WRITTEN QUESTION E-2828/99

by Nicholas Clegg (ELDR) to the Commission

(18 January 2000)

Subject: European coal industry

Has the Commission conducted an integrated analysis into the future prospects of the European coal industry, not least in view of the projected EU dependence on energy supplies from politically insecure external sources in the decades to come? If such an analysis exists could the Commission make it available to the European Parliament? If not, will the Commission confirm that it will conduct such an analysis as a matter of priority tackling the full range of issues of importance to Europe's coal industry (e.g. clean-coal technologies, state subsidies, imports from the outside the EU etc.)?

Answer given by Mrs de Palacio on behalf of the Commission

(25 February 2000)

In November 1999, the Commission published its latest energy outlook for the Community to 2020(1), a copy of which is sent directly to the Honourable Member and to Parliament's Secretariat. This publication analyses future energy trends both on the basis of a baseline scenario, where Community policies currently in place remain unchanged, as well as in the context of three emission reduction scenarios. The baseline scenario indicates that the dependency of the Community on imported energy will rise from 47,6 % of total energy this year 2000 to over 63 % by the year 2020, with the import dependency for solid fuels increasing from 46,7 % to 67,8 % over the same period.

Coal, unlike other fossil fuels, has the very significant advantage of a mature, highly competitive world market with abundant supplies from a wide variety of geographical sources. Therefore even in the long term and with an increased demand for coal, the risk of a persistent interruption of supply, although it cannot be ruled out totally, is nevertheless minimal.

Coal is cheap, safe to transport and with world-wide reserves that would last for over 200 years at the current rate of extraction, it will continue to be an important element of energy security, particularly as an input fuel for electricity generation.

However, the Commission also recognises that, unfortunately, a significant part of hard coal production within the Community is uncompetitive. Coal production in France has declined by over 50 % since 1990, to an estimated 4,5 million tonnes in 1999, and will cease completely by 2005 as a result of an agreement between the government, the main coal producer and the trade unions. While production is also decreasing significantly in both Spain and Germany, the level of state aid remains high. In 1998, the Commission authorised Spain to grant 727,4 million in aid to current production and authorised Germany to grant 4,225,8 million, which translates into 43,04 per tonne for Spain and 91,97 per tonne for Germany.

The planned expansion of the Community will bring a new challenge in the shape of Poland, an important player on the international coal market and one which currently produces more hard coal than the rest of the Community put together. Poland is undergoing a period of intense restructuring, with production now down to around 112 million tonnes compared to 193 million tonnes in 1988.

The importance of coal in enhancing energy security and energy diversity is fully acknowledged by the Commission, which has funded some 101 solid fuel projects to the tune of 350 million under the remit of the European Coal and Steel Community (ECSC), the JOULE and the Thermie programmes over the period from 1978 to 1997. These projects have focused on developing and implementing more efficient combustion technologies in order to reduce the negative environmental effects of coal use. Following the conclusion of the Thermie programme at the end of 1998, coal projects are now continuing under the Energie programme to 2002.

The Commission shares the Honourable Member's concerns for the security of energy supplies and believes that this can be most effectively achieved by encouraging Member States to ensure a diversified mix of energy sources. The Commission plans therefore to launch a comprehensive consultation document on an overall strategy for the future security of energy supplies. The intention is to analyse the developments concerning import dependency for all energy sources, including coal, in the context of climate change and an enlarged Community. The Commission plans to launch this process before the end of this year.

(1) European Union Energy Outlook to 2020 and Economic Foundations for Energy Policy. Special issues of DG Transport and Energy's Energy in Europe. OPOCE ISBN 92-828-7533-4.