EU to Allow Spain Coal Plan

Source:


Spain will win EU approval this week for a plan that would benefit domestic coal producers over importers until the end of 2014.

Under a decree passed by the Spanish government, power utilities would be required to burn domestic coal instead of imports, which are usually cheaper.

Spain defends the plan by citing an EU regulation allowing member states to give priority to power facilities using domestic energy sources when there are supply risks.

Critics have said the scheme amounts to state support for national coal producers and goes against the EU's clean energy and environmental goals.

The decision by the European Commission, the EU competition watchdog, coincides with strikes by Spanish coal miners demanding unpaid wages and EU approval of the plan.

Opponents in the Commission want to close loopholes that allow Spain to extend this aid beyond 2014, the date by which the EU has said state aid to the coal industry should end as part of its plans to support cleaner energy.

"The Commission will announce the decision on Wednesday. The Commission will say that subsidies should not go beyond Dec. 31, 2014," one of the sources said.

"Some commissioners are seeking to ensure a political assurance from Spain that this will not be extended beyond 2014," said a second source.

The Spanish coal industry receives government aid as it struggles to compete with cheaper and higher quality imports. The government and industry say domestic coal is needed to reduce Spain's heavy dependence on imported gas and coal.

But Spain's competition regulator has criticized the scheme, saying it would distort the power market while utilities say it will increase prices. The Commission has in the past cleared similar public service compensation schemes for Austria, Ireland, Slovenia and also Spain.

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