EU report says coal subsidies should end in 2010

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Current EU rules allow governments to give some financial aid to the coal industry, which the Commission said had been unprofitable in most EU countries for many years.

But a review of the regulation allowing such aid recommended leaving its expiration date -- the end of 2010 -- unchanged, meaning coal would then have to fall under stricter rules governing state aid in other EU industrial sectors.

"After 2010, this is going to be over," said Ferran Tarradellas Espuny, spokesman for Energy Commissioner Andris Piebalgs. "State aid for coal will be under the same regime as any other state aid."

The report will now be sent on to EU governments and the European Parliament for input.

The EU prohibits government subsidies to industry so that companies compete on a level playing field. State aid is allowed under special circumstances, for example by helping underdeveloped areas.

The report said coal accounts for 17 percent of overall EU energy consumption and 30 percent of electricity production.

Bulgaria, Germany, Hungary, Romania, Slovenia and Spain grant operating aid to coal mines, while Poland, Slovakia and Britain grant investment aid, the report said.

The Czech Republic, France and Italy have stopped coal subsidies for operating mines.

The EU sees coal production as one way to reduce its growing dependence on foreign energy suppliers such as Russia, but it is working on ways to capture and store carbon dioxide emissions from coal in an effort to fight climate change.

EU leaders agreed in March to reduce greenhouse gas emissions by at least 20 percent by 2020 compared to 1990 levels.

[BRUSSELS/Reuters/Finance.cz]