Poland to push EU on coal mine subsidies

Warsaw will this week push the EU to loosen rules on state subsidies for Poland's ailing but politically-sensitive coal mines in a bold election-year gambit that defies the bloc's public embrace of green energy.

The EU styles itself as a world leader on environmental issues and has been pushing to phase out coal in favour of cleaner renewable forms of energy. It typically approves government subsidies in the coal sector only if they are intended to help overcome the social and environmental problems associated with pit closures.

But in an unusual departure, Warsaw will instead seek the EU's consent to restructure four big mines in the south of the country, saying that it will use the state funds to avoid closures and politically damaging job losses

Polish officials said that a letter seeking support for this so-called "state aid" to the mines recently spun off from state-controlled Kompania Weglowa, which has been losing 200m zlotys (£35m) a month, would be delivered to the commission in the coming days

Coal is an emotive issue in Poland and the fate of the mines will be closely watched in the run-up to October's election, with polls showing the incumbent Civic Platform party holding only a slender lead over its main rightwing opponents.

Coal generates 90 per cent of the country's electricity, is seen as a safeguard of partial energy independence from Russia and more than 100,000 people are employed in mining it.

However, the industry faces massive economic problems. The mines lose about €15 for every tonne of coal they extract, due to years of neglect by Polish politicians fearful of dealing with the problem in the face of strong and politically powerful trade unions.

The four mines had been slated for closure in January, but the prime minister, Ewa Kopacz, relented just 10 days later after strikes by miners, to the chagrin of investors and industry analysts.

Warsaw's stubborn defence of the industry has led it to block a series of EU environmental initiatives in recent years, making it the bane of environmental groups and a source of frustration for many within the bloc - particularly Scandinavian and other northern European nations.

<

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

Ms Kopacz, who has seen her authority weakened by a number of political missteps since succeeding Donald Tusk last autumn, stressed the need for flexibility over subsidy rules during a recent meeting with Jean-Claude Juncker, president of the European Commission.

Several officials familiar with the case in Brussels said that Poland would face a battle in winning the commission round.

"We have had constructive dialogue with the commission on this," said a senior official involved in writing the letter. "It will not be easy [to convince the commission], but we are optimistic."

After heavy lobbying from Germany and Spain in 2010, Brussels allowed member states to pay subsidies to coal producers until 2018, but on the condition that the mines were earmarked for closure.

Marcin Korolec, Polish state secretary for the environment, stressed that Poland was not using state payments for "operational costs" as other EU countries were. "We are discussing this with the commission; those discussions are continuing," he said.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation