Europe continues to subsidise coal industry, says ODI

8 May 17

Ten of Europe’s major economies hand out €6.3bn ($6.9bn) in coal subsidies every year, including €1bn ($1.1bn) in funds intended for low-carbon sources, according to a UK think-tank.


Only a meagre amount of that total – €859m ($941m) or 14% – is directed towards supporting workers and communities to transition away from coal, with the majority instead serving as a life line for what green campaigners argue should be a dying industry.

Shelagh Whitley, head of the climate and energy programme at the Overseas Development Institute, which published the report, said: “European countries need to phase out coal if they are to meet the Paris climate agreement targets, fight air pollution and support a change to low-carbon energy systems.”

Instead, she continued, governments are in fact handing out new subsidies, without which the coal industry would not be economically viable.

Of the total €6.3bn doled out on average every year between 2005 and 2016, the ODI identified €875m ($958m) in new subsidies annually since 2015 by Germany, France, the UK, the Czech Republic, Greece, Hungary, the Netherlands, Poland and Spain – altogether accounting for 84% of the continent’s emissions.

That same year, those 10 nations joined almost 200 others in signing a historic deal in Paris, making landmark commitments to tackle climate change.

However €1bn ($1.1bn) worth of funding intended to support the transition to low-carbon energy was being diverted back to coal, the report found.

Germany accounted for almost half the total amount looked at, delivering over €2bn to support coal mining alone, although it has committed to ending these by 2018.

While Germany did deliver some funds – €415.5m ($454m) – to supporting workers and communities to transition, decommission plans and rehabilitate environments, France, Greece, Italy, the Netherlands and the UK spent none in these areas at all.

The ODI also highlighted a lack of transparency in coal subsidy reporting in a number of the countries measured.

Meanwhile, a number of their European neighbours, including Belgium, Cyprus, Luxembourg, Malta, Scotland and the Baltic countries, have already ended the use of coal-fired power.

The European Union as a whole has committed to ending harmful subsidies by 2020, including those to coal. Meanwhile, the European Commission has cracked down on backdoor subsidies, known as capacity mechanisms, which governments have used to support fossil fuels.

Four of the countries studied – Italy, the Netherlands, France and Greece – were delivering between just two and four subsidies, which the ODI said meant they had the potential to easily become coal subsidy-free.

The think-tank called on the ten countries to end their support for coal, focus remaining subsidies on supporting a transition away from it, and to commit to greater transparency and accountability with consistent annual reporting of their backing for coal and other fossil fuels.

“Governments in Europe must stick to their promise to shift to low-carbon and efficient energy systems,” said Whitley. 

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