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COM (83) 309 
 
 
 
Vol. 1983/0 125 
  
 
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
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COMMISSION OF THE EUROPEAN COMMUNITIES
COM  ( 83) 309 final
Brussels, 10th June 1983
PROPOSALS FOR A BALANCED SOLID FUELS POLICY
(Communication from the Commission to the Council)

COMMISSION OF THE EUROPEAN COMMUNITIES
COM(83) 309 final
Brussels, 10th June 1983
PROPOSALS FOR A BALANCED SOLID FUELS POLICY
(Communication from the Commission to the Council)
COM(83) 309 final

CONTENTS
PAGE
1. INTRODUCTION ............................................  1
2. OBSTACLES TO GREATER USE OF SOLID FUELS
- General factors affecting consumption ...............  5
- Specific factors affecting consumption ..............  8
3. THE ROLE OF RESEARCH, DEVELOPMENT AND DEMONSTRATION
- General remarks ............. ........................  12
- R&D activities .......................................  13
- Demonstration projects ............................ . 14
4. IMPORTANCE OF SATISFACTORY COMMUNITY PRODUCTION FROM THE  
ECONOMIC POINT OF VIEW AND FROM THE POINT OF VIEW OF  
SECURITY OF SUPPLIES'
- Access ................................................. 15
- Prices ................................................. 15
- The economics of Community production of coal ....... 15
- Towards a more balanced European market in coal ...... 16
- Lignite (brown coal) and peat production ........   19
- Coking coal ............................    21
5. SOCIAL MEASURES .........................................  22
Annex

- 1 -
,, INTRODUCTION
jt1.  At it 3 meeting on 21 April the Energy Council -underlined the importance  
of achieving the Community’s energy objectives for 1990 and asked the  
Commission to assess what progress had been made towards the achievement  
of these objectives. The Commission concludes from its analysis that  
present policies will not be enough to ensure the achievement of Community  
objectives, particularly in a situation where lower oil prices are checking  
the momentum given to the energy strategy by market forces.
In a separate Communicatioif the Commission is submitting to the Council a  
proposal for an accelerated five-year programme of action in the energy and  
energy R&D sectors, with a view to reinforcing this strategy. One of the main  
ideas underlying this Communication is the need to make optimum use of  
physical and financial resources at Community level. This applies in particular  
to solid fuels - consumption of which is below the forecasts and is stagnating.  
Despite the considerable amounts of aid paid by the coal producing countries,  
a large proportion of coal production is not competitive with imported coal in  
the present circumstances. Imports are therefore at a high level. Production  
levels have been maintained and producers* stocks are continuing to build up.  
This state of affairs is a source of wastage and lack of cohesion. If the  
size of the Community’s internal market is taken into account, and the action  
to be undertaken is better coordinated at Community level, it should be  
possible to reduce the wastage and increase the flexibility of the supply of  
solid fuels for the benefit of all, producers and consumers, provided that  
Community action is based on a programme with a modicum of credibility in  
terms of financial resources and an overall framework to ensure continuity.
1.2, As the Ministers of Energy noted at their informal meeting in Copenhagen in  
December 1982, a balanced, overall solid fuels policy would be a major step  
in this direction.
*C0M( 8 3  ) 3 1 5

- 2 -
1.3· In the Council's policy debate on 21 April based on the Commission’s working  
paper (COM(83) 54 final), the Council concluded that discussions should centn  
on four factors which will determine the future of solid fuels in the  
Community:
- What are the obstacles to greater use of solid fuels?
- In what way can R&D help to increase consumption of solid fuels?
- What influence will Community production (under satisfactory economic  
conditions) have on the security of energy supplies?
- What can the Community do to help overcome the social problems?
1.4· This Communication examines each of these four questions in turn and  
discusses the measures already proposed or now being proposed by the  
Commission to the Council· The Commission has taken into account the  
concerns of consumers and has endeavoured to identify the obstacles to  
greater use of solid fuels. It has also examined how solid fuels might  
better satisfy users' concerns as regards security of supply, economic  
questions and convenience of use and environmental protection thanks to  
research and development· It has also examined how the position of  
Community coal might be strengthened by means of competitive prices.
It does not reproduce all the contents of the basic policy papers already  
presented by the Commission on coal (C0M(82) 31 final), lignite (brown coal)  
and peat, but it does review them and the discussions .to which they gave  
rise within the Council. It does not list all the measures already adopted  
by the Community on solid fuels. They are contained in an annex.

- 3 -
2,  OBSTACLES TO GREATER USE OF SOLID FUELS
2,1, In 1982, solid fuels accounted for 24.3% of the Community’s total energy
consumption, 178.5 million toe in the case of hard coal ( 20.5%) and 33 million toe
for lignite (brown coal) and peat (3*8%). Consumption has remained at
around this level for a number of years despite the strong competitive  
edge which solid fuels have over oil products^ ^ and the many national  
incentive aids they receive. These factors were intended to encourage  
more widespread conversion of oil-burning plants or the construction of new  
plants using solid fuels. It is true that major consumers such as cement  
manufacturers or electricity producers have switched from oil products to
1 ) 2 )solid fuels. In 1982, they used 182 mt '  of coal compared with 140 mt '  
in 1973· However, the competitiveness of solid fuels has not been sufficient
in itself to bring about a large increase in their consumption in all sectors of
utilization. The causes are numerous: security of supply, cost of initial  
investiement, pollution and psychological factors. There are still additional  
possibilities for the consumption of solid fuels where users in the Community  
are concerned, particularly in the non-producing Member States.
The Community has already adopted a number of measures to increase the use  
of solid fuels:
- On 21 April 1983» the Council adopted two Recommendations to the Member  
States concerning the encouragement of investment in the conversion or  
reconversion of solid fuels of
. oil-fired installations in industry, with the exception of  
the iron and steel industry and the energy sector;
. oil-fired boilers in public buildings and in district-  
heating systems
1)'In 1982 the price differential for coal in relation to oil and gas for the  
industrial user was on average 35% for the same calorific value. According  
to available data, lignite (brown coal) and peat have much larger price  
advantages for the types of advantages specific to them.
2),t for tonne

- 4 -
These Recommendations request the Member States to notify the Commission  
at the end of each year of the measures which they have taken in this  
respect so that the Commission can make an annual report to the Council  
in the appropriate form.
— The Commission has decided (see OJ No. C343 of 31 December 1982) to grant  
industrial loans at reduced rates of interest under Article 54(2) of the  
ECSC Treaty for investment designed to promote consumption of Community coal.  
Installations and equipment relating to the combustion, transformation,  
hadnling and preparation of coal, and to the treatment and disposal of  
effluents can be financed with these loans. The sum of 9 MioECU, enabling a  
3 percentage point subsidy to be granted for five years on loans totalling  
60 MioECU, is available under the ECSC Budget for 19&3.
In addition to these subsidized loans there are also ECSC loans under  
Article 54 of the ECSC Treaty. In 1982, the Commission decided to grant  
loans totalling 832 MioECU in respect of coal-burning plants (power stations,  
industry).
- The Commission has also submitted to the Council a proposal, which is under  
discussion, concerning the payment of financial incentives in support of  
certain categories of investment in the rational use of energy, some of which  
are designed to increase the use of solid fuels:
. heat generation for district-heating systems using solid fuels;
. conversion of industrial combustion plants from fuel oil to solid fuels;
. preparation of solid fuels for users other than power stations and  
coke ovens.
Of the total 65 MioECU proposed in the Preliminary Draft Budget for 1 984
for this purpose, approximately 30 MioECU are earmarked for solid fuels.

- 5 -
The Commission will continue to pay particular attention to studying obstacles  
in the way of solid fuels use, and the most appropriate methods to encourage  
solid fuels use, especially in industry, all the more so Bince there is a  
risk that recent trends in oil prices could reduce the relatively favourable  
price advantage which coal has been enjoying. What is needed is more forceful  
action by the national public authorities and the Community.
2,2,  General factors affecting consumption
2,2.1. Security of supply
An important factor taken into account by potential investors is the security  
of coal supplies in the medium and long term. For Community users, security of  
supply depends on the level of Community production, which is discussed in  
section 4 and imports of coal from non-member countries.
Coal imports have increased sharply over the last ten years; their share  
of consumption has risen from 10$ (30 mt) to 22$ (70 mt). They cone  
from different parts of the world (mainly the United States, Australia,
South Africa and Poland). The exploitable reserves in these countries are  
sufficiently large to cover the Community’s foreseeable import requirements,  
which may be three times what they are at present by the year 2000.
Reliance on imports, however, involves possible risks. Problems in  
certain exporting countries (such as those which occurred in 1981) could 
disrupt exports from these countries at any time. The danger of disruption  
of supply shou,d however, be greatly reduced by signing long-term contracts  
and maintaining stocks in the Community, since the political and geographical  
diversity of our exporters ensures a judicious spreading of the risks involved.
The Commission will hold regular talks with the main exporting countries  
to ensure that our outside supplies are as secure as possible in the short,  
medium and long term.

- 6 -
2.2.2. Uncert^nty=about_grice|
Potential userB of solid fuels contemplating investment in new boilers  
or in conversion need to be confident that solid fuels will have a  
long term price advantage over oil and gas. This longer-term advantage  
seems assured, but there is greater uncertainty about the shorter-term  
where coal could come under pressure from heavy fuel oil if the price of crude  
oil fell significantly. Uncertainty about the shorter-term could weaken  
investor confidence about the future. The Commission will do what it can  
to counteract this tendency, for example by encouraging the transparency  
of market prices through the publication of its bulletin on energy prices.
2.2.3· Infrastructures
During the next few years, the Community's infrastructures, roads, ports  
and means of transport should be able to cope with a greater volume of  
traffic in solid fuels. However, if coal imports do in fact triple by the  
year 2000, a major investment drive will be required to ensure that coal  
is received and handled effieicntly. There do, of coures, exist Community  
instruments (ECSC loans, the EIB, the NCI and the ERDP) which can be used  
to help meet these requirements.
The studies into infrastructure problems still require further work.
Where necessary, they may lead to Commission proposals designed to resolve  
the difficulties identified.
2.2.4·
The use of solid fuels may give rise to serious problems from the public-  
health and environmental viewpoints if the necessary precautions are not  
taken. The attention of the last European Council was drawn to the effects  
of acid rain and this problem will be on the agenda of the next meeting. The  
Community has already laid down limit values and guide values for concentration!  
of S02 and suspended particulates in the atmosphere (Directive 80/779/^)·

- 7 -
Under the Third EEC Action Programme on the Environment, the Commission  
recently sent the Council a proposal for a Directive on the combating
of air pollution from industrial plants , with particular reference  
• to coke ovens, coal gasification and liquefaction units and thermal power
stations and other combustion plant with a heat rating of more than 50 MW· 
Clearly this proposal could add to investment costs, but normally by no  
more than a few per cent. In some cases, however, the increase could be  
far higher, for example, when coal-fired power stations are fitted with  
smoke-desulphurization facilities. But coal should be competitive enough  
against oil for the industry to bear the extra investment cost. However,
if it became apparent that the additional costs involved in pollution control  
were slowing down investment which is recognized as being important to the  
attainment of the Community’s energy objectives, the Commission would examine 
the situation created thereby.
The Community is pressing ahead with its R&D on the measurement and  
reduction of air pollution. Work is in hand concerning the conversion of  
atmospheric pollutants and the increase in COg in the air. As for the  
re-use of fly-ash, the Commission plans to arrange for the Member States  
to compare notes on their experience in this field.
The "quota" section of the Community’s regional fund can make grants to  
mining areas which are considered to be areas of regional assistance in  
the Community for the purpose of site rehabilitation and clearance for  
other economic use. Where appropriate, the "quotar-free" section.can help  
to deal with conversion problems arising.
1^C O M {83) 173

- 8 -
2.3· Specific factors affecting consumption
2.3.1. Power stations
Power stations offer the largest outlet, accounting for 60$ of all solid  
fuels consumption. To a large extent increases in consumption in this sector  
depend on the general economic climate. However, the current economic  
crisis has led electricity producers to reduce their forecasts of  
production capacity. Today's forecasts for the number of power stations  
fired by solid fuels to be brought into service between 1980 and 1990 are 
slightly lower than those made in 1981.
Higher consumption of solid fuels will also depend on reducing the share
taken by oil products and gas, which still accounted for 24$  of all electricity
generated in 1 982· The Commission continues to keep vigilant watch on the
1 )implementation of the two 1975 Directives 'restricting the use of natural  
gas and of oil products in power stations. The two ban outright the  
construction of new power stations burning fuel oil or natural gas, while  
the one concerning natural gas only authorizes an extension of existing  
supply contracts in exceptional cases.
1'0J No. L178 of 9 July 1975, 0. 24 and 26

- 9 -
Although the Community’s target for 1990 - that solid fuels and nuclear  
energy should account for "between 70$ and 75$ of all electricity generated -  
has already "been achieved in the Community as a whole, the Community  
average masks wide discrepancies between the situation in the individual  
Member States, some of which still generate almost 70$ of their electricity
from oil and gas it is the responsibility of the Member States concerned  
to take the requisite measures. The Commission sees no need for further  
Community action in this sector at the moment, but will keep a closer watch  
on the implementation of the 1975 Directives.
2,3.2. Other industry
2)
The Commission analysed the substitution of coal for oil in "other industry"
in its Communication of 6 May 1981 (C0M(81 ) 229). "Other industry" is one
of the markets for solid fuels where coal has suffered particularly heavy
losses of market share to oil and natural gas over the past twenty years.  
Theoretically, there appears to be considerable potential for substitution  
for heat-raising for other industry, remembering that in i 960 coal and coke  
accounted for the lion’s share of the sector’s heat consumption, whereas  
in 1982 only 21 mt were burnt, against 110 mtce of oil.
The large number of firms burning coal, the wide range of types of consumption  
and the lack of statistics make it difficult to gain an overall picture of  
the sector.
^ ^Percentage of energy consumption for electricity generation accounted for  
by oil (0) and natural gas (g) in the Member States in 1982:
0 G 0+G
D 5.6 9.1 14.7
P 10.0 1.7 11.7
I 59.2 7.1 66.3
ÏÏL 21.3 45.5* 66.8
B 24.2 4 .8 29.O
L 13.9 0.4 14.3
UK 11.7 0.7 12.4
IRL 26.2 47.5 73.7
IK 8.5 - 8.5
GR 31.7— 31.7
EUR 10 16.8 6.9 23.7
♦This is a transitory phase because coal power stations being  
constructed will lead in the medium term to a reduction in the  
share of gas in electricity production.
2 ) _ 1 1  _  · a___I___ _ _ _ _ _ _ __ An Q R’tâfil2 W
e r  industry = all branches of industry, e5c®P^P9w®: Ti^ a^ 5 | »  the steel  
industry, basic chemical and gasification and liquefaction units.

- 10 -
Coal consumption by "other industry" is on the increase as a result of the  
conversion already completed. In 1982, it rose by 20$ compared with 1981 - 
a high percentage increase, but low in absolute terms.
In the major energy consuming industries, such as the cement industry, the  
switch back to coal is virtually complete in some Member States and still  
well underway in others. Prom now on, the prospects for coal in the cement  
industry are limited.
Despite the competitive edge of solid fuels, "other industry" has been  
slow and d,°in£ "too little to turn to them.
The principal reason for this inertia is that investment costs for equipment  
fired by solid fuels are between 1.5 and 3 times the costs of replacement  
of construction of oil-fired plant. What is more, part of the price  
differential between the fuels is wjiped out by the higher maintenance  
costs and cost of treatment of the wastes and other pollutants. As a result,  
the pay—back time on investment in such conversion can vary from two or  
three years for the major energy consuming industries to five or six years  
for those where fuel costs are no more than 5 f ° of production costs.
Another factor is that many industries switched from solid fuels to fuel  
oil, gas or electricity comparatively recently and, with good reason, are  
reluctant to make changes to installations which have yet to pay for them­
selves. Finally, there are also the psychological barriers created by the lack  
of experience with solid fuels, the lack of staff with the skills to use  
them and the general doubts about such a bulky, and potentially polluting  
fuel.
Added incentives are neede over and above the legislation and financial  
measures already adopted at Community and national level. The Commission  
attaches great importance to the Council adopting its proposal on the  
payment of financial incentives in support of categories of investment in  
the rational use of energy, the most important of which entail increased  
use of solid fuels (C0M(82) 357)·

- 11 -
Conclusions: Greater use of solid fuels
Infrastructures : Coordinated use of existing means
Environment : - Adoption hy the Council of the proposal for a  
Directive on the combating of air pollution from  
industrial plants.
- Continuation and expansion of Community programmes  
and aid in specific cases.
- Exchanges of experience between the Member States  
on the use of fly-ash.
Power stations: Closer monitoring of the 1975 Directives  
restricting the use of oil products and  
natural gas in power stations.
Other industry: Adoption by the Council of the proposal for a  
Regulation on the payment of financial incentives  
in support of categories of investment in the  
rational use of energy, allocated 65 MioECU in the  
Preliminary Draft Budget for 1984 of which about  
30 MioECU are for the solid fuels sector.

- 12- -
3. THE ROLE OF RESEARCH. DEVELOPMENT AND DEMONSTRATION
3.1. General remarks
3.1.1. R&D has an important part to play in modernizing the factors of production a ® 
increasing the productivity of workings. Although the Community has been 
working in this field for some time, Community seti«E.t covered by Article 5 5  
of the ECSC Treaty must he pursued and even increased.
3.1.2. New emphasis should he put on improving existing processes for using solid 
fuels and marketing new technologies. If solid fuels are to replace hydro­
carbons, their use in industry must he made more practical and more attract^, 
Considerable R&D efforts will have to he made to facilitate the combustion, 
handling and preparation of solid fuels, overcoming a number of factors which 
currently act as obvious disincentives to their wider use (they are bulky, 
dusty and less easy to use).
Short-term prospects are particularly favourable in the heat sector, where 
substantial progress has already been made over the last few years in 
developing technologies like fluidized bed combustion and the use of oil-coal 
or coal-water mixtures and improving boiler design and control. Many of these 
new developments are likely to be adopted rapidly throughout the industry and a  
order to improve the operation of electric power stations.
In the longer term, new markets should be opened up for the liquefaction 
and gasification of solid fuels. As things stand, gasification seems the more 
promising of the two from both the technical and economic viewpoints, since 
liquefaction involves more difficult technical problems. Nevertheless, 
many more research, development and demonstration projects will have to be 
carried out before we are in a position to decide on the future of these 
two technologies.

-  13 -
3.2· R&D activities
,  2,1. As far as ECSC technical research projects are concerned, the medium-term 
guidelines for aid to coal research ( 1981-1985) identified priority areas 
where efforts now have to he concentrated on production problems.
- Mining techniques: the major part of the research concentrates on 
improving the use of machines by using modern control methods (micro­
processors and electronic processes).
- The mechanical preparation of coal to improve the quality of the end 
product·
- Making better use of coal by transforming it into coke.
In 1983» financial support granted for this type of research from the ECSC 
budget amounted to 19-5 MioECU. If the ECSC budget permits, this amount 
should be increased in future years.
3,2.2. The third four-year energy research programme, which the Commission will be
adopting shortly, contains a sub-programme on new methods of using solid fuels. 
Projects include the development of new combustion techniques, protection of 
the environment, the development of advanced power-generating systems, the 
development of small gas producers and making solid fuel equipment easier 
to use.
These projects to help reduce dependence on oil by encouraging wider use of coal, 
lignite (brown coal) and peat will require considerable financial aid: a total 
of 63 MioECU has been earmarked for the four-year period. The new programme 
also sets out to organize cooperation between fuel users and equipment 
manufacturers. This cooperation, and the ease of access to-results which it 
will provide, will be particularly useful for those Member States who wish to 
convert their industry to coal but who have no recent experience and have limited 
R&D infrastructure.
This programme should be adopted by the Council before-the end of 1983·

-  1 4 -
3.3· Demonstration projects
The Commission would emphasize the importance it attaches to demonstrating the 
technical and commercial viability of newly-developed processes. In 1982, 
it submitted to the Council a new programme of solid fuel demonstration projects 
to run for five years.
The programme includes:
- the liquefaction and gasification of solid fuels. This is a continuation of the 
first four-year programme. Although the economic crisis and the drop in oil 
prices have added to the difficulties Member States are facing in this area, 
the Commission considers that the efforts already undertaken should not be 
abandoned.
- the use of solid fuels. This programme includes the implementation of projects 
to demonstrate new technologies for using solid fuels: fluidized bed boilers, 
combined cycles, the combustion of coal-liquid mixtures, and the use and 
elimination of solid fuel waste.
Originally, in its financial statements, the Commission asked for appropriations 
for the five-year programmes amounting to 94 MioECU for gasification and liquefac­
tion and 64 MioECU for the use of solid fuels. These requests are being re-examine! 
now that the regulations for demonstration projects are being discused.
The Commission therefore expects that the temporary solution to continue the 
demonstration programme for one year - the result of a conciliation procedure - 
will probably be adopted and that a solution for the other four years will be 
found as soon as possible.
CONCLUSIONS
- Increase in the appropriations in the ECSC budget for "technical coal research1 1  
in the production sector. The Commission hopes that the existing appropriation 
(19.5 MioECU) will be increased in the future as far as the ECSC budget will 
allow.
- Adoption by the Council of the sub-programme on energy in the four-year 
research programme on the use of solid fuels. The proposal is for 63 MioECU 
a year from the general budget for the duration of the programme (4sr years).
- The swift adoption of new rules concerning demonstration projects on the 
liquefaction and gasification of solid fuels and on new combustion processes. 
Provision has been made in the draft general budget for an appropriation of 
+ 44 MioECU in 1984.

-  1-5-
IMPORTANCE OF SATISFACTORY COMMUNITY PRODUCTION FROM THE ECONOMIC POINT OF 
VIEW AND FROM THE POINT OF VIEW OF SECURITY OF SUPPLIES
|j, The solid fuel produced in the Community is a guarantee of security of supplies 
for the Community’s consumers. But this contribution should he analysed and 
differentiated from the points of view of security of access, of price stability, 
and of the financial conditions; i.e. whether production is economic or not.
] ,1,  Access
In the solid-fuel-producing Member States, national production is a major 
factor in security as the sources of production are close to the consumer and the 
transport capacity and long-standing, tightly-knit commercial relationships 
between producer and consumer already exist. The importers of Community coal 
enjoy the same security of access.
In 1982, intra-Community trade accounted for 16.5 million t of coal and 
5.5 million t of coke, whereas 70 million t of coal was imported from outside the 
Community. This relatively low level of intra-Community exchanges compared with 
imports is principally due to price considerations.
,1,2, Prices
The large volume of Community production (240 million t in 1982) has a moderating 
effect on prices, charged in world trade by sea ( 1 86 million t in 1982). A sudden 
substantial drop in this production could have lead to a major rise in the world 
selling price. Maintaining production at a high level therefore provides real 
security against sudden fluctuations or increases in the price of coal. In any 
event, it is important to ensure sales of Community production through the improve­
ment of its competitive position, or any measure which will bring down prices.
■1>3. The economics of Community production of coal
The security of supplies provided by Community coal production also depends on the 
conditions of production. In its communication entitled "The rôle for coal in 
Community energy strategy", the Commission examined Community coal production from 
the point of view of profitability. The Commission divided current production into 
three big categories using economic viability and competitive vis-à-vis imports 
as criteria. _ _
Imports from coal-producing Member States in 1 982 (in million t)
B DK D F I LUX NL
COAL 1.9 2 2.4 5.8 2 1.5
COKE 0.4 - 0.8 1.8 - 1.6 0.6

-16-
Uhder this method of subdividing total Community production, 20 to 25$
(50 to 60 million t) is fully profitable and competitive with imported coal. 
This proportion may be regarded as providing very secure supplies for the 
Community. In mines capable of guaranteeing this level of profitability, high 
priority is given to investment.
A 15$ proportion (or some 40 million t) is produced at a high deficit and is 
clearly not competitive at all. This proportion can contribute to security of 
supplies for a limited period only since to maintain this production involves 
very high national subsidies. It seems likely that the Member States will not h i  
willing to finance such production indefinitely. Once they refuse to fund it, 
production in the mines concerned will have to stop within a period which will 
depend largely on how the social problems are solved.
The major proportion of Community production (60 -65$) is not profitable at 
present. (But this unprofitability is only marginal and is partly due to the 
price of coal imported under long-term contracts). Current spot market rates» 
frequently thought to be lower than the cost of production and transport for 
mines in non-Community countries. Nevertheless this part of total production 
could be made significantly more competitive by means of investment and the 
subsequent increase in productivity. The competitiveness of this portion also 
depends on fluctuations in the price of imported coal and, more particularly, 
in the dollar exchange rate. Recent experience has shown that these fluctuate 
can be large and can follow each other rapidly.
4.I.4. Towards a more balanced European market in coal
1. The structural problems outlined above have thrown Europe’s coal 
market off balance. Too high a proportion of the production is 
unprofitable. But seeking abetter balance implies keeping investment 
high, which is a difficult task for coal producers in a precarious 
financial position.
In the past the Commission has helped to remedy this situation 
by granting the coal industry limited interest rebates (totalling 
5 MioECU a year) under Article 54 0 )  of the ECSC Treaty. This has

helped, hut must he reconsidered in the light of the objectives 
and methods set out under the multi-annual programme.
2. At present coal producers are having to shoulder the added burden 
of very high stock levels (42 million tonnes of hard coal and 
11 million tonnes of coke at the end of 1982). The very substantial 
financial cost which this entails creates a dual handicap:
- by reducing the funds available for improving production structures;
- by increasing the overall cost of coal and pushing up selling prices.
In the long term, the stock problem will call for an overall approach 
with the following key components:
- action relating to the technological and environmental constraints which 
hamper wider vise of coal;
- improvement of the sales prospects for Community coal, by taking 
measures to reduce productio ncosts and to promote a modern, 
healthy, vigorous coal industry.
3. The Commission feels that the Community has a rôle to play in these fields, 
since due account must be taken of the European dimension and of the 
Community’s energy objectives if the coal market is to recover.
Its views on the technical and environmental aspects were outlined 
earlier in this paper. On the other point, the Commission will send 
the Council a separate Communication setting out a proposal for a 
Regulation - based on Article 235 of the EEC Treaty - granting non­
repayable subsidies for investment aimed at increasing productivity in 
the most promising coal mines.-  17 -

-  18 -
These subsidies are to be granted on the basis of the Commission's analysis 
of the modernization and restructuring programmes voluntarily submitted 
to it by the producers.
Their objective must be to produce coal at competitive prifces bearing 
in mind the market outlook. When assessing the programmes, the Commission 
will examine their impact on the development of production capacity. Dep­
ending on changes in commercial stocks levels, the level of the aid could 
be adjusted in line with the amount of clearly uncompetitive production 
capacity closed down.
The subsidies could be up to 25 fo of the total investment cost. An 
appropriation of 300 MioECU has been proposed to support investment in 
solid fuels in 1984» part of it for lignite (brown coal) and peat (see 
Section 4*1 *5·)· The Commission is planning to propose similar sums in 
each of the four following years.
4. The Commission also proposes granting additional aid for modernization 
and restructuring programmes which will achieve a reduction in the 
short term in the level of stocks held.
The general aim must be to help cut back stocks to a more normal
level, i.e. to one of two months' production. This should be achieved
step by step over a period of three years:

-  19 -
- by adapting production; and
- by adapting the competitive position of the coal trade within the 
Community.
The Commission's present thinking on this matter is that the proposed 
support should take the form of a stock-reduction premium, granted 
after the event.
The success of such a scheme will depend on the initiative and 
responsibility not only of the coal producers but also of the Member 
States.
An appropriation of 100 MioECU has been proposed for this purpose 
in 1984» smd the Commission is planning to propose sums of the same 
order of magnitude in each of the two following years if stocks remain 
extremely high. The Commission's target is a reduction in stocks of around
With a view to creating a better-balanced market in Europe, the Commission
supply and demand so as to promote the marketing of Community coal.
In connection with the Community's production of solid fuels, special 
mention should be made of lignite (brown coal) and peat. For three 
Community countries - Germany, Ireland and Greece - these fuels are a 
most advantageous source of supplies from the point of view of both cost 
and security of supplies*. It should also be noted that Greece and 
Ireland cover a large proportion of their energy consumption by 
importing oil which is a heavy drain on their balance of payments.
Large reserves of lignite (brown coal) and peat in both countries are a 
factor to be taken into account when considering diversification and 
security of supplies. It would be in the interests of the Community to 
develop them.
*Lignite (brown coal) and peat as a proportion of total primary energy 
consumption in 1981:3 0 mt.
will examine (a) appropriate ways of increasing transparency where 
quotations for Community coal are concerned and (b) ways of comparing
4.1*5· Lignite (brown coal) and peat production
Germany
Greece
Ireland26.8 toe 
3.2 toe 
0.8 toe10.7$ (lignite/brown coal) 
22.4$ (lignite/brown coal) 
10. $  (peat)
(3)

- 20 -
Greece and Ireland should take steps to increase the degree of self­
financing of investment by coal enterprises so as to permit a 
considerable increase in the share taken by lignite and peat, (in 
Ireland peat’s share of total energy consumption should rise from 
10$ at present to 13$ by 1990» while in Greece lignite (brown coal) 
should take its share from 22$ to 26$ over the same period).
The Commission considers that these countries - two of the least 
prosperous in the Community - will need additional aid from the 
Community if these production levels are to be attained. In a 
separate Communication the Commission is therefore proposing that 
the Council should adopt a Regulation, based on Article 235 of "the 
EEC Treaty, to assist lignite (brown coal) and peat producers, over 
a five-year period, in increasing their production capacity by 
using the most up-to-date methods.
This aid is to take the form of non-repayable direct subsidy of 
up to 25$ of the investment cost. The approprations are included 
in the total of 300 MioECU for solid fuels mentioned in Section 4·1.4·

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4 ,1 .6 . Coking coal
Coking coal production depends largely on developments in the steel industry  
and technological progress. The steel industry’s consumption of coking  
coal fell from 63 million t in 1977 to 45*5 million t in 1982: no increase  
can he expected in the short or medium term. The new system of aids to  
coking coal which the Commission recently submitted to replace the system  
which lapses at the end of 1983 aims to retain national aids and to  
facilitate intra-Community trade by providing higher subsidies which will  
nevertheless decrease over the period. It is absolutely essential that the  
Council adopt this proposal before the end of 1983 to avoid à.legal void.
CONCLUSIONS :  SATISFACTORY COMMUNITY PRODUCTION FROM THE ECONOMIC POINT OF  
VIEW AND FROM THE POINT OF VIEW OF SECURITY OF SUPPLIES
1. The Council should adopt Regulations
- granting subsidies for investments in the modernisation of or the  
development of new economic coal production capacities. 300 MioECU are  
set aside in the Preliminary Draft 1984 Budget (part of which for the  
support of investments in the production of lignite and peat in  
Ireland and Greece). The Commission envisages annual amounts of
the same order of magnitude for the duration of the Regulation  
(5 years);
- granting aids to the reduction of stocks. 100 MioECU are set aside for  
this action in the Preliminary Draft 1984 Budget. The Commission envisages  
annual amounts of the same order of magnitude for the duration of the  
Regulation (3 years);
- granting subsidies for the increase of productio ncapacities of lignite  
and peat in Ireland and in Greece (budgetary credits are included in the  
above-mentioned 300 MioECU).
2. Appropriate measures for improving the transparency of price quotations for  
Community coal should be examined.
3. A Regulation concerning aids to coking coal should be adopted before the
end of 1983. 60 MioECU are set aside in the Preliminary Draft 1 984 Budget
and 120 MioECU for degressive annual payments over the 4 subsequent years.

"  2 2 "
5· SOCIAL MEA3ÜBES
5.1. Over the years, the rationalisation of the coal industry has led to
the implementation of social measures foreseen in the ECSC Treaty. Article
56.2.h. of this Treaty empowers the Commission to intervene in favour of 
redundant workers. In particular, this includes measures which would·: 
temporarily maintain their level of income. Por 3 years the contribution 
to these measures was less than I 5 MioECU, but in I 982, 4I MioECU were 
devoted to this type of aid.
These measures will affect those categories of workers who, in the past, 
had been spared by the decisions concerning definitive redundancies. The new 
measures will require the reinforcement of réadaptation aids which will 
necessitate an adjustment in the level of aids, or an extension of their 
duration, and responsibility must be taken, at an earlier age than hitherto, 
for workers who cannot be reemployed, as before, in the coal industry.
5.2. Furthermore, it is essential to instigate activities which, through the 
creation of new jobs, will combat the progressive disintegration of the 
socio-economic structure of the industrial area concerned.
In 1982, under Article 56.2.a. of the ECSC Treaty, 43 MioECU were earmarked 
for interest rebates to promote the creation of new jobs for the 
reemployment of workers who are covered by the ECSC Treaty in the coal 
and steel industries.
5.3· With regard to the restructuring which is under way in the coal industry, the 
Commission considers it no longer possible to finance new expenditure linked 
to coal policy from the ECSC budget which is already insufficient to cover 
the restructuring of the steel industry. In the Commission’s opinion, 
the best solution would be to finance additional requirements from the
EEC budget.
The Commission has already earmarked 60 MioECU for this purpose in the / 
Draft Budget for 1984 towards measures for restructuring the Community 
coal industries .Preliminary
The Commission will submit to the Council, the necessary proposals to use  
these appropriations.

annex 1
EXISTING MEASURES TO ASSIST THE SOLID FUELS SECTOR
Aid
- Decision 73/287/ECSC National aid in respect of coking coal and
support in respect of intra-Community trade
- Decision 76/528/ECSC National aid to the hard coal industry
Industrial loans from the Community
- Industrial loans under Article 54(1) - 
investment in collieries and coke 
ovens etc.
-Industrial loans under Article 54(2) - 
plants using Community coal (inclu­
ding infrastructure)
- Industrial loans under Article 54(2) 
coking coal mines in non-memher coun­
tries (supplies to the Community 
steel industry)
- EIB and NCI loansDecision on industrial loans at 
reduced interest rates - O.J. C79 of 
29 March 1980
Decision on industrial loans at 
reduced interest rates in order to 
encourage consumption O.J. C343 of 
31 December 1 982
I«Investment to encourage the use of 
solid fuels (including infrastructure)
Investment in production, infrastru­
cture and the utilization of lignite, 
brown coal and peat
Loans for Italy and Ireland (see above, 
EIB/NCI loans).
-Loans for industrial reconversion (new employment, Art. 56.2.a.)
Loyis for social purgoses
-Miners* housing loans (Article 54 (2))
- Aid for the redeployment of miners (Article 5^(2)b)
- Interest rebate loans for the reconversion of miners (Article 5^(2)a)- EMS interest rebates

- 2 -
AMEX 1
Prices policy
- Transparency of prices Decision No. 77/707 (government 
representatives meeting in the 
Council) on an information system for 
the prices of imported coal)
Bulletin of prices charged
Research, development and demonstration
- Coal research (Article 55)» 
including mines safety
- Programmes of demonstration projects Regulation 1302/78:  gasification and
liquefaction of solid fuels
New regulations in 1983s gasification 
and liquefaction of fuels and altern­
atives to hydrocarbons (combustion .  
technologies, etc.)
Stocks
- Directive 75/339/eEC Minimum stocks of fossil fuels in
power stations
Legislative acts to encourage the utilization of solid fuels
- Directives 75/404 and 405/EEC restricting the consumption of fuel
oil and natural gas in power stations
— Two recommendations (1903) encouraging conversion to coal in
industry and public buildings