Coal subsidies continue in EU

7th June 2017

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  • Adaptation ,
  • Generation ,
  • Conventional


Luke Dorey

Governments across Europe are continuing to provide the coal industry with financial help, despite commitments to tackle climate change.

A review by the Overseas Development Institute (ODI) of the subsidies to coal in ten EU countries that produce 84% of Europe’s energy-related greenhouse-gas emissions found that six, including the UK, had introduced new subsidies to support the sector since 2015, the year of the Paris climate agreement. It said these were worth €875m a year.

The subsidies can undermine measures, such as the carbon price support in the UK, that aim to increase the cost of coal-fired power to achieve emission reductions, said the ODI. It found measures, such as capacity mechanisms, which seek to balance the objectives of increasing renewable energy with ensuring security of supply, had tended to result in large payments to fossil fuel-fired generation, including to coal plants.

The think tank calculated that countries covered by the study provided on average €6.3bn annually to the industry overall between 2005 and 2016. The study found that only a minority (14%) of subsidies by value (€859m a year) went to support workers and communities to transition away from coal mining. It estimated that annual subsidies to coal in the UK, including mineral extraction allowances and the payments under the capacity market, amount to £356m.

UK transparency of its subsidies is described as very poor, with the government explicitly denying that it provides any subsidies to fossil fuels, said the ODI.


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