Analytics, Energy, Energy Market, EU – Baltic States, Modern EU

The EU energy policy has been aimed at encouraging renewable energy sources as well as sustainable and safe low-carbon economy, while diminishing the role of indigenous coal in the overall energy mix of the EU member states.

Hence, already in December 2010, the Council of the European Union adopted Council Decision 2010/787/EU on state aid to facilitate the closure of uncompetitive coal mines. Under the Decision, state support to the coal industry has been allowed – only- to facilitate the closure of mines by covering production losses and exceptional costs resulting from the closure. 

“Closure aid” can cover operational losses subject to certain limits and must be based on an agreed closure plan. The Council Decision requires that a mine receiving closure aid must cease mining activities by the end of 2018 at the latest.

Such aid is to cover exceptional costs resulting from activities related to the closures, notably to mitigate social costs such as the costs of social welfare benefits or early retirement, costs incurred in safety or site rehabilitation for the production units subject to closure, as well as the pumping and cleaning of water from decommissioned mines can be paid out after the closures until 2027 and must also be based on an agreed closure plan.

The non-confidential version of the decision will be made available under the case number SA.41161 in the State aid register on the competition website once all confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.  

Commission’s response to state aid

The European Commission has found Poland's plans to provide PLN 7.95 billion (about €1.8 billion) of support to alleviate the social and environmental impact of closing uncompetitive coal mines by 2018 to be in line with EU state aid rules. The Commission concluded the support would not unduly distort competition.

Following the decision taken by Poland to close uncompetitive Polish coal mining units, in September 2016, Poland notified to the Commission plans to provide public funding of PLN 7.95 billion to ensure their orderly closure.

According to the EU law, the responsibility for decisions on whether or not to close public coal mines rests with the member states. However, the EU state aid rules, in particular Council Decision 2010/787/EU, allow the EU states to support the closure of uncompetitive coal mines in order to alleviate the social and environmental impact (italics mine, EE).

The Commission's assessment has found that, in line with the Council Decision, the Polish state aid aims to ease the closure process by providing financial support totaling some 1.8 billion to those workers who have lost, or will lose, their jobs due to the closures. In particular, the state support will fund severance payments, compensatory pensions and social security benefits for these workers. 

Furthermore, state aid will be used to secure mine shafts and decommissioning of mine infrastructure, to repair damage to the environment caused by mining and to re-cultivate land after the mine closures. The remainder of the aid will cover production losses of the mines until closure. 

Reference: European Commission, press release IP-16-3824 on EU’s support to close coal mines in Poland/Brussels, 18 November 2016. In: 

http://europa.eu/rapid/press-release_IP-16-3824_en.htm?locale=en