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Coal subsidy phase-out faces German opposition

(18 Aug 10) Leading political parties in North Rhine Westphalia, Germany's largest state, have urged chancellor Angela Merkel to lobby for more time to end EU subsides for hard coal. The European Commission has proposed to phase out the subsidies by 2014.

Under draft EU rules tabled in July, operating aid to loss-making coal mines would only be allowed if closure plans are in place. Mines would have to shut down by 15 October 2014. The subsidies would have to be paid back if firms miss the deadline.

This proposal undermines a German deal to end subsidies for hard coal by 2018, currently amounting to an annual €2bn. The agreement was reached in 2007 between the federal government, several state governments and the mining industry. North Rhine Westphalia is home to most of Germany's hard coal mines.

Thousands of miners would be laid off if mines had to shut down in 2014, warned Hannelore Kraft, the state's prime minister, and heads of all the main parliamentary groups except for the liberals who distanced themselves from the statement.

An earlier phase-out would also jeopardise the financing of closed mines' maintenance costs in the Ruhr area, according to the statement. The federal government must push for a 2018 deadline in the European Commission's proposal, it adds. The plan is due to be voted by member states in the autumn.

The position of the federal government is unclear. In July, Ms Merkel appeared to be surprised by the commission's proposal, "I don't think it would have been a mistake to discuss the issue one more time with the member countries," she said. “I am not thrilled”. The liberals however, Merkel’s coalition partners, support an earlier deadline.

Follow-up: Joint statement (in German)

See also: Phase out the subsidies by 2014


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