, 6.4% in Romania, 9.7% in Hungary, 12% 
in Slovakia. 
EN 15   EN       
Romania   5.8% 0.1% 38.4 
 RO 42 Vest 5.7% 1.1% 44.7 
      
Slovakia   9.5% 0.2% 63.5 
 SK 02 Zapadne 
Slovensko 6.4% 0.4% 62.8 
 SK 03 Stredne 
Slovensko 13.1% 0.03% 49.2 
Source: Eurostat 
Taking as simple rule of thumb that for each coal job a further 1.3 jobs would be lost in 
the regions concerned, the unemployment rate  on the national level would be hardly 
affected by the loss of the coal jobs, but regional unemployment rates (at NUTS2 level) 
could increase by up to 2.5 percentage point s. The most affected regions would be 
Münster and Saarland in Germany, Asturi as in Spain and Vest in Romania. 
However, these employment figures do not s how the full problems that coal mine 
closures can create for the a ffected regions and localities. 
– As mine workers usually live close to the co al mines, the closure of these mines has a 
concentrated effect on the population in dir ect proximity. For example, in Germany, 
the mine workers are very much concen trated in the town s surrounding the coal 
mines, so that in case of immediate mine  closure some of these smaller towns would 
experience very steep increases in the num ber of unemployed – up to 50% in certain 
cases26. In Romania, the mines and their personn el are concentrated in the Jiu Valley; 
in 2004, half of the workforce in the valley was employed by the coal mines; 75 to 80% of total employee wages were depe ndent upon the evolution of the coal 
extraction sector
27. Studies have estimated that between 1997 and 2005, 17% of the 
population of the Jiu Valley was directly a ffected by the restructuring of the coal 
sector, and this percentage would reach 25% after the ye ar 2010 at present policies28. 
The unemployment rate in the valley is higher than 22%, and it would roughly double in case of a sudden closure of the remaining coal mining activity. 
– Previous experiences with coal mine clos ures have shown that they tend to have 
significant impacts on the regional demogra phics. High unemployment typically 
reinforces emigration trends, especially for young and well-qualified work forces. 
This leads to a "brain drain", where the most qualified workers leave the affected region, and to an abso lute population decline
29. This reduces the supply of qualified 
workers to other industries and also leads to  an overall ageing of the local population. 
                                                 
26 In the towns Bergkamen, Alpen, Dinslaken, Moers, Neukirchen-Vluyn and Voerde the number 
of unemployed would increase between 25 and 38%; in Hünxe and Kamp-Lintfort this would be 
up to 50%; Regionalökonomische Auswirkungen des Steinkohlenbergbaus in Nordrhein-
Westfalen, Studie der Prognos AG im Auftrag der GVSt, September 2007 .  
27 The Jiu Valley Region: Multi-dimensional Assessment , World Bank Report, March 2004. 
28 Dorinta Nita, Imola Driga, The integration of Jiu Valley's economy on regional and national 
level ,, Annals of the University of Petrosani, Economics, 8(2), 2008, 31-40. 
29 An extreme example is the case of Petrosani in the Jiu Valley (Romania) where the population 
declined from 100000 in 1997 to 46000 in 2002. But also in the Ruhrgebiet (Germany), the 
EN 16   EN – The ageing of the population and the higher unemployment l ead to higher expenses 
for health and social services by local authorities while their revenues tend to diminish because of the drop in activity. Fu rthermore, a number of social functions 
previously sponsored by the coal mining companies (such as sport facilities, 
nurseries, training centres, etc.) will have to be financed by the State if they are not to 
close. 
– The reconversion of previous coal mining re gions has proved very difficult in past 
experiences. Sudden closure of coal mine s with massive lay-offs overburden the 
regional labour market to a point where many mine workers remain unemployed for 
long periods of time and therefore tend  to become less "employable". The 
development of new activities proves to be difficult as potential investors are scared 
off by the drop of activity in the region tr iggered by the mine closures and by the 
often high wage expectations of former coal  miners. It must be noted, however, that 
the difficulties of reconversion differ str ongly between former coal mining regions, 
because of the specific characteristics of th ese regions (e.g. share of the coal mine 
activity in total activity, une mployment rate at the beginning of restructuring, 
regional policies, etc.). 
– On a more broad perspective, the dec line of coal mining activity is often 
accompanied by social aspects which are ve ry difficult to quan tify. The loss of the 
coal mining job is often a very traumatic experience for the work force concerned, more so than in other sectors, because coal miners experience their job as particularly 
difficult jobs which are performed in orde r to sustain the entire economic activity. 
Coal miners therefore consider that they de serve special consideration and the loss of 
their job therefore gives a strong feeling of  "society turning its  back" on them. The 
population of former coal miners is more prone to psychological problems 
(depression) and linked societal problems. 
Experience in industrial rest ructuring throughout Europe has shown that Member States 
can of course implement various social and employment programmes in favour of 
workers losing their jobs during the restructuring process and which do not necessarily imply State aid: this range s from direct support to more active labour market 
programmes involving employment services, training, wage subsidies, public works 
programmes, self-employment assistance programmes, etc. 
With regard to State aid for inherited liabilitie s, in so far as they result from statutory 
provisions, the State would n eed to honor most of these pa yments even if the mining 
companies were to go bankrupt; in so far as  the inherited liabili ties from measures 
smoothening the reduction of the work fo rce are concerned, Member States could 
implement these measures also in  the form of direct payments to former coal miners, in 
which case these measures might not even constitute State aid. 
However, the experience has shown that su ch social and labour market policies have 
had very diverse levels of success and that they are particularly difficult to implement 
successfully when the labour market is floode d with a great number of lay-offs at the 
same time. Regional reconversion is a long-haul  process that takes rather decades than 
                                                                                                                                              
 
population tends to decline while it increases in the rest of the Land Nordrhein-Westfalen (-1.2% 
between 1990 and 2002 compared to +4.2% for the entire Land). 
EN 17   EN years30. Even if economic reconversion is su ccessful, be it by in tegration of the 
workforce into other sectors or even by the development of new sectors (like the renewables sector), such developments ta ke time and a great share of the unemployed 
from a massive lay-off are at high risk of  becoming long-term unemployed before the 
economic reconversion starts to make a real impact. 
3.1.5. Is there a risk for the security of energy supply? 
During the public consultation, most stakeholders  have argued that subsidized coal is 
essential for ensuring the security of s upply. The indigenous coal production could 
constitute a protection against disruptions in the supply of imported coal or disruption in 
the supply of gas as having coal mines in Eu rope increases the ge ographic diversity of 
the origins of fossil fuels and reduces th e import dependency. However, the small 
contribution of subsidised hard coal to the overall energy mix strongly limits the capacity of such subsidies to compensate for such disruptions. 
Most Member States use a diverse range of fu els in the process of electricity production. 
Hard coal represents 18% of the EU elec tricity production (2006 figures), of which 42% 
is produced in the EU. 68% of the EU hard coal production receives some form of State 
aid under the Coal Regulation. Hence, subsid ised coal serves for only 5.1% of the 
electricity production in the EU. When taki ng account only of ai d to cover production 
losses, this figure is reduced  to 1.4%. This low percenta ge raises serious doubts on 
whether the security of supply still justifie s a specific instrument such as the Coal 
Regulation, at least at a global EU level. 
In addition, the likelihoo d of disruptions in th e supply of imported ha rd coal seems to be 
rather limited as the world coal market has shown greater stability than the markets for 
other energy sources. Hard coal can be impor ted from a diversity of exporting countries. 
The world trade volume in hard coal has been increasing on average by 7% per year since the year 2000. Strong capac ity expansion in several c ountries, such as Indonesia 
and Russia, indicates that glob al trade can be expected to continue growing rapidly in 
the future
31. Very recent changes related to the quickly increasing demand from Asia 
and modifications of the geographical origin of  EU coal imports seem not to affect this 
view32. Even if this were so, in view of the low proportion of electricity generated from 
subsidised coal, it is doubtful whether an  additional State aid instrument would be 
useful to address security of supply concerns. 
As for short-term bottlenecks, studies indica te that stock-piling imported coal is more 
efficient to assure security of supply than  subsidizing a domestic hard coal production33. 
                                                 
30 See also Gert-Jan Hospers, Restructuring Europe's Rustbelt, The Case of the German 
Ruhrgebiet , Intereconomics, May/June 2004, p. 147. 
31 See Christopher Kopal (2006), Angebot und Nachfrage am Steinkohlenwelthandel, Zeitschrift 
für Energiewirtschaft 30 (p. 67) and Manuel Fr ondel, Rainer Kambeck, Christoph M. Scmidt 
(2006), Hard coal subsidies: a never-ending story?, Discussion Paper No. 53, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. 
32 In 2007, the major exporting countries to the EU were Russia (25.2%), South Africa (21.1%), 
Australia (13.4%), Colombia (13.4%), the USA (9.3%), Indonesia (7.7%) and Canada (3.1%). 
33 International Energy Agency (2002), Energy Policies of IEA Countries – Germany 2002 Review 
and Manuel Frondel, Rainer Kambeck, Christoph M. Scmidt (2006), Hard coal subsidies: a 
EN 18   EN During the public consultation, some  social partners of the co al sector referred to the 
possibility that coal prices might increas e following the closure of uncompetitive coal 
mines in the EU, hurting the EU competitiveness. However, this seems very unlikely as the total production shortfall expected in the EU in the absence of subsidies only 
corresponds to 4% of the world trade volume in hard coal; which is le ss than the annual 
growth of world trade (7%). 
It should be noted that the before-mentioned percentages are higher in the coal-
subsidising Member States: e.g. subsidised coal accounts for 9% of the electricity 
generation in Germany and 14% in Spain
34.  
3.1.6. Impact on coal-fired  power stations 
Industry associations indicate that in many cases, coal-pow ered power stations cannot 
easily switch form indigenous coal to imported coal without substantial modifications of 
the power station and of the ad jacent infrastructure. This conc erns mainly the coal mills, 
as imported coal is usually not supplied in a properly treated state while indigenous coal 
is often already prepared in the coal mining company. Especially for older power 
stations, which have been designed specifically  for the coal of a local coal mine, the 
conversion to imported coal may be too expe nsive or technically impossible. This not 
only refers to the burners of the power stati on, but also to the infr astructure needed to 
transport the imported coal to  the power station (e.g. missi ng rail or waterway link, 
insufficient loading capacity in ports). In such cases, the closure of the mine may 
jeopardize the supply of electri city by this power station. However, it  is doubtful that 
this problem would be of such a magnitude  as to cause security of supply problems 
either at EU or national level35. 
3.1.7. Environmental impact of immediate mine closures at the end of 2010 
As section 6.5 will show more in detail, a closure of coal mines stops the negative 
impact on the immediate environment of the mines, i.e. the visual and biodiversity 
impact on the landscape, the impact on ground water and soil subsidence in underground mining areas and the impact through mining waste. 
With regard to the impact on greenhouse gas emissions, the impact of mine closures is 
uncertain. Although coal mining releases me thane, a powerful greenhouse gas, methane 
capture technologies are highly develope d in some coal-mining Member States. 
Furthermore, as greenhouse gas emissions ar e a global as opposed to local problem, the 
uncertainty increases when the emissions from  the burning of the coal during the energy 
generation are taken into account. 
                                                                                                                                              
 
never-ending story?, Discussion Paper No. 53, Rheinisch-Westfälisches Institut für 
Wirtschaftsforschung. 
34 Coal accounts for 43% of the el ectricity generation in Poland an d 22% in Slovakia, but these 
countries do not provide operating aid per se. Polish mining companies are currently able to 
produce competitive coal, apparently because their additional costs for closed mines are covered by State aid for inherited liabilities. Aid in Slovakia is very small. 
35 This is also shown by the low interest of the electricity sector in the public consultation 
conducted by the Commission.  Only two companies of the electricity sector responded (one that 
indicated no problems to use other coal sources, and one that indicated that adaptation of its 
power station would be necessary for the use of imported coal).  
EN 19   EN Studies, such as the one by Europe Economics , have shown that th e overall use of coal 
as an energy source should not be significan tly affected by the geographical origin of 
the coal. The reduction of the production of i ndigenous coal will most likely be replaced 
by imported coal. This is not surprising as a safeguard clause of the Coal Regulation prevents State aid from lowering the pri ce of indigenous coal  under the price of 
imported coal. It follows that the overall impact on greenhouse gas emissions depends on the emissions from coal mining in third countries and from the transport of the coal to the EU. The impact on the overall energy mi x of the EU is negligible, at least in the 
short to medium term. 
The closing of a mine necessitates a series of  measures to rehabilitate the mining site, 
such as removing the mining equipmen t from the mine, cleaning-up the site, 
underground safety work, removal of waste wa ter, etc. If the mi ning company ceases all 
economic activities, the financing of these environmental measures by the State may not 
constitute State aid (see section 3.1.2 above ). But in case the undertaking continues 
mining or non-mining economic activities, State financing could consti tute State aid and 
the other activities of the undertaking may be at risk if the undertaking had to bear these 
costs on its own.  
Finally, in case of an immediate closure of mines at the end of 2010, there is a risk that 
necessary preparatory work for the close- down may not have been undertaken in time, 
thereby increasing the cost of rehabilitation measures followi ng the closure. This mainly 
relates to the necessity of a specific sp atial distribution of the underground coal 
extraction to avoid ground level damages (in extreme cases th is can lead to 
earthquakes). And, in an immediate closure, it may be more difficult to retain the know-
how needed for the rehabilita tion and cleaning-up of the mi ning site, as the qualified 
workforce would have left. This risk coul d be avoided by a gradual closure implying a 
partial and temporary con tinuation of its activity. 
3.2. What are the underlying drivers of the problem? 
As mentioned earlier, some Member States have requested authorisation to continue 
subsidising their hard coal producers. Genera l State aid rules will not allow them to do 
so to the same degree as under the Coal Regulation. 
While the expiry of the Coal Regulation will address the lack of competitiveness of the 
coal industry by leading to the closure of the uncompetitive mines, it also may have 
adverse consequences  on employment, on the economic si tuation of certain regions, and 
on the environment. 
3.3. Who is affected, in what ways, and to what extent? 
The expiry of the Coal Regulation would a ffect primarily those undertakings active in 
coal mining
36 - which have received State aid - and their employees. 
But it also affects citizens who are concer ned by coal mining activities, for example 
because of mining damages to their houses. Fu rthermore, it may create spill-over effects 
                                                 
36 It also affects coal mines which currently do not  receive any State aid as the absence of State aid 
to their competitors may create new business opportunities. 
EN 20   EN into neighbouring markets, such as the ma rket for mining technology and clean coal 
technology and the markets for electricity and steel. 
3.4. Should the EU act? 
The Treaty entrusts the Union with State aid control. Only the Union can thus decide 
whether specific rules for the coal mi ning industry should be in force after 2010. 
4. O BJECTIVES  
The EU's general policy objecti ves for State aid to coal 
The broader, horizontal objectives of the Co mmission with regard to  State aid and to 
coal can be derived from the Strategic Ener gy Review - as endor sed by the European 
Council and the Council of Ministers -, the State Aid Action Plan and the Environment 
Action Programme: 
• In its second Strategic Energy Review37, adopted in November 2008, the 
Commission underlines the importance of indi genous energy sources for the security 
of energy supply. It cites " making the best use of the EU’s indigenous energy 
resources " as one of the five priorities of its action plan. In this context, the 
Commission explains that coal  "remains an essential component of Europe's 
domestic energy supply and an import ant alternative to oil and gas". The Strategic 
Energy Review mainly promotes the deve lopment of renewable indigenous energy 
sources and considers that th e use of coal in the longer run is only compatible with 
the climate challenge if highly-efficient plants predominate and carbon capture and 
storage (CCS) is widely available. 
• The Council (TTE38) in its conclusi ons of 19 February 2009 and the European 
Council  of 19/20 March 2009 endorse the Stra tegic Energy Review and recall " the 
need to make best use of [the Community's] own energy resources, including 
renewables, fossil fuels  and, in countries which choose to do so, nuclear energy " 
(emphasis added). The Council further stated  that it is necessary to ensure the 
environmentally compatible developmen t of the EU's indigenous fossil fuel 
resources. 
• The general policy objectives for State ai d have been defined by the Commission in 
its “State aid action plan39. The Commission considers that the main objective of 
State aid control is to ensure a level playing field, which is a prerequisite for the efficient functioning of a market-based economy.
40 I t  t h e n  r e c o g n ises that under 
certain circumstances, State aid might be justified if the distortion of competition created by the aid is counterbalanced by th eir contribution to the furtherance of 
                                                
 
37 Communication from the Commission to the European Parliament, the Council, the European 
Social and Economic Committee and the Committ ee of the Regions, Second Strategic Energy 
Review, An EU Energy Security and Solidarity Action Plan - COM(2008) 781, 13.11.2008. 
38 Transport, Telecommunications and Energy 
39 COM(2005) 107 http://ec.europa .eu/comm/competition/state_aid/others/action_plan/saap_en.pdf 
40 Ibidem, points 6 and 7.  
EN 21   EN objectives of the EU interest. The Stat e aid action plan favours a move towards 
horizontal State aid rules and away from sector-specific rules where possible. 
• In the sixth Environment Action Programme 2002-201241, the Commission cites 
among the objectives "undertaking as soon as  possible an inventory and review of 
subsidies that counteract an efficient and sustainable use of energy with a view to 
gradually phasing them out" and "encour aging renewable and lower carbon fossil 
fuels for power generation". This follows an  objective to phase out subsidies to fossil 
fuel production and consumption by 2010 as set in the Strategy for Sustainable 
Development42. 
In summary, the Commission wishes to apply horizontal State aid rules in as many 
sectors as possible and with regard to energy policy favour s a move towards renewable 
energy sources and an environmentally sust ainable use of indigenous energy sources. 
But it also recognizes the importance of  making the best use of domestic energy 
resources, including fossil fuels.  
Policy objectives for State ai d to the hard coal industry 
It follows that indefinite  State support for coal mini ng is not in line with the 
Commission's broad policy objectives, especial ly when it counteracts efforts to raise 
competitiveness or to move to renewable energy sources, even if its impact on 
competition is rather limited43. But at the same time, the closure of uncompetitive mines 
may have consequences, especially on the so cial level, which need to be addressed. 
The Commission defines the policy objective  which the present assessment addresses as 
to minimize the possible adverse effects of mi ne closures that may follow a phasing-
out of subsidies, especially with regard to  their social and environmental aspects, 
while minimising distortions of co mpetition on the internal market.  
In particular, this implies the following specific objectives: 
- reduce the social impact for the work force of the coal mines and indirectly affected 
jobs (e.g. retraining, outsourcing, early  retirement, etc.). Given the regional 
concentration of coal mines, this objective strengthens the social and regional cohesion; 
- ensure the cleaning and the rehabili tation of abandoned production sites; 
- ensure that the distortions of competition ar ising from any State aid granted to the coal 
mining industry are minimised and in any ev ent, counterbalanced by the positive social 
regional and/or environmental effects of the aid. 
                                                 
41 Decision No 1600/2002/EC if the European Parliament and of the Council laying down the Sixth 
Community Environment Action Programme (OJ L 242, 10.9.2002. p. 1) – see Article 5(2). 
42 COM(2001) 264, 15.5.2001. 
43 It is one of the conditions of the current Coal Regulation that there is no impact of subsidised 
coal on electricity prices (see Article 4(c) an d (e) of the Coal Regulation and Annex 3 therein). 
EN 22   EN 5. P OLICY OPTIONS  
The following six policy options have been assessed44: 
(1) Option 1: the baseline scenario 
Under the baseline scenario, the Commission will not propose a new sector-specific 
legal instrument applicable after the expiry  of the Coal Regulat ion. General State aid 
rules will apply to the hard  coal sector from 2011. 
(2) Option 2: Commission Guidelines 
Under option 2, the Commission would adopt  guidelines based on Article 107(3)(c) 
TFEU. This Article does not constitute a le gal basis for authorising operating aid over 
the long or medium term, even if such aid is  degressive and intended for the closure of 
mines. Such guidelines should be strictly limited in time. They would be similar to 
those adopted in the shipbuilding and steel sectors and would be limited to closure aid 
in the form of aid to cover payments by coal mine undertakings to workers made 
redundant or accepting early retirement due to  mine closures, the costs of counselling 
such workers and the costs of  vocational retraining. It may also cover costs to finish 
ongoing contracts (for a maximum of 6 months) or the costs related to cancelling such 
contracts, whatever of both is lower. Mo reover, it may cover e xpenditure incurred for 
the immediate cleaning and rehabilitation of  the groundlevel production sites, but could 
not cover the sometimes significant amount s involved in the rehabilitation of the 
underground as their scope and duration (som etimes even eternal) would exceed what 
can be authorised under Article 107(3)(c) TFEU (see option 4). It is to be expected that 
the overall amount of aid would only be a sm all fraction of the aid amounts observed in 
the past (see Table 1 in Annex 2). 
These Guidelines would expire at the e nd of 2013 as the aid measures should only 
concern coal mines closing in the context of the expi ry of the Coal Regulation. 
(3) Option 3: Council Regulation allowing tim e-limited operating aid (closure aid) 
Under option 3, the Commission would propose a Council Regulation on the basis of 
Article 107(3)(e) TFEU. On the basis of this  Article, the Council  can legally adopt a 
Regulation authorising Member States to  grant, over the long or medium term, 
operating aid necessary to accompany the closur e of mines, taking account of the social 
consequences. The Regulation would allow cl early degressive opera ting aid aimed at 
covering current production losses as long as it accompanies an orderly winding-down 
of activities in the context of a well-define d mine closure plan (and concerning only 
mines already existing today). This would be a gradual phasing-out of operating aid 
over a maximum period of 10 years – in case of notification in 2011  - at the end of 
which the concerned mine(s) would be clos ed (closure aid). Aid must be clearly 
degressive at a rate of mini mum 10% per year. In case the mine would not be closed at 
                                                 
44 The "one time last time" principle which is applied in the Guidelines on rescue and restructuring 
aid (see footnote 15) is not applicable in this context as the aid either applies to mines to be closed anyway and/or is given in the form of production aid which does not relate to 
restructuring but to a continued support of uncompetitive activities. 
EN 23   EN the planned target date, the ai d would have to be recovered.  In any case, such closure 
plan would not allow the concerned mines to remain open beyond 2020.45 As such long- 
or medium-term operating aid could only be  justified to soften the social and 
environmental impact of the mine closures , it cannot be legally  based on  Article 
107(3)(c) TFEU but can only  be based on Article 107(3)(e) TFEU. 
The proposed period of 10 years is based on  the minimum time period requested by 
most stakeholders for a prolongation of specifi c State aid rules. It takes example on the 
coal mine closure plan notified by the Germ an authorities which plans a gradual phase-
out of operating aid over a period of 10 year s. This time period is considered long 
enough to avoid that any coal miners would be directly fi red. Instead the reduction of 
the work force would entirely be achieved by  natural outflows, ( early) retirement and 
outplacement measures. 
The overall amount of such aid would be inferior to the amounts listed under the 
headings "current production aid" in Table 1 of Annex 2 and would quickly diminish 
because of the strict degressivity. 
(4) Option 4 : Council Regulation allowing aid to  cover exceptional costs (inherited 
social and environmental liabilities) 
Under option 4, the Commission would propose a Council Regulation on the basis of 
Article 107(3)(e) TFEU. This Regulation would allow aid for the social and 
environmental costs linked to the closure of co al mines, such as social welfare benefits 
and costs related to the rehabilitation of the former coal mining sites, as defined in the 
Annex of the current Coal Regulation. This pos sibility would apply to undertakings in 
restructuring, it is not needed if the mini ng undertaking ceases all economic activities 
(see section 3.1.2 above). The aid could then be  provided as long as needed to cover the 
exceptional costs linked to the closing of th e mine (which can be very long as for 
pension rights or removal of waste water). 
Exceptional costs linked to the restructuring/ closing of mines can be subdivided into 
two sub-categories: 
(1) Social costs  such as the cost of paying so cial welfare benefits resulting 
from the pensioning-off of worker s before they reach statutory 
retirement age, the payments of pe nsions and allowances outside the 
statutory system for workers who lo se their jobs as a result of 
restructuring/closing of mines, the retraining of workers, residual costs 
to cover former miners health insurance, etc. 
(2) Environmental costs  such as the rehabilitation of former mining sites 
(e.g. removal of waste water), additional underground safety work resulting from the closure of mines,  etc. The rehabilitation of former 
mining sites often necessitates signi ficant expenditure over a very long 
                                                
 
45 The 10-year period could only be fully used for closure plans notified in 2010. If, for example, 
the plan were notified in 2016, the concerned mines would still need to be closed by 2021, 
reducing the maximum duration of the plan to 5 years (and increasing the pace of degressivity). 
EN 24   EN period of time (e.g. pumping of wate r may sometimes be an eternal 
necessity). 
The high amounts and the very long duration of  aid plead for a legal instrument based 
on Article 107(3)(e) TFEU (the expected amounts of aid woul d be similar to those listed 
under the headings "aid related to excep tional costs" in Table 1 of Annex 2). 
Option 5: the combination of options 3 and 4 Under option 5, the Commission would propose a Council Regulation on the basis of 
Article 107(3)(e) TFEU that allows both, clos ure aid (as in option 3) and aid to cover 
exceptional costs (as in option 4). 
It is to be expected that th e overall amount of such aid woul d be inferior to the amounts 
listed in Table 1 of Annex 2 and would quickly diminish because of the strict degressivity of production aid. 
(5) Option 6: temporary prolongation of  the current Coal Regulation 
In line with the favoured opti on of most stakeholders from the coal sector, under option 
6, the Commission would propose to th e Council to prolong Council Regulation 
1407/2002 - as it stands today - by a further 10 years, i.e.  till the end of 2020. This 
would differ from option 5 by the following characteristics: 
– Production aid could be authorized on the basis of Article 5(3) if the 
operation of the concerned production units forms part of a plan for 
accessing coal reserves; hence, there w ould be no conditionality with regard 
to the closure of these mines; 
– Production aid would need to be degressive so as to result in a significant 
reduction, but no particular rate of reduction would be imposed; 
– Initial investment aid up to 30% of the total investment cost could be 
granted. 
The possibility of closure aid (Article 4)  already expired in 2007 according to the 
current Regulation. A prolongation of this po ssibility is not needed as production aid 
can already be granted under Article 5(3) (as was already noted in the Commission 
report under Article 11 of the Coal Regulation
46). 
The expected amounts of aid under option 6 woul d be inferior to the amounts listed in 
the last column of table 1 of Annex 2 becau se of the degressivity of production aid, but 
there would be no fixed time s cale for the end of subsidies. 
                                                 
46 Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of the Regions – Commission Report on the 
Application of Council Regulation (EC) No 1407/2002 on State Aid to the Coal Industry – COM(2007) 253, 21.5.2007  
(http://eur-lex.europa.eu/Lex UriServ/LexUriServ.do?uri= COM:2007:0253:FIN:EN:PDF) 
EN 25   EN The Regulations proposed in options 3 to 6 are to be seen as transitory legal 
instruments, marking the transition from th e coal-specific rules of the current Coal 
Regulation to the definite application of th e general State aid rules at their expiry. 
6. A NALYSIS OF IMPACTS  
The analysis of the impact s has been divided into: 
• Economic impacts ; 
• Social impacts , especially with regard  to regional employment; 
• Environmental impacts  (pollution, global warming, etc). 
6.1. The current market situation 
6.1.1. Hard coal production in the EU The current market situation of EU hard co al is shown in more detail in Annex 2. The 
EU presently accounts for approximately 125 million tonnes of coal  equivalent (Mtce)
47 
of hard coal production. Poland accounts for more than half of the EU production, while 
the other half is mainly produced by Germany, the United Kingdom, the Czech Republic and Spain.  
In 2007, about 220 000 persons were employed in EU hard coal production, of which 
more than half in Poland. Similarly as fo r production, the employ ment level is on a 
declining trend.  
6.1.2. State aid to the hard coal industry 
Between 2003 and 2008, over €26 b illion of State aid to the ha rd coal sector has been 
approved on the basis of the Co al Regulation (most, if not a lmost all, of which could not 
have been approved on the basis of general State aid rules).  In addition, a number of 
forward plans for aid in the years to 2010 ha ve already been made. However, the total 
amount of subsidies to EU hard coal fo llows a downward trend: the yearly amounts 
have more than halved between 2003 and 2008 (see Annex 2).  
6.2. Affected markets and impact on co mpetition in the internal market 
The Coal Regulation allows an exception to  the general prohibition of State aid 
measures laid down by Articles 107 and 108 TF EU. The rationale for this prohibition is 
that State aid produces distortions of comp etition on the internal market and tends to 
harm efficient firms and sectors, to the detriment of EU consumers. Amongst the various types of State aid, ope rating aid tends to have a pa rticularly strong impact on 
competition and is only allowed in exception al circumstances. Overall, State aid is 
normally only allowed when it contributes to  the furtherance of objectives of EU 
interest, to an extent that this contri bution overrides its detrimental effects on 
                                                
 
47 T on of coal equivalent  (TCE): a conventional value of 7 Gcal (IT) = 29.3076 GJ. 
EN 26   EN competition. For that reason, appreciatin g the compatibility of State aid is 
fundamentally about balancing the negative effects of aid on co mpetition with its 
positive effects in terms of EU interest. 
State aid measures can sometimes be eff ective tools for achieving objectives of EU 
interest. They can correct market failures,  thereby improving the functioning of markets 
and enhancing European competitiveness. They can also help promote e.g. social and 
regional cohesion , sustainable development and cultura l diversity, irrespective of the 
correction of market failures. These pr inciples have been confirmed in the 
Commission's State Aid Action Plan48. 
To fully appreciate the possible impact of St ate aid on competition, we also need to 
determine which markets are likely to be aff ected and to which extent. State aid to the 
coal industry potentially  affects three different product ma rkets: the market for coal, the 
market for steel, and the market for electric ity. In addition, there might also be effects 
on closely related markets, such as the mark et for mining equipment, the market for 
environmental technologies related to  mining, and other similar markets. 
With regard to the coal market itself, it s hould be noted that most subsidised production 
is consumed in the national market and th at the impact of aid for hard coal on 
competition in the internal market is lim ited. The table below shows that the coal-
producing Member States expo rt about 19 mio tonnes – or 12% of their hard coal 
production – to other Member  States. A further 13 mio tonnes is exported by non-
producing Member States – mainly Belgium and the Netherlands – as coal importers are situated in their maritime ports. Intra-EU imports of hard coal only represent about 11% of the imports from third countries and only 6.5% of the hard coal consumption in the 
EU. 
Table 4: Import and export from hard-coal producing countries (thousands of tons, 
2007) 
 
Hard coal 
production Hard coal 
consumption Intra-EU 
imports Intra-EU 
exports Extra-EU 
imports Extra-EU 
exports 
Bulgaria 35 4736 104 0 4738 1
Czech 
Republic 12894 9760 2418 6658 135 150
Germany 24185 70097 6684 294 39603 16
Spain 11002 36465 158 7 24281 865
Italy 158 25118 98 0 24855 0
Hungary 0 2565 1093 65 1559 0
Poland 87406 85336 2073 11497 3851 403
Romania 12 4507 7 3 4484 64
Slovenia 0 594 19 2 554 0
Slovakia 0 5021 2284 0 3002 0
UK 16540 62865 495 467 42870 54
Other 
Member 0 71272 9104 13244 73987 549
                                                 
48 §10 and 11, for reference see footnote 40. 
EN 27   EN States 
EU 27 152232 378336 245374932237 223919 2102
Source: Eurostat50 
However, the fact that there are currently limited flows of coal between Member States 
does not mean that such flows could not some what increase in the future should certain 
EU mines be closed because of the cessation of operating aid. But such an increase of 
intra-EU trade would mainly c oncern coal imported from third countries as most coal-
producing Member States consume more co al than they produce; only the Czech 
Republic and Poland export a part of their pr oduction, but it is uncertain whether they 
would be able to increase production for more exports.  
Export possibilities are even more limited for low-grade coal (as in Slovakia, Spain and 
Hungary), as the transp ort costs for low-grade coal are relatively high, and most of the 
production is used in near-by power plants. 
With regard to the markets for electricity and for steel, it must be reminded that the Coal 
Regulation foresees a safeguard clause in its Article 4 (e): " aid must not lead to any 
distortion of competition on the electricity market, the market of combined heat and 
electricity production, the coke pro duction market and the steel market". . It follows that 
it can be excluded that the Coal subsidie s, as provided under the Coal Regulation, 
reduce the price of electricity or steel produced with this coal, as the coal subsidies 
cannot go beyond what is necessary to reduce the price of indigenous coal to the level of 
the world market.  
6.3. Economic impacts of the policy options 
The comparison of the different policy opti ons is based on the assumption that the 
concerned Member States would indeed grant State aid as allowed by the rules 
applicable under each of the policy options. Should they ch oose not to do so, then the 
results of the alternative po licy options would not differ from the baseline scenario. 
6.3.1. Impact of the policy opt ions on the public budget 
Whether sector-specific State aid rules would have a differe nt impact on public finances 
than the general State aid rules is above a ll a decision of the con cerned Member State. 
Even in the presence of sector-specific rule s, there is no obligation for the Member State 
to indeed grant State aid. 
A reduction of subsidies to the hard coal sect or would improve the financial situation of 
the public finances of the concerned Memb er States. Table 2 s hows that in 2010, 
production aid in the 5 concerne d Member States could amount  to €1.67 bi llion and aid 
                                                 
49 The difference between total intra-EU imports and intra-EU exports is mainly due to variations 
in stocks and statistical discrepancies. 
50 The definitions used in coal statistics are somewh at different from those in the Coal Regulation. 
The table gives the impression that there is no hard coal production in Hungary and Slovakia; 
this is because the low- grade coal types produced in these countries are no t registered among the 
hard coal as defined in the statistics. The tabl e should mainly be used to capture the scale of 
intra-EU trade compared to overall consumption. 
EN 28   EN for exceptional costs to €1.55 billion annuall y. Subsidies for exceptional costs would 
still be needed in the case of immediate clos ure of the mines; they  would even increase 
in the short term as costs linked to the clea ning-up and rehabilitation of the mining sites 
would have to be borne for all the closed mi nes at the same time. Still, the phase-out of 
operating aid (and of investment aid)  would free up fiscal resources. 
A (simplistic) comparison of the data in ta ble 2 shows that, when taking into account 
production aid and investment aid, Spain sp ends annually EUR 73 276 per coal job 
saved, Germany EUR 54 245, Hungary EUR 20 846 and Slovakia EUR175. But at least 
part of this economy would be counter-balanced by additional costs in case of 
accelerated close-down of the mines, especi ally in terms of unemployment benefits, 
early retirement schemes and other social ob ligations towards former coal miners, and 
fiscal budgetary shortfalls. The data result ing from the simple calculation would be 
significantly reduced. 
For example, a calculation made for Germany51, on the basis of an immediate 
closedown in 2006, shows that the loss in public revenu e from taxes and social 
contributions from more than 55000 job loss es (net, direct and indirect job losses) 
would amount to about EUR 1 billion, plus EUR 685 million of additional expenses for 
labour market measures (at current policies) . The saved annual production aid (EUR 1.4 
billion, see annex 2) would be entirely soaked  up by this budget shortf all, at least in the 
short term. 
It follows that, first, financial resources would only be freed up in the longer term, when 
job losses are gradually absorbed by the labour market and when exceptional costs linked to mine closures are reduced. Sec ond, the amount of budgetary resources freed 
up by the stop of subsidies depends very much  on the ability of lo cal/regional labour 
markets to absorb the labour formerly employed in the mines. The above-mentioned study for Germany was based on an average re-employment rate of 3% of the work force, as observed following the mine closures  in the UK (where fina lly only 60% of the 
coal miners found another job within 20 year s, according to this study). The absorption 
of mine workers by the labour market very much depends on the specific labour market 
of the region concerned, such as job polic ies in place, the importance of the coal 
industry in the regional economy, the re-empl oyability of the mine workers in other 
industries, the jobless rate be fore the mine closure, etc. 
One should therefore not conclude too qui ckly that the saved subsidies could 
immediately be re-employed for other policies, such as regional economic reconversion or promotion of other energy sources. It may well turn out, that depending on the 
specific characteristics of the Member Stat e and the region con cerned, the budgetary 
impact of an immediate mine closure or of a gradual mine closure plan would be very 
similar, if the latter would indeed facilitate the absorption of the work force into alternative jobs. The figures provided by the aforementioned Prognos study do indeed 
point in that direction
52. 
                                                 
51 "Regionalökonomische Auswirkungen des Steinkohlenbergbaus in Nordrhein-Westfalen, 
Prognos 2007, Studie im Auftrag des Gesamtverband Steinkohle. 
52 A calculation based on the Prognos figures shows that an immediate closure of the German 
mines would cost between EUR 18 and 21 billion in fiscal losses until 2018 (if the job market 
only absorbs 3% of mine workers per year); a gradual closure until 2018 would cost around EUR 
EN 29   EN 6.3.2. Option 1: the baseline scenario - general State aid rules 
The Coal Regulation expires on 31 December 2010. As shown in paragraph 3.1 above, 
in the absence of a new legal framework allo wing for certain specific types of State aid 
to the coal industry, Member States could gr ant aid only within th e limits foreseen by 
general State aid rules appli cable to all sectors. Sect ion 3.1 already described the 
consequences. The alternative options are assessed in comparison with this baseline scenario. 
6.3.3. Option 2: Guidelines 
The economic impact of option 1 is not funda mentally different from option 2. Option 2 
will lead to the same production shortfall and the same number of jobs lost. The 
difference lies in the possibility given by op tion 2 to organise a mine closure in an 
orderly way and even to delay it  for a few months in order to  finish ongoing contracts. It 
should nevertheless be stresse d that the closure aid as currently foreseen by the 
shipbuilding and steel frameworks falls far below the current needs of the coal sector as expressed by the stakeholders  and certain Member States. 
Support for certain costs such as retraining of the work force or the rehabilitation of the 
mining site, which could be State aid when th e mine is still economically active, may be 
allowed during the closure phase. 
6.3.4. Option 3: production aid 
By covering operating losses, production aid has the ability to keep uncompetitive 
mines open. However, it weighs heavily on public finances and is operating aid.  
In such a closure plan, the concerned mines could be kept open for a longer period (up 
to 10 years in the extreme case), but producti on and employment would significantly be 
reduced from year to year as subsidies woul d be strictly degressi ve. Related industries, 
such as mining equipment producers, coal-fired power stations or steel mills, would have additional time to adjust their producti on process to imported coal or other energy 
sources. Strongly affected regions woul d be given more time to implement 
redeployment policies that reduce the imp act of the mine closure on the regional 
economy. 
6.3.5. Option 4: aid to cover excepti onal cost (inherited liabilities) 
We already noted before that with regard  to State aid for exceptional costs, these 
payments might not constitute State aid if the concerned companies have ceased all economic activities (without pr ejudice to possible State aid indirectly provided to non-
coal companies because they hire specifically retrained ex coal miners).  
Option 4 is rather relevant for mining compan ies that only close down part of their 
mines or that have other economic activities. As seen before, the general State aid rules 
                                                                                                                                              
 
24.5 billion (of which EUR 16 billion in production subsidies) at the same job creation rate, but 
it could be reduced to EUR 22 billion or less if the absorption rate can be accelerated (up to 9%) 
thanks to the gradual release of the work force to the labour market. The difference in budgetary 
cost would be reduced to EUR 2 billion over the 10-year period. 
EN 30   EN give only few possibilities for training aid or environmental aid. Mining undertakings 
programmed to close down part of their mine s may simply not have the financial means 
to fulfil their obligations with regard to i nherited liabilities until the final close-down of 
their mines. 
The economic impact may differ from option 1 if the aid for the exceptional cost does 
not force the mining company to divert resources from other, potentially competitive mining sites to the mines to be closed. Ind eed, if the closure of some mines of the 
company would generate exceptional costs which the company cannot bear, this will 
impact on the chances of survival of the other mines of the company as well. 
As shown before (see section 6.2), the impact  of the aid on competition in the internal 
market remains limited. In addition, possibl e distortions of competition may be further 
limited by clearly distinct accounts for the subsidised mines (to avoid cross-subsidisation). 
A quantitative estimate cannot be provided as the Commission does not have precise 
information on the needs for support of ex ceptional costs after 2010. Indeed, the aid 
schemes that have been approved by the Comm ission did not detail such a need after 
2010, taking account of the expiry of the Coal Regulation in 2010
53.  
6.3.6. Option 5: combination of options 3 and 4 
In the context of a gradual closure of co al mines belonging to a same company, as 
would be possible when operating aid were allowed as under option 3, aid to cover the 
exceptional costs linked to these closures ma y be necessary as such support could be 
considered as State aid where mines have b een closed but belong to  undertakings with 
other coal mines. In the case of a gradual close-down of coal mines, aid for inherited 
liabilities is likely to be needed at the same  time as other types of aid, mainly operating 
aid. 
The economic impact in terms of production a nd jobs would be very similar to option 3, 
but under this option 5, it woul d be possible to avoid that the exceptional costs linked to 
the mine closures would impact on the viab ility of other mines of the same company. 
6.3.7. Option 6: prolongation of the current Coal Regulation 
Under the simple prolongation of the Regulatio n the type of aid currently granted could 
be extended. Although the Regulation impose s the degressivity of the aid, past 
experience has shown that such degressivity  can be very weak in practice, thereby 
prolonging State aid for an indefinite time. 
Indeed, while the presently pursued policy ob jective is a social objective, the Coal 
Regulation responds to a double policy objectiv e: mitigating the social impact of mine 
closures, but also securing the access to coal reserves in order to e nhance the security of 
energy supplies. Today, this second objective is not consider ed as relevant anymore (see 
                                                 
53 Recent Commission decisions on St ate aid indicated a need for State aid for the period beyond 
2010, as for Spain and Poland, but without further precision as long as the EU legal regime 
applicable after 2010 is not known. 
EN 31   EN section 3.1). Therefore, the production aid gran ted in view of securi ng access to reserves 
(Article 5(2) of the Coal Regulation) doe s not respond to the present policy objective: 
rather than facilitating the closure of mines, it helps to keep uncompetitive mines open. Experience has shown that the expiry date of the Regulation and the not further defined 
degressivity of the aid do not exert sufficien t pressure on Member States to restructure 
their hard coal industry in or der to make it competitive. 
Indeed, past experience with the Coal Regulation is mixed (see the 2007 report
54). 
During the period of applicati on of the Coal Regulation, two Member States completed 
the restructuring process: France by closing all its coal mines and the Czech Republic 
by privatizing the coal mines and stopping subsidies. The UK, Poland and Slovakia 
have not given operating aid (only investment aid). But Bulgaria, Germany, Hungary, 
Romania and Spain have maintained sche mes of operating aid. The success of the 
restructuring process in these countries seem s to be limited, as the production costs have 
only slightly been reduced, or have even incr eased. In these countries, it seems that the 
limits of possible efficiency gains have been reached. The Ecorys  study has shown that 
the chances of survival without subsidies of the coal industry in most of these countries 
are weak. Political and social resistance coul d lead to an indefinite continuation of 
operating aid in case of a prolonga tion of the Coal Regulation.  
Although the option of prolonga tion could allow Member St ates to meet the policy 
objective by implementing mine closure plans,  at the same time, it could also allow 
them to deviate from the policy objective by simply continuing to provide production 
aid to uncompetitive mines without a clear commitment for closure or restructuring. It follows that the same mines could still be uncompetitive at the new expiry date of the 
Regulation in 10 years. The underlying probl em of non-competitiveness would not be 
solved, but just delayed. 
A prolongation of the Coal Regulation would se nd the (wrong) signal that coal subsidies 
may continue for an indefinite time. Th is, however, would be contrary to the 
Commission's objectives with regard to c limate change and (the move away from) 
sector-specific State ai d rules (see section 4). 
With regard to investment aid, as could be authorized under this option, it cannot 
contribute to the policy objectives at hand,  i.e. as an accompanying measure of mine 
closures. Indeed, investment aid rather prom otes the development of new activities or 
the increase of efficiency, neither of which is relevant for accompanying the closure of a 
coal mine. 
Moreover, actual investment aid is very limited under the current Coal Regulation (see 
Table 1 in Annex 2). Only Slovakia currently provides investment aid to coal mines and 
at present it cannot be excl uded that it could continue  doing so after 2010 if the 
substantive rules of the Regional Ai d Guidelines were to be applied. 
                                                
 
54 See footnote 47. 
EN 32   EN 6.3.8. Overview of economic impacts 
Table 3: economic impact of the policy op tions (comparison to the baseline scenario)55 
  Internal market and competition 
(1) Baseline scenario  The reduction of State aid reduces aid-induced market 
distortions although these remain limited (see section 6.2)  
(2) Guidelines  = same as option 1  
(3) Production aid until closure  - Production aid has usually the most distortive impact as it has 
an immediate effect on the costs/ prices. However, in the case of 
hard coal, the distortion is limite d (see section 6.2) and the aid 
is applied for a limited period in view of the closure of mines. .  
(4) Aid for exceptional costs 
related to closure  - Limited distortion the market functioning; but the aid 
facilitates the closure of uncompetitive mines  
(5) Combination of (3) and (4)  - Production aid has usually the most distortive impact as it has 
an immediate effect on the costs/ prices. However, in the case of 
hard coal, the distortion is limite d (see section 6.2) and the aid 
is applied for a limited period in view of the closure of mines. .  
(6) 10-year continuation of the 
current Coal Regulation As the experience with the Coal Regulation has shown, in this 
option, there is not sufficient in centive to close or restructure 
the concerned mines.  
 
Table 3: economic impact of the policy options (continuation) 
  Competitiveness Operati ng costs and conduct of 
business 
(1) Baseline scenario  The closure of the non-competitive mines raises the overall level of 
competitiveness in the hard coal 
sector. 
 The option leads to the likely close-down of coal-mining 
undertakings in a number of 
Member States.  
It is not expected that the option 
will have a significant impact on 
the availability of coal on the 
market (energy security).
 
(2) Guidelines  = same as option 1  = same as option 1  
(3) Production aid until 
closure  - Production aid keeps in life uncompetitive mines without any incentive for improvement. 
However, closure aid may 
facilitate the closure of uncompetitive mines in an uneasy +/= The option may temporarily 
save coal-mining undertakings from close-down.
 
                                                 
55 The signs "+" and "-" in the table are to be s een as a comparison with the baseline scenario. 
EN 33   EN social and political context. 
(4) Aid for exceptional 
costs related to closure  -/= Aid for non-competitive producers does not raise 
competitiveness, but it may facilitate the closure of 
uncompetitive mines in an uneasy 
social and political context. = The option will not save 
uncompetitive coal mines; it only 
covers exceptional costs linked to the inevitable close-down.
 
(5) Combination of (3) 
and (4)  - Production aid keeps in life uncompetitive mines without any 
incentive for improvement. 
However, closure aid may 
facilitate the closure of 
uncompetitive mines in an uneasy social and political context. +/= The option may temporarily 
save coal-mining undertakings 
from close-down.
 
(6) 10-year continuation 
of the current Coal 
Regulation -- Production aid keeps in life 
uncompetitive mines without 
sufficient incentive for improvement. + the options may save 
uncompetitive coal mines from 
closing 
Table 3: economic impact of the policy options (continuation) 
  Innovation and research Consumers and households 
(1) Baseline scenario  The possible close-down of mines 
may reduce the stimulation for 
research and development in the 
related equipment industry.  It is not expected that the option would have a significant impact on 
energy prices paid by households. 
Indirectly, the relief on the public budget may have positive impact 
in terms of lower taxes/higher 
expenses elsewhere, at least in the medium to long term. 
(2) Guidelines  = same as option 1  -/= It is not expected that the 
option would have a significant 
impact on energy prices paid by 
households. Indirectly, higher 
subsidies via their impact on the public budget, may weigh on 
consumers via higher taxes or 
lower expenses in other sectors. 
(3) Production aid until 
closure  = temporary aid will not have a lasting impact on related research 
and development activities -/= It is not expected that the 
option would have a significant 
impact on energy prices paid by 
households. Indirectly, higher subsidies via their impact on the 
public budget, may weigh on 
consumers via higher taxes or lower expenses in other sectors 
(4) Aid for exceptional 
costs related to closure  = aid in the context of mine closures will not have a lasting 
effect on research and development activities -/= It is not expected that the 
option would have a significant 
impact on energy prices paid by households. Indirectly, higher 
subsidies via their impact on the 
EN 34   EN public budget, may weigh on 
consumers via higher taxes or 
lower expenses in other sectors 
(5) Combination of (3) 
and (4)  = temporary aid will not have a lasting impact on related research 
and development activities -/= It is not expected that the 
option would have a significant 
impact on energy prices paid by 
households. Indirectly, higher subsidies via their impact on the 
public budget, may weigh on 
consumers via higher taxes or lower expenses in other sectors 
(6) 10-year continuation 
of the current Coal Regulation =/+ on the one hand, the mines 
will continue their activity and may stimulate further research and 
development in related research 
and development activities; on the other hand, the incentive for 
productivity gains is reduced when 
the mine can continuously rely on production aid. - It is not expected that the option 
would have a significant impact on energy prices paid by households. 
Indirectly, higher subsidies via 
their impact on the public budget, may weigh on consumers via 
higher taxes or lower expenses in 
other sectors. In this option, there is insufficient incentive for a 
significant reduction of these 
subsidies over time. 
 
Table 3: economic impact of the policy options (continuation) 
  Specific regions or sectors Third countries and 
international relations 
(1) Baseline scenario  Some Member States and some regions are affected more than 
others. Coal mine closures will 
have a concentrated impact on the economic activity in these regions.
 The closing of mines will lead to a (at least partial) substitution of 
indigenous coal by imported coal. 
(2) Guidelines  =/+ Same as option 1, but the aid 
alleviates to a very limited degree the negative economic impact.
 = same as option 1 
(3) Production aid until 
closure  + Aid alleviates the negative economic impact on specific 
regions.
 + Aid will slow the substitution of 
indigenous coal by imported coal.  
- This could be seen as a 
protectionist measure and might 
send the wrong signal to 
international partners that the EU is not doing its utmost to achieve a 
low carbon economy 
(4) Aid for exceptional 
costs related to closure  + Aid alleviates the negative economic impact on specific regions.
 Same as option 3 
(5) Combination of (3) 
and (4)  + Aid alleviates the negative economic impact on specific Same as option 3 
EN 35   EN regions.  
(6) 10-year continuation 
of the current Coal 
Regulation + Aid alleviates the negative 
economic impact on specific 
regions Same as option 3 (for option 6, the 
negative aspect is stronger given 
the insufficient incentive to phase out aid) 
Table 3: economic impact of the policy options (continuation) 
  Macroeconomic environ ment Security of supply 
(1) Baseline scenario  The baseline scenario may induce 
mine closures at a time when 
regional and national 
unemployment is already high 
following the financial crisis. On 
the other hand, the reduction in subsidies frees financial resources 
for other support to the economy 
(although in the short term, these resources may be reduced because 
of the exceptional costs linked to 
mine closures and the fiscal shortfall). The baseline scenario may lead to 
the loss of 20% if the EU hard 
coal production, standing for only 
1% of the gross inland energy 
consumption of the EU. 
International coal suppliers are diversified, not indicating 
particular problems for the EU 
security of supply. However, coal-fired power plants may have to 
switch quickly to imported coal 
which is not always possible without extensive investments. 
(2) Guidelines  = very similar to option 1, but the 
subsidies drain resources from 
other uses of the public funds in favour of the economy (the aid 
remains very limited though). = similar to option 1 (but it gives 
slightly more time for coal-fired 
power plants to adapt) 
(3) Production aid until 
closure  = If mines can temporarily be saved from closure, the option will alleviate the aftermath of the 
financial crisis. However, the 
subsidies drain resources from other uses of the public funds in 
favour of the economy.  =/+ By slowing down the closure 
process, this option may give coal-fired power plants more time to 
adapt. Marginal effect on EU 
security of supply. 
(4) Aid for exceptional 
costs related to closure  = same as option 3 =/+ By slowing down the closure 
process, this option may give coal-
fired power plants more time to 
adapt. Marginal effect on EU security of supply. 
(5) Combination of (3) 
and (4)  = same as option 3  =/+ By slowing down the closure 
process, this option may give coal-
fired power plants more time to adapt. Marginal effect on EU 
security of supply. 
(6) 10-year continuation 
of the current Coal Regulation =/- same as option 3, but the public 
resources used are more important and there is insufficient incentive 
to phase out the aid. =/+ Coal-fired power plants may 
still have access to local coal. Marginal effect on EU security of 
supply. 
When comparing the pros and cons of the va rious policy options in  the above table, it 
can be seen that the alternatives to the baseline scenario have an overall negative 
EN 36   EN economic impact, mainly because of the imp act on competition in the internal market 
and on the competitiveness. This is particularly the case when production aid is involved, and even more so when there is no guarantee that the aid will be phased out 
(as in option 6). However, as shown in section 6.2, the impact of the State to aid to hard 
coal on the internal market is limited because  of the feeble scale of intra-EU trade in 
hard coal, thereby limiting the negative economic impact. 
Moreover, the policy objective (defined in s ection 4) is minimizing the adverse effects 
of the mine closures while also minimizing the distortions of competition. Therefore, options 2 to 5 cannot simply be dismissed given their impact on specific regions which, 
mainly with closure aid, are given more time to adapt in a difficult socio-economic 
context. Option 2  then seems to be the preferable option to the baseline scenario in 
terms of mitigating the direct economic im pact on the most concerned regions and 
industries.  
6.3.9. Uncertainties with respec t to the economic impact 
Many uncertainties surround these scenarios. Firs t of all, the evolution of future coal 
prices remains uncertain. Secondly, it cannot be excluded that some mines may be able 
to restructure successfully in order to surviv e without aid or only with aids as allowed 
under general State aid rules. Inversely, it is  not impossible that some mines identified 
as competitive in the Ecorys  study may become uncompetitive, for example because of 
an unforeseen event or because production cost s increase faster than expected in the 
Ecorys  study. 
6.4. Social and regional impa cts of the policy options 
6.4.1. Option 1: Baseline scenario Section 3.1 already described the conseque nces of this "do nothing" scenario. The 
alternative options are assessed in comp arison with this baseline scenario. 
6.4.2. Option 2: Guidelines 
Option 2 will not reduce the number of job losses. But it can help to better organise the 
close down of the mines with more direct s upport to the workers concerned, in the form 
of retraining, counselling, etc. that goes be yond what is foreseen by statutory rights. The 
closure itself could be delayed by maximum 6 months. 
Past experience with mine restructuring has shown that early intervention is a key to 
success: offering employment and retraining services before workers are laid off 
increases the participation rates in these pr ogrammes and facilitates a rapid transition to 
other jobs
56. In this sense, option 2 may help to reduce the social impact by starting 
counselling and retraining progra mmes before the mine's closure.  
                                                 
56 See for example Hungary's experien ce with pre-layoff assistance – Labor transition in the coal 
sector (Southeast Europe) , US Agency for International Development (USAID), March 2007. 
EN 37   EN 6.4.3. Option 3: Production aid 
(Temporary) production aid could keep an uncompetitive mine in activity, thereby 
saving jobs. The aim of the te mporary measure is not to sa ve permanent jobs, but to 
allow a gradual reduction of the work force,  giving the time to take account of the 
workforce's age structure (early  retirement and retirement), of "natural outflows" (not 
replacing leaving workers) and of its qualification (retraini ng workers to allow 
employment in other activities). It allows  reducing the production of an uncompetitive 
mine by minimizing the number of direct lay-offs and by maximizing accompanying 
measures allowing the work force's redeployment into other activities. 
This logic applies in the notified German cl osure plan, which phases in the closure of 
the remaining hard coal mines in order to a void direct lay-offs by (early) retirement and 
redeployment via retraining. 
Experience with economic and regional reconv ersion has shown that  the labour market 
can more easily absorb the laid-off work force if the lay-offs are spread over time. It allows implementing more easily counselli ng and retraining programmes and avoids 
that a great share of the former coal miners slip into long-term unemployment
57. The 
International Labour Office also pleads for gradual closure: " When considering the 
removal of production subsidies and conseque nt mine closures, the pace of closure 
needs to be examined. Sudden closure in an ar ea that is heavily dependent on a mine 
will have a major and, quite possibly, lasting adverse economic impact on the local economy, even in a genera lly robust national economy, whereas phasing out smoothly 
will tend to have less of an impact ."
58 
Such gradualism needs to be carefully pla nned and implemented to ensure that the 
necessary qualifications needed for a safe and efficient production remain within the mining undertaking until its closure. 
6.4.4. Option 4: Aid to cover exceptional cost 
Section 6.3 has shown that such aid is main ly necessary in the context of a gradual 
closedown of the production sites of a mini ng company. It then allows to provide 
additional support to mining employees via retraining and counseling (in view of 
redeployment) and for early retirement.  
It may also save jobs when the exceptional costs linked to the closedown of a mine do 
not affect the viability of ot her mines of the same company. 
The impact in terms of jobs of option 4 is  not significantly different from option 2. 
                                                
 
57 For example, in Germany hard coal employmen t has been reduced by more than 50000 jobs 
between 1997 and 2007 without firing any workers: 21000 retired, 7000 left the industry by own initiative and all others found a new job in other industries via outplacemen t policies or transfers 
to non-coal subsidiaries. 
58 International Labour Office, The evolution of employment, working time and training in the 
mining industry,  Report for discussion at the Tripartite Meeting on the Evolution of 
Employment, Working Time and Training in the Mining Industry, Geneva, October 2002. 
EN 38   EN 6.4.5. Option 5: combination of options 3 and 4 
From the social point of view , option 5 combines the positiv e impact of options 3 and 4 
by reducing the direct lay-offs and, simu ltaneously, maximizing the possibilities of 
support for the laid-off workers. 
6.4.6. Option 6: temporary prolongation of the current Coal Regulation 
Under option 6, Member States could be auth orized to carry out the same type of 
closure plans as under option 5. But option 6 al so allows the authorization of State aid 
without a clear commitment for closure whic h would miss the policy objective. There is 
insufficient incentive to effectively restru cture or close the non-competitive mines and 
to initiate social and retrai ning programmes to help the work force. After 10 years, when 
the temporary prolongation expires, the same  problems as faced today may still exist 
and then, without any sector-spe cific State aid rules, a sim ilar scenario as under option 1 
would apply again. 
6.4.7. Overview of social impacts 
Table 5: social impact of the policy opti ons (comparison to th e baseline scenario)59 
  Employment and labour 
markets Retraining 
(1) Baseline scenario  Direct loss of between 27000 and 
42000 jobs, concentrated in a few 
Member States and a few regions. 
More jobs affected in related industries (e.g. sub-contractors in 
Spain, equipment producers in 
Germany). These figures do not take account of multiplier effects 
on other sectors and regions. Up 
to 100000 jobs may be affected. Inversely, they do not take 
account of the (although limited) 
possibility of job creation in 
competitive coal mines that might 
supply coal to the Member States/regions where mines have 
been closed. Immediate closure of mines does 
not leave time for retraining before 
applying for new jobs (it still does 
not exclude support to general retraining measures after job loss) 
(2) Guidelines  = same as option 1 =/+ slightly better possibilities for 
retraining than under option 1 (retraining support can start before 
job loss) 
(3) Production aid until 
closure  + Jobs will be saved temporarily  
while the mine closure is phased in. This could allow a progressive 
reduction of the work force while 
minimizing firing ("natural" outflow, retirement and early + Gradual phase-out of production 
gives time to organize retraining/redeployment. 
                                                 
59 The signs "+" and "-" in the table are to be s een as a comparison with the baseline scenario. 
EN 39   EN retirement). 
Note that the public resources 
injected in the coal sector as production aid cannot be used 
anymore for other sectors, such as 
renewable energy, where more permanent jobs could be created 
(but these job creations will not 
necessarily alleviate the strong regional impact of the job losses 
in the coal sector and the relief of 
the public budget might be less 
than hoped for, see section 6.3.1). 
(4) Aid for exceptional 
costs related to closure
 =/+ May save jobs when mine would be competitive without bearing these exceptional costs. + Aid for retraining gives better 
chances for redeployment 
(5) Combination of (3) 
and (4)  + Jobs will be saved temporarily  
while the mine closure is phased 
in. This could allow a progressive reduction of the work force while 
minimizing firing ("natural" 
outflow, retirement and early retirement). In addition, the option 
may save jobs when mine would 
be competitive without bearing these exceptional costs. 
Note that the public resources 
injected in the coal sector as production aid cannot be used 
anymore for other sectors, such as 
renewable energy, where more 
permanent jobs could be created 
(but these job creations will not necessarily alleviate the strong 
regional impact of the job losses 
in the coal sector and the relief of the public budget might be less 
than hoped for, see section 6.3.1). + Gradual phase-out of production 
gives time to organize 
retraining/redeployment. 
(6) 10-year continuation 
of the current Coal Regulation + Coal jobs (and related jobs) 
could be saved by keeping uncompetitive mines open. 
However, there is no guarantee 
that such jobs could become viable in the longer term; after 10 
years, the underlying problem of 
non-competitiveness may not be resolved. =/+ retraining could be organised as 
in options 4 and 5, but there is insufficient incentive for retraining 
programmes as long as there is no 
clear perspective for restructuring or closure. 
Table 5: social impact of th e policy options (continuation) 
  Public health and safety Effects on social protection 
(1) Baseline scenario  Coal mining jobs involve higher 
risks for accidents and for the The closure of mines should not 
affect miners' statutory rights with 
EN 40   EN workers' health in general than 
other jobs in the economy. 
Therefore, the closure of mines may have a positive impact on the 
health of the work force. 
However, if the work force stays 
unemployed, this may also have 
adverse health effects (e.g. 
psychological impact) 
 regard to social protection and 
health insurance. However, they 
may lose additional coverage provided by the undertaking. 
(2) Guidelines  = same as option 1 + The closure of mines should not 
affect miners' statutory rights with 
regard to social protection and 
health insurance. In addition, 
additional support may be given to the workers. 
(3) Production aid until 
closure  -/= if the option keeps mines (temporarily) alive, there may be a 
negative impact on the health of the concerned miners, depending 
on health and safety provisions in 
the concerned mines. + If the option keeps mines 
(temporarily) open, this may have a 
positive impact on additional social protection provided by the 
undertaking 
(4) Aid for exceptional 
costs related to closure  -/= if the option keeps some mines (temporarily) alive, there may be a 
negative impact on the health of 
the concerned miners, depending on health and safety provisions in 
the concerned mines. ++ If the option keeps mines open, 
this may have a positive impact on 
additional social protection 
provided by the undertaking. In addition, the option also concerns 
the financing of such additional 
protection for miners losing their jobs following restructuring/closing 
(5) Combination of (3) 
and (4)  -/= if the option keeps mines (temporarily) alive, there may be a 
negative impact on the health of 
the concerned miners, depending 
on health and safety provisions in the concerned mines. ++ If the option keeps mines 
(temporarily) open, this may have a 
positive impact on additional social 
protection provided by 
undertaking. In addition, there is additional support for mine 
workers. 
(6) 10-year continuation 
of the current Coal Regulation - if the option keeps mines open 
(for up to 10 years), there may be a negative impact on the health of 
the concerned miners, depending 
on health and safety provisions in the concerned mines. ++ If the option keeps mines 
(temporarily) open, this may have a positive impact on additional social 
protection provided by 
undertaking. In addition, there is additional support for mine 
workers. 
 
Table 5: social impact of th e policy options (continuation) 
  Social impacts on third countries 
EN 41   EN (1) Baseline scenario  1. increasing coal imports could favour production in countries with 
poor social standards without improving the latter 
2. increasing coal imports may also favour the development of under-
developed third countries (e.g. South Africa, Colombia, Indonesia) 
(2) Guidelines  = 
1. increasing coal imports could favour production in countries with 
poor social standards without improving the latter 
2. increasing coal imports may also favour the development of under-
developed third countries (e.g. South Africa, Colombia, Indonesia 
(3) Production aid until 
closure  + may (temporarily) reduce imports from countries with poor social standards 
- may (temporarily) reduce – or slow the increase of - the import from 
countries in need of economic development 
(4) Aid for exceptional 
costs related to closure  = could reduce imports from third countries if some mines can keep open that could not bear the exceptional costs; however, this is only a 
by-effect and continuation of production is not the objective of this 
measure 
(5) Combination of (3) 
and (4)  + may (temporarily) reduce imports from countries with poor social standards 
- may (temporarily) reduce – or slow the increase of - the import from 
countries in need of economic development 
(6) 10-year continuation 
of the current Coal 
Regulation + may reduce imports from countrie s with poor social standards 
- may reduce – or slow the increase of - the import from countries in 
need of economic development 
In this table, option 5 shows the most favourab le social impact when compared with the 
baseline scenario. The combin ation of a gradual closure of  mines, allowing maximizing 
(early) retirement possibilities and comple mentary support in terms of counseling and 
retraining, effectively reduces the negative soci al impact of the mine closures in the 
regions concerned. Although – despite its high cost - it does not promote the creation of 
permanent jobs, it directly addresses the problem  that the social impact of mine closures 
is geographically concentrated in a few regions. 
6.4.8. Uncertainties with respect to the social and regional impact 
With respect to regional and social impacts, one  further point needs to be highlighted (in 
addition to the uncertainties mentioned in paragraph 6.3.9). The assessment carried out here concerns only the coal-mining regions. As the money spent in the mining regions 
cannot be spent elsewhere, it would also be  necessary to compare whether the same 
money would not lead to even better results in other sector s or regions. The study of 
Europe Economics
60 points to the possibility that there are opportunities to create jobs 
in other sectors at costs inferior to the cost  for saving jobs in the coal industry (e.g. in 
                                                 
60 See footnote 3. 
EN 42   EN the renewable energies sector). This however would not necessarily respond to the 
social impact of the mine closur e on the particular region concerned. 
6.5. Environmental impacts of the policy options 
6.5.1. Overview of the environmental aspects The impact of mining on the environment largely depends on the method of mining 
adopted, the geo-mining conditions of the ar ea in question, and the size and duration of 
the mining operations. Even though the method adopted for mining is often selected 
according to the characteristics of the coal seam and geo-mining conditions, political and social considerations can exercise an  influence in the choice of mining method 
adopted. Regardless of the method of mi ning chosen, coal mining affects the 
environment in a number of ways. The follo wing main categories of impact can be 
distinguished: 
• Visual and biodiversity impact on the landscape 
• Impact on ground water and soil subs idence in underground mining areas 
• Impact through mining waste 
• Emissions of greenhouse gases during the production, the transport and the burning 
of coal 
• Emissions of pollutants (except greenhouse gases) linked to the burning of coal 
Visual and biodiversity impact on the landscape 
The impact on the landscape and on biodive rsity is very different between open-cast 
mining and deep mining. Open-cast mining has a major impact on the landscape and 
biodiversity by creating virt ually "moon landscapes". The impacts can be partially 
remedied after the end of mining through environmental rehabilitation. 
Deep mining – as for most of hard coal in  Europe - affects the landscape above the 
mines only to a minor degree, but can crea te pressure on water and water-based eco-
systems through changes in the ground water level. Impacts depend on the region where 
the mining takes place and the biodiversity present before the start of mining operation. 
Particulate matter resulting from mining activit ies has been shown to  be detrimental to 
local fish populations. Enhanced sedimenta tion within aq uatic environments has the 
effect of inhibiting spawning a nd the development of fish e ggs and larvae, as well as 
smothering benthic fauna (fauna that inhabit the bottom/beds of rivers and lakes). In 
addition, high turbidity may impair the pa ssage of light, which is necessary for 
photosynthetic activity of aquatic plants
61. 
There is, to the knowledge of the Comm ission, no exhaustive assessment of the 
damages which mining causes to biodiversity and landscape. Some Member States have 
                                                 
61 Ibid 
EN 43   EN reported impact of mining activities on wate r and water-based eco-systems in their 
reports under Article 5 of Dir ective 2000/60/EC of th e European Parliament and of the 
Council establishing a framework for the Comm unity action in the field of water policy 
(hereafter: the Water Framework Directive)62. It results from these reports that mining 
activities can create significan t pressure on water and water-based ecosystems, both by 
changing the ground water level and by releasing pollutants.63 One particularly well 
documented example is the impact of open-cast mining in Germany on the Meuse 
river.64 
With respect to the impact of biodiversity on mining in general, there is an on-going 
dialogue between the Interna tional Union for the Conserva tion of Nature (IUCN) and 
the International Council on Mining and Meta ls, which has elaborated extensive best 
practice guidance on how to mini mize the biodiversity impact.65 
However, it has to be noted that, as subsidis ed coal will be, at l east to a large extent, 
replaced by imported coal, additional impact s on the landscape and on biodiversity are 
to be expected in the countries fr om which this coal is imported. 
 
Impact on ground water 
The average use of water in coal mining vari es from 60 to 120 litres per metric tonne in 
underground mining and about 17 litres pe r tonne for surface mining (El-Hinnawi 
198166). In addition, approximate ly 30 litres of water per tonne is required for waste 
disposal both in surface and underground mini ng. Large volumes of mine water are also 
discharged through areas of the mine and carri es with it any soluble minerals that may 
be present either in the coal or associat ed rocks, which causes degradation of water 
quality. The mine water may be acidic or neutral depending upon the pyrite content in 
the coal. Acid mine drainage occurs in thos e mines in which sulphur content is found in 
the range of 1–5% in the form of pyrite (FeS2). It degrades the water quality of the 
region in terms of lowering the pH of the surrounding wate r resources and increasing 
the level of total suspended solids, total dissolved solids and some heavy metals. In non acidic mines, water quality shows high hardness and bacterial contaminants. High values of hardness of mine water reduces its utility for domestic consumption. Some 
                                                
 
62 OJ L 327, 22.12.2000, p. 1.  
63 The reports can be found under  
http://forum.europa.eu.int/Public/irc/env/wfd/lib rary?l=/framework_directive/implementation_d
ocuments_1/wfd_reports&vm=detailed&sb=Title  . 
64 See the Meuse roof report, ava ilable on-line under http://www.cipm-
icbm.be/files/dce/31/Rapport%20final%20MEUSE_angl_def_4Mb.pdf. The report describes that for most of the groundwater bodies in the German Meuse river basin district, the risk of 
pressures due to chemicals (i.e., NO
3, and NH 4, SO 4) originates from diffuse pollution, in 
particular that resulting from intensive agricultura l activities. The good chemical status of many 
groundwater bodies is at risk because of high sulphate concentration. This is due to intense 
mining activities (e.g. spoil tips from coal mining, opencast mining operations) and to specific 
agricultural or industrial pressures. The groundwater bodies in opencast mines ( Inden  open-cast 
mine, GWK 282_06, and Garzweiler  open-cast mine, GWK 286_08) are influenced by intensive 
pyrite oxidation. 
65 See for an overview http://www.iucn. org/themes/business/mining/index.htm . 
66 El-Hinnawi. Essam. (1981) The Environmental Impacts of Production and Use of Energy, 
Dublin: Tycooly Press 
EN 44   EN mines (in Germany, anthracite mines for exam ple) also present a hazard in terms of 
collapsing buildings due to the need  to pump off excess ground water.  
Impact through mining waste 
Coal mines produce waste mainly through the fact  that the coal needs to be washed and 
cleaned from residues, before it can be sold. This makes it necessary for mines to deposit the residues material near the mining site. This wa ste can be avoided, if the 
material is used to fill abandoned mining ga lleries in order to stabilize them. The 
amount of mining waste is a direct function of the mining activity; if mining activity is 
reduced, then the environmental impact through mining waste would be reduced 
accordingly. Also here, it has to be noted th at there will be some additional waste in 
third countries, as indigenous coal will be replaced, to a cer tain extent, by imported coal 
from third countries. 
Emissions of greenhouse gases during th e production, during transport and during 
burning of coal  
Production. Coal mining releases methane, a very powerful greenhouse gas. The 
Europe Economics Study reports that both  deep mining and open cast mining create 
methane emissions, but that deep mining has higher methane emissions per ton of coal 
produced. Methane emissions from coal mines can be reduced through methane capture; the captured methane can then be used to produce electricity in a combined gas cycle 
turbine (which is done in at least a part of  the European mines). 
There is very limited data availability on me thane emissions from European coal mines; 
it has not been possible,  in the framework of this impact assessment, to assemble data 
covering the different co untries and mining areas. 
In addition, the production of coal consumes itself energy. The IEA has calculated that 
the overall energy consumption of coal mines in the EU Member States which are also 
Members of the OECD (the EUR 19) amount s to 1,983 ktoe in 2003, out of which 
electricity accounts for 1,114 ktoe , diesel 54 ktoe, hard coal  409 ktoe and anthracite 409 
ktoe.
67  
Transport . The transport of coal from the mine  head to the power plant consumes 
energy for transportation. Depending on the available mode of transport (inland 
waterway or railway) and the distance, the consumption of energy varies. The Europe 
Economics Study68 reports that in general, imported coal has considerably higher CO 2 
emissions for transport than domestic coal. 
It is very difficult to clearly establish the environmental impact of the envisaged 
scenarios on greenhouse gas emissions during the production and during transport, for 
several reasons. 
                                                 
67 See International Energy Agency, Energy balances of OECD countries 1960 to 2003. 2005 
edition on CD ROM. OECD/IEA 2005. 
68 See footnote 3. 
EN 45   EN First of all, the exact methane emissions of  the domestic coal industry are not known. 
Mining technology in general and methane capture in particular  are highly developed in 
Germany. It thus seems likely that the methan e emissions in other Member States might 
be higher. 
Secondly, it is difficult to know in advance what kind of imported co al will replace the 
subsidised domestic coal. Depending on th e method of mining (deep or open cast), 
depending on the transport distance, and depending on the mining technology used, the 
greenhouse gas emissions of imported coal may vary considerably. 
Overall, the environmental trade-off between  domestic productions and coal imports is 
uncertain. Shorter transport wa ys and higher standards for me thane capture in European 
mines would plead in favour of domestic pr oduction. But the fact that a lot of the 
international coal production takes place in open cast mines, which emit less methane, 
would rather plead in favour of imports, as  long as this is not counter-balanced by 
methane capture. The impact of the various scenarios with regard to greenhouse gas 
emissions is thus ambiguous. 
Burning of coal. As explained before, the overall use of coal as an energy source 
should not be affected by th e choice between the assess ed policy options, as the 
reduction in the production of indigenous coal  will likely be replaced by imported coal. 
However, several studies concluded that that due to non-rationa l economic behaviour, 
the use of coal under a system with subsidie s could be higher than it would be absent 
the subsidies69. 
6.5.2. The impact of the policy options 
Overall, the closure of uncompetitive mines seems to have a positive impact on the 
immediate environment of the mines. Howe ver, in case coal subsidies continue 
temporarily, aid for exceptional costs related to closure may be directed to mitigate the 
environmental impact and to allow an immediate clean-up of closed mining sites, even if the mining undertaking would normally not be  able to finance such. Furthermore, it 
needs to be mentioned that mine closures n eed to be prepared well in advance in order 
to avoid possible negative environmental im pacts on the immediate environment of the 
mine (e.g. the spatial distribution of the mine's remaining exploitation needs to be planned years in advance to avoid that a sudden interruption of the exploitation would 
lead to damages to the landscape above the mine). 
With regard to greenhouse gases, while the closing of a mine stops any emissions from 
the mining activity, its impact on global
 emissions remains uncertain when the 
electricity generation is taken into account. This follows from the likely substitution of 
indigenous coal by imported coal. Indeed, to  appreciate the impact on global emissions, 
we need to take into account the environmenta l effect that a substitution of domestic by 
imported coal would have on the environment of the third countries concerned. As this 
is very difficult – we do not know in a dvance where the additional coal will be 
produced and under which environmental condi tions -, there are un certainties regarding 
the overall environmental impact. Only a gr adual switch from coal to other energy 
                                                 
69 See OECD, "The energy, environment and economic effects of phasing out coal subsidies in 
OECD countries", study carried out by DRI for the OECD Environment Di rectorate, April 1994. 
EN 46   EN sources for the electricity production, in parallel  to the closure of domestic coal mines, 
would have a more certain impact on greenhouse gas emissions. 
As there are many uncertainties surrounding the environmental impact of coal mining, it 
is difficult to evaluate the various polic y options form the overall environmental 
perspective. Table 6 gives an overview of the impact of the polic y options for the EU 
(the table gives the impact on the EU envi ronment, only for greenhouse gases is the 
global effect taken into account).  
All the policy options as sessed aim at the reduction of coal  subsidies, but with different 
degrees of gradualism, and may also contribu te to a gradual switch to other energy 
sources. Whether a gradual reduction of the su bsidies (as in options 2 to 5, and perhaps 
6) or an immediate stop of subsidies (option 1) leads to a faster switch also depends on 
the modalities of the national support scheme s (e.g. if they are embedded in a general 
plan favouring the switch to other energy sources). 
Table 6: environmental impact of the policy options (impact in the EU only) 
(comparison to the baseline scenario)70 
  Visual and biodiversity impact 
on landscape Impact on ground water and soil 
subsidence 
(1) Baseline scenario  Closure of mines significantly reduces the impact of open-cast 
mining, less for underground 
mines. Potential damages will be stopped 
for closed mines in the EU, may be 
enhanced in mines from where 
imports originate. 
(2) Guidelines  -/= same as option 1, except that production could last a few months 
longer -/= Potential damages will be 
stopped for closed mines. But 
mining may continue for a very 
short time. 
(3) Production aid until 
closure  -/= closure aid will be temporary, but in the meantime the negative 
impact will continue. However, a 
better planning of the closure 
avoids negative impacts on the 
landscape. -/= possibility of further damage 
during temporary continuation of 
mining 
(4) Aid for exceptional 
costs related to closure  =/+ aid for the rehabilitation of mining sites may help to remedy 
(part of) the impact =/+ aid helps to cover the costs of 
damages 
(5) Combination of (3) 
and (4)  -/= closure aid will be temporary, but in the meantime the negative impact will continue. 
However, a better planning of the 
closure avoids negative impacts on the landscape. -/= possibility of further damage 
during temporary continuation of mining. 
(6) 10-year continuation - production could continue - further damage for up to 10 years 
                                                 
70 The signs "+" and "-" in the table are to be s een as a comparison with the baseline scenario. 
EN 47   EN of the current Coal 
Regulation without big reduction for up to 10 
years 
Table 6: environmental impact of the policy options (continuation) 
  Impact through mining wast e Emission of greenhouse gases 
(1) Baseline scenario  Waste can directly be avoided by 
stopping the coal production Closing mines reduces methane 
emissions, but unknown in how far 
they are compensated by higher emissions from imported coal for 
power generation (methane 
released by third country mines 
and emissions from transport).  
(2) Guidelines  = very similar to option 1, 
production will only continue for a very short time = same as option 1 
(3) Production aid until 
closure  -/= waste production would continue where mines are 
temporarily kept open unknown impact (uncertainties 
with regard to the degree of 
substitution by imported coal for power generation and to the 
geographical origin and the 
production methods of imported coal) 
(4) Aid for exceptional 
costs related to closure  = this type of aid is not expected to affect waste production = not affected by this option 
(5) Combination of (3) 
and (4)  -/= waste production would continue where mines are temporarily kept open unknown impact (uncertainties 
with regard to the degree of substitution by imported coal for 
power generation and to the 
geographical origin and the production methods of imported 
coal) 
(6) 10-year continuation 
of the current Coal 
Regulation - waste production could continue 
without significant reduction for 
up to 10 years Unknown impact 
 
6.6. Impact on SMEs 
The number of small and medium-sized enterpri ses is rather limited as shown in table 7. 
Smaller coal mining enterprises can mainly be found in Spain. 
Table 7: number of companies according to  number of persons employed (subsidizing 
Member States – 2008/2009) 
 Germany Spain Poland Ro mania Hungary  Slovakia 
Micro entreprise 0 1 0 0 0 0 
EN 48   EN (1-9 employees) 
Small entreprise 
(10-49 employees) 0 6 0 0 0 0 
Medium enterprise 
(50-249) 0 5 1 0 0 2 
Big enterprise 
(more than 250) 1 5 6 1 1 1 
Total 1 17 7 1 1 3 
With regard to State aid, SMEs of the hard coal sector are not expected to be in a 
different situation than the bigger companies. 
It must be considered that there may be  a lot of SMEs among the suppliers and sub-
contractors of the coal mines. Ho wever, exact figures are lacking. 
6.7. Impact on administrative costs 
The provision of State aid generates an admi nistrative cost for th e authorities and the 
undertakings concerned.  
For the national authorities, th is relates to the pr eparation of the budgets and the control 
of the correct use of the financial means. Fu rthermore, State aid im plies the notifying of 
aid and the reporting towards the European  Commission. Approximate estimates from 
the main Member States providing aid to the coal industry indicate an administrative 
cost between 0.15 and 0.25% of the total amount of aid, depending on the number of 
beneficiaries. This corresponds to a total co st between EUR 5 and 8 million for the EU 
(including an administrative cost of about  EUR 100,000 for the Commission). Note that 
this administrative cost does not diminish pr oportionately with the amount of aid as the 
amount of work remains roughly the same, as long as the number of beneficiaries 
remains stable. 
Furthermore, these administrative costs coul d not be avoided completely, even in case 
of the expiry of the Coal Re gulation (option 1) as State ai d could still be provided on the 
basis of the general State aid rules, and as the financial support for the inherited 
liabilities of closed coal mines would sti ll necessitate the same administrative effort, 
even if the financial support would no longer constitute State aid. 
Finally, there are no estimates as to the administrative cost of State aid for the 
undertakings concerned. This would mainly re late to the applicati ons for State aid and 
the reporting on the correct use thereof. 
EN 49   EN 7. COMPARING THE OPTIONS  
The results of the previous sections give a contrasted picture of the impact of the 
various policy options: 
– From an economic point of view, op tion 2 (Guidelines) seems to be 
preferable to the baseline scenario in terms of mitigating the direct economic impact on the most concerned regions and industries. 
– From a social point of view, option 5 of fers the best possibilities to cushion 
the negative impact of the mine closur es, especially given the geographical 
concentration of this impact. 
– From an environmental point of view, there is a lot of uncertainty. Although 
the immediate environment of the mine s would certainly benefit from an 
immediate or almost immediate stop of production (options 1, 2 and 4), the 
picture is uncertain with regard to  global greenhouse ga s emissions when 
the emissions from the burning of coal  by electricity pr oducers are taken 
into account. This uncertainty results from the high substitution rate of domestic coal by imported coal. Although this would not be a 100% substitution, the difference between the policy options would depend upon 
the modalities of the national policies w ith regard to favouring the switch to 
other energy sources. Finally, with regard to the local impact, we need to consider that a gradual closure as in op tions 3 and 5 allows to better taking 
account of preparations that need to be done well in advance of the closure 
(potential impact on landscape). 
All in all, options 2 and 5 stand out as the most adequate to attain the policy objectives 
defined in section 4. The choice for one of th ese two options depends on the weight that 
policymakers attach to the economic aspects on the one hand and the social aspects on 
the other hand. The environmental impact de pends more on the mode of implementation 
of the options than on the options themselves. 
The following table gives a synthetic overview of the policy options' effectiveness with 
regard to the specific policy options defined in section 4. The preferred options 2 and 5 
have been compared with the baseline scen ario. In addition, option 6 has been added to 
the table, given that it is the pref erred option of most stakeholders. 
Table 8: comparison of the policy options  on the basis of th e policy objectives 
Policy objectives (1) Baseline (2) Guidelines (5) Closure aid + 
aid for 
exceptional costs (6) Prolongation 
of the Coal 
Regulation 
Reduce the social 
impact of coal mine closures About 100 000 
jobs will be lost at once. General 
labour market 
policies could be complemented by 
specific support 
for former coal Same as (1), but 
mine closures can be organised in a 
more orderly 
fashion. The reduction of 
activity can be spread over time 
in order to limit 
firing and to facilitate the 
absorption of the 
unemployed by The same policies 
as under (5) are possible, but there 
is a risk that the 
policy objective will be missed: 
there is a lack of 
incentive to prepare for the 
EN 50   EN miners. the labour market. closure of the 
mines and to 
support a reconversion of 
the work force. 
Ensure the 
cleaning and rehabilitation of 
abandoned mines In case of 
bankruptcy of the mining 
undertaking, the 
State can organise the rehabilitation 
of the site. 
However, there is 
a risk that useful 
preparatory work cannot be carried 
out because of the 
immediate stop of activities. The rehabilitation 
of the site can be started 
immediately 
during the closure period, thereby 
effectively 
preparing 
rehabilitation 
work while production is run 
down. The rehabilitation 
of the (to be) closed mines can 
be prepared before 
production stops, even if the mining 
undertaking does 
not have the 
necessary means. Same as (5) is 
possible, but it is also possible that 
the closure will 
not be prepared at all as the closure 
of the mines is not 
necessarily 
planned. 
Minimise distortions of 
competition Possible (although 
limited) distortions 
of competition by State aid are 
avoided altogether. Distortions of 
competition by 
State aid are limited to a very 
short period of 
time. Furthermore, the low volume of 
intra-EU trade in 
hard coal is limited and 
therefore the 
impact of State aid 
on the internal 
market is very limited anyway. Distortions of 
competition by 
State aid are limited to the 
closure period. 
Strictly degressive aid leads to a 
quick reduction of 
possible distortions. 
Furthermore, the 
low volume of 
intra-EU trade in 
hard coal is limited and 
therefore the 
impact of State aid on the internal 
market is very 
limited anyway. There is no 
guarantee that 
State aid will be reduced quickly. 
However, the low 
volume of intra-EU trade in hard 
coal is limited and 
therefore the impact of State aid 
on the internal 
market is very 
limited. 
 
8. MONITORING AND EVALUATION  
State aid granted by Member States is subject to the notification and reporting 
requirements of Regulation 659/199971. In addition, the cu rrent Coal Regulation 
imposes national reporting of aids sp ecifically for the hard coal sector. 
The Commission will continuously  monitor the developments in the hard coal sector 
and evaluate on a regular ba sis the impact of the changed legislative context. 
                                                 
71 OJ L 83, 27.3.1999, p. 1. 
EN 51   EN More specifically, the Commission will observe market developments with regard to the 
following issues: 
• Evolution of State aid in the sector; 
• Evolution of productivity and employment in the sector; 
• The impact of coal mine closures on regi onal development and on related industries; 
• The redeployment of former coal mine workers; 
• The reconversion of the regions co ncerned by coal mine closures; 
• The evolution of intra-EU trade in hard coal and the impact of mine closures; 
• The rehabilitation of former mining sites. 
Data on State aid are already collected by the Commission in the context of the so-
called "scoreboard" on State aid. Data on trad e, employment and productivity can be 
derived from Eurostat data. Other, more specific information on the impact of mine 
closures on regional economies and on the mi ne workers can be prepared by ad hoc 
studies or - depending on the option chosen – be part of the reporting requirements 
linked to the authoris ation of State aid.  
EN 52   EN ANNEX 1  
Historical background Since 1965, the Commission has authorized, on different legal bases,  State aid to the 
Coal industry. The aim of authorizing this State aid has been threefold: 
• Overcoming the lack of competitiveness of the EU coal industry through 
restructuring; 
• Reducing the dependence on foreign im ports of energy and increasing the 
EU’s energy security; 
• Mitigate the often difficult social situation in coal mining areas. 
State aid to the Coal industry was covere d until its expiry in 2002 by the Treaty on the 
European Community of Coal and Steel (hereafte r: the ECSC treaty). Its Article 4(c) set 
out a general prohibition of State aids: 
The following are recognized to be incompatible with the internal market for coal and 
steel, and are, therefore, abolished and prohi bited within the Comm unity in the manner 
set forth in the present Treaty: 
(c) subsidies or state assistance, or special charges imposed by the state, in any form 
whatsoever; 
However, as of 1965, it became clear that the strict application of  Article 4(c) would 
have meant the close down of most of th e underground mines in Europe, because they 
were no longer competitive on the world ma rket for coal. Following proposals of the 
Commission, the Council adopted a total of four consecutive ECSC decisions, laying 
down the conditions under which State aid to  the coal industry co uld be granted. The 
legal basis for these decisions was Article 95(1) ECSC treaty: 
In all cases not expressly provided for in the present Treaty in which a decision or a 
recommendation of the High Authority appears n ecessary to fulfill, in the operation of 
the internal market for coal and steel and in accordance with the provisions of Article 5 
above, one of the purposes of the Community  as defined in Articles 2, 3 and 4, such 
decision or recommendation may be taken subject to the unanimous concurrence of the Council and after consultation wi th the Consultative Committee. 
The authorization and granting of State aid a llowed alleviating the social consequences 
of the close-down of coal mines all ove r Europe. Of the mining Member States, 
Belgium phased out mining the first in the 1970ies; it was followed since then by 
France. Portugal closed its last mine prior to joining the EU; so did the current candidate country Croatia. The other mining Member States have considerably reduced 
the size of their coal mining industry, but not phased out mining completely. 
It is important to note that the Commissi on authorized aid under the ECSC decisions 
only for mines which produced “coal” in the se nse of Annex I ECSC. State aid to lignite 
mines was excluded from the ECSC treaty. Th e distinction between "coal" and "lignite" 
EN 53   EN was thus of crucial importance under the ECSC treaty. Th e Commission issued 
guidance in this respect in a Communication of 1986.72 
After the expiry of the ECSC  treaty on 23 July 2002, the rule s of the EC treaty apply to 
State aid for the coal industry. Now, it is necessary to distinguish between on the one 
hand mines producing low-grade C coal in th e sense of the intern ational codification 
system for coal laid down by the Unite d Nations Economic Commission for Europe73 
and on the other hand high-grade, medium-grade and low-grade category A and B coal within the meaning of the international codi fication system for coal laid down by the 
United Nations Economic Commission for Euro pe, cited above. The latter are covered 
by the Coal Regulation (see Article 2 (a) of the Regulation), cited above, whereas the 
former are subject to the general State aid rules. 
 
The Coal Regulation has been  adopted on the basis of Ar ticle 87(3)(e) EC Treaty, and 
established an exception to the general proh ibition of State aid. It allows for operating 
aid (Article 4 and Article 5 § 3), investment aid (Article 5 § 2) and aid for inherited 
liabilities (Article 7) to coal mine s, subject, regarding Articles 4 and 5,
 to the condition 
that the aid follows a downward trend (Artic le 6) and that Member States include the 
mines into a plan for access to coal reserves, which needs the approval of the Commission (Article 9): 
(a) Aid for accessing coal reserves : Countries providi ng aid for ongoing 
activities (e.g. current production aid (Article5(3)), and aid for initial 
investments and accessing reserves on any scale (Article 5(2)); 
                                                
 
72 Communication of the Commission concerning the interpretation of the expressions “coal” and 
“lignite” mentioned in the annex I of the ECSC treaty of 11 October 1986 (OJ C  254, 11.10.1986, p. 2). According to this Communication, the “black lignite” produced in Spain, as 
well as the coal in the Italian mining area of Sulcis  (Sardinia), constitute “coal” in the sense of 
Annex I ECSC, whereas the “brown  lignite” found in different Member States, as well as the 
coal produced in the French area of L’Arc  (Gardanne) constituted lignite in the sense of Annex I 
ECSC. 
73 International system for the codification of medium-grade and high-grade coal (1998); 
International classification of coal in seam (1998) and International system of codification for 
low-grade coal (1999). COAL
HARD COAL ORTHO - LIGNITE
Anthracite 
Bituminous Coal 
Sub-Bituminous Coal 
Meta - Lignite Peat Oil Shale
Covered by current Coal Regulation NOT covered by current Coal Regulation 
EN 54   EN (b) Aid for reduction of mining activity : Countries providing aid for 
ongoing activity for mines that are unde r a closure plan (Article 4, only 
applicable until the end of 2007); and 
(c) Aid to cover exceptional costs : Countries providing aid to cover 
exceptional costs of restructuring a nd decommissioning, as well as of 
inherited social and environmental liab ilities of closed mines (Article 7). 
EN 55   EN ANNEX 2  
The current market situation 
Hard coal production in the EU Hard coal reserves in Western and Southern  Europe have signif icantly decreased over 
the past 50 years due to high production le vels and the closure of many uneconomic 
mines, while Eastern European Member Stat es still have higher reserve levels. Today, 
the largest hard coal resour ces are located in Poland, with  significant resources also 
available in the Czech Republic, UK a nd Germany. The EU presently accounts for 
approximately 125 million tonnes of coal equi valent (Mtce) of hard coal production. 
Poland accounts for more than half of the EU  production, while the other half is mainly 
produced by Germany, the United Kingdom, the Czech Republic and Spain. 
Chart 1: production of hard coal in the EU (Mtce, 2007; Ecorys data) 
PL
55%
DE
14%UK
11%HU
1%
CZ
10%ES
5%SLO
0%SK
1%IT
0%BG
1%
RO
2%
 
The coal production has been declining stead ily over the last two decades. A number of 
Member States have stopped the hard coal production altogether, such as France and 
Belgium. 
Hard coal accounts for 12% of the EU's  gross inland energy consumption. This 
percentage can be split up be tween 5% of domestically prod uced hard coal and 7% of 
imported hard coal. 
 
      
EN 56   EN  
 
Chart 2: gross inland energy consum ption (Mtoe, 2006; Eurostat data) 
Imported hard coal
7%
Domestic hard coal
5%
Lignite
5%
Oil
38%Gas
24%Nuclear
14%Renewables
7%
 
Chart 3: gross electricity generation in the EU (Gwh, 2006; Eurostat data) 
Hard coal
18%
Lignite
12%
Oil
4%
Gas
20%Nuclear
30%Hydro
10%Wind
2%Other
4%
 
As far as electricity production is concerned, most Member States use a diverse range of 
fuels in the process of electri city generation. While the particular mix of fuels differs 
between countries, a significan t level of reliance is place d on coal, gas, nuclear and 
hydro.  
EN 57   EN Hard coal accounts for 18% of the EU's electricity production.  Note that these 
percentages vary a lot between Member States. For example, hard coal accounts for about 57% of electricity generation in Poland, 51% in Denmar k, 35% in the UK and 
21% in Germany, but less than 5% in France and Romania
74. Not surprisingly, coal 
plays a much more prominent role in the domestic power generation of coal-producing 
countries; almost all coal-producing Member St ates use a much higher share of coal for 
their domestic power generation than the EU average. 
Employment in the EU hard coal industry 
In 2007, about 220 000 persons were employed in EU hard coal production, of which 
more than half in Poland. Similarly as for production, the employment level is on a clear 
declining trend.  
020000400006000080000100000120000
PL DE CZ RO ES UK BG SK HU IT
 
State aid to the hard coal industry 
With the 1407/2002 Regulation in place, over €26 b illion of State aid to the hard coal 
sector has been approved between 2003 and 2008.  In addition, a number of forward 
plans for aid in the years to 2010 have alrea dy been made. However, the total amount of 
subsidies to EU hard coal follows a downw ard trend: the yearly amounts have been 
halved between 2003 and 2008 (from €6.4 billion in 2003 to €3.2 billion in 2008). 
The following table gives an overview of St ate aid to the EU hard coal sector:
                                                 
74 Source: Euracoal (figures for 2007). 
EN 58   EN Table 1 - State Aid 2003-2008 - amounts actually granted by Member States or 
authorised by the Commission for the relevant year 
(Million €) 
Country 2003 2004 2005 2006 2007 2008 
Germany 
- current production aid 
- aid  related to exceptional costs 2639 
780  
2483 
556  
2114 
602  
1472 
882  
1347 
994  
727 
1055 
Spain 
- current production aid - aid related to exceptional costs  569 
550  
340 573  
502 582  
467 345  
448 359  
434 373 
France 
- current production aid - aid related to exceptional costs   
202 715  
119 769  
0 0  
0 0  
0 0  
0 0 
United Kingdom 
- investment aid 
- aid related to exceptional costs   
22 14  
30 
0  
36 
0  
14 
0  
1 0  
2 0 
Poland - aid related to exceptional costs   
903  
913  
369  
60  
87  
169 
Czech Republic 
- aid related to exceptional costs   
n/a  
15  
15  
15  
15  
0 
Romania 
- current production aid   
n/a  
n/a 
  
n/a  
n/a  
112  
93 
Hungary 
- current production aid   
n/a  
44  
39  
38  
36  
34
Slovakia 
- investment aid 
- aid  related to exceptional costs  
n/a 
3  
n/a 
2  
2 
3 
  
4 
3  
3 
3  
3 
3 
Slovenia 
- aid related to exceptional costs   
2  
2  
15  
17  
17  
18 
 
Total EU27  - current production aid 
- investment aid 
- aid related to exceptional costs   
6399 
 
3410 
22 
2967  
5846 
 
2986 
30 
2830  
4279 
 
2655 
38 
1586  
3318 
 
1977 
18 
1323  
3422 
 
1943 
4 
1475  
2911 
 
1288 
5 
1618 
 
 
EN 59   EN ANNEX 3  
Summary of the contributions received by  the Commission following the public 
consultation on the aftermath of the ex piry of Regulation (EC) 1407/2002 on State 
aid to the coal industry.  
 
This document does not express the posit ion of the Commission; neither does it 
commit the Commission, nor should it be assu med that it will be the position taken by 
the Commission following the consultation process. 
 
On 13 May 2009, the Commission launched a pub lic consultation to obtain interested 
parties' comments on the aftermath of the expiry of Council Regulation (EC) 1407/2002 
on State aid to the coal industr y (the "Coal Regulation"). To  this effect, the Commission 
services published a consultati on paper on its Internet websit e "Your voice in Europe". 
The consultation was closed on 15 July 2009. 
In addition, the Sectoral Social Dialogue Committee " Extractive Industries" was 
consulted in a plenar y meeting on 4 June 2009. 
The Commission received 60 contributions, breaking down into the following groups: 
- The common contribution of the social part ners of the Sectoral Social Dialogue 
Committee "Extractive Industries"  
- Undertakings and associati ons of the coal industry: 16 
- Electricity producers: 2 - Producers of mining equipment: 3 - Other undertakings and industry associations: 4 - Trade Unions: 13 - Environmental associations: 2 - Public authorities: 12 (9 nationa l governments + 3 regional and other) 
- Individual contributions: 8 A complete list of contributors is given in the annex. All co ntributions can be consulted 
on the Commission's website: http://ec.europa.eu/energy/ coal/consultations/2009_07_15_en.htm
. 
EN 60   EN General overview  
In the consultation paper, the Commission se rvices defined the specific policy objective  
as to minimize the possible adverse effects of  mine closures that may follow a phasing-
out of subsidies, especially with regard to their social and environmental aspects. Policy 
options were then discussed in order to attain this objective. 
The respondents of the coal industry  and of the mining equipment industry  generally 
contested the policy objective its elf by arguing in favour of the continuation of the State 
aid categories currently a llowed under the Coal Regul ation. The social partners  stressed 
that such continuation would be necessary to support the sector 's restructuring efforts, to 
limit its social and regional aspects, and to ensure the security of supply of energy by 
guaranteeing the access to coal as an in digenous energy source. They call for a 
continuation of the Coal Regulation and as k at least for a new Community regime on 
State aid for the reduction of activity as well as for covering mine closures and inherited 
liabilities. 
Several respondents emphasized that a pa rt of the electricity power plants  were 
specifically designed to be fired with the coal  of a given (nearby) mine. The adaptation 
of these power plants to other coal types or  even to other energy sources would be very 
expensive and in some cases even technically  impossible. If the expiry of the Coal 
Regulation led to the closure of the near by mines, then these power plants would 
encounter difficulties to continue their production. 
The environmental organisations do not favour a new sector-s pecific State aid regime 
for the coal sector. They argue that State ai d to coal has a negativ e impact on the energy 
production from clean, sustaina ble and renewable sources and it does not provide 
incentives for the energy efficiency and savings. According to them, if coal mines were to close, this would have a medium-ter m favourable environmental impact, by the 
increasing use of alternative energy sources . Finally, these organi sations also believe 
that, by not prolonging this specific regime, subsidies could be redirected at supporting 
the workforce of the coal mines in retrai ning and finding other j obs. They argue that 
more jobs could be created in the renewable en ergy sector than would be lost in the coal 
sector. 
The governments
 of Spain, Slovakia, Hungary and Romania  are in favour of a 
prolongation of the current Coal Regulation. Th ey refer to the necessity to ensure the 
security of energy supply by continuing the production of indigenous coal and to the 
impact that mine closures would ha ve on regional unemployment. Poland  pleads for a 
new Regulation allowing investment aid a nd aid for inherited liabilities. Germany  
favours sector-specific rules that would allo w State aid in the context of the gradual 
closure of its mines until 2018; this would a llow using all possibilities of retraining and 
(early) retirement in order to avoid direct job losses. 
The Czech Republic and Bulgaria  currently do not grant State aid based on the Coal 
Regulation, but they concede that a coal-speci fic legal instrument ma y become useful in 
future years. The United Kingdom  prefers the issue of an information note or 
Commission Guidelines on the application of general State aid rules to the hard coal 
sector instead of new sector–specific rules. However, the UK acknowledges that 
circumstances may arise in which an appr opriate programme of well-defined and time-
EN 61   EN limited aid could be justified to  secure the survival of an  otherwise viable undertaking. 
Furthermore, well defined investment aid coul d help potentially vi able undertakings to 
maintain access to reserves. 
Specific aspects  
Impact of the expiry of the Coal Regulation on the hard coal industry 
The respondents confirmed that most of th e coal mining undertakings that currently 
receive State aid would not be able to su rvive without aid granted under a sector-
specific State aid regime. As mentioned in  the Ecorys study this is the case for 
Germany, Spain, Hungary and Romania. But also respondents from Poland, the Czech 
Republic, Slovakia and the United Kingdom were concerned that coal mining 
undertakings in these countries may need St ate aid in coming years that goes beyond 
what is allowed under ge neral State aid rules. 
Security of supply / operating aid 
A large majority of respondents argue that co ntinued State aid to th e hard coal industry 
is needed in order to ensure the security of energy supply in the Community. According 
to them, the need for diversified energy sources and for reduced dependence on third 
countries for energy supplies justifies State aid for the hard coal sector in order to keep 
access to this indigenous energy source. In most cases, these respondents call for 
continued operating aid . Some argue that for the sake of the security of supply, such 
operating aid should not be degressive75. Some respondents also claim that such aid 
would have a limited impact on the internal ma rket, given that there is hardly any trade 
of coal between Member States. 
However, according to some respondents, hard  coal should be readily available on 
world markets from a number of economic stab le countries, even if prices may become 
more volatile than in the past. In partic ular, the environmental organisations do not 
believe that the security of energy supplies would be endangered by reduced coal production in the Community, because of easil y available coal on world markets and the 
increasing importance of renewable energy sources (which are also indigenous). 
Investment aid 
Currently, investment aid is only provided in  one Member State (Slovakia) and most 
respondents did not request the possibility for investment aid in the future. 
However, respondents from trade unions and coal mining undertaki ngs in the United 
Kingdom and in Poland pointed to the poten tial need for investment aid after 2010. 
While the Polish respondents are in favour of  direct investment grants to increase 
production capacity, respondents from the UK poin ted to the very high  initial financing 
requirements to access new reserves and the difficulty to obtain bank finance without a 
State guarantee. They believe that the regional aid guidelines will not always allow such 
                                                
 
75 For one respondent, such operating aid should be kept until coal production would be profitable 
with CCS. 
EN 62   EN investment aid as the coal reserves are not necessarily located in the areas eligible for 
regional aid. 
Also the Polish government refers to the need for investment aid and the UK 
government - although in the fr amework of the general State rules - asks for special 
attention for investment aid. 
Coal-fired power stations 
While one electricity provider declared that  its coal-fired power station can easily 
switch between different coal qualities and hence would have no problem in switching 
to imported coal, this seems not to be the case for other power stations. Many 
respondents point out that coal -fired power stations, which have been designed to burn 
coal of a given quality – such as coal from a nearby coal mi ne – cannot always easily be 
adapted to other coal types. If the mine providing the coal would be closed, then the 
transformation of the burners and the adap tation of the transport infrastructure may 
require significant investments which the st ation will not always be able to bear. 
Concrete examples: - The Industrial Development Agency in Pola nd estimates that the modernisation of 
Polish power stations required by a switch to  imported coal would take between 15 and 
20 years. It further notes that the transpor t capacities (ports and roads) are limited and 
that because of its geographical location, Po land would be mainly dependent on coal 
from its eastern neighbours. 
- The Hungarian Power Companies Ltd and Ve rtési Power Plant Lt d indicate that a 
cessation of aid for the only Hungarian coal mine would entail the closure of the Vertési 
power plant. In case of closure of the mine, the power station's boile rs would need to be 
technically modified, but even after this modification they w ould not be able to attain 
the efficiency of modern power plants. Furthermore, imported coal could only be 
transported by rail, increasing its cost. 
Inherited liabilities 
Most respondents confirmed that coal mines currently receiving St ate aid would not be 
able to meet their inherited social and e nvironmental liabilities in case of an end to 
subsidies. 
Employment 
Many respondents have stressed that an e nd to coal production would not only directly 
affect the jobs in the coal industry, but that there are also many jobs in related industries 
that would be lost. 
According to Spanish trade uni ons, there are 12000 coal miners
76, but also 70000 other 
jobs in related industries. According to Polish trade unions, for each coal mining job, 
there are a further 2.5 jobs elsewhere in Poland. According to RAG (Germany), for each 
                                                 
76 This figure seems to englobe all coal, not just hard coal. 
EN 63   EN coal mining job, there are a further 1.3 jobs  elsewhere in the economy. And according to 
the Slovak coal producers, there are 5000 jobs  in coal mining in Slovakia and 10000 
related jobs. 
Ortho - lignite 
Respondents pointed out that the production of  hard coal and ortho-lignite are very 
different, as the first is usually mined in deep mines while the latter is mined on the 
surface. Ortho-lignite production is therefore less costly and competitive without State 
aid. Some respondents, however, would like to  extend the Coal Re gulation to include 
ortho-lignite as well.