Reuters reported that Spain gained approval from Europe's competition watchdog to support unprofitable coal mining until 2015, which critics said would prop up an ailing sector to the detriment of the environment. The decision coincides with a wave of strikes by Spanish coal miners demanding unpaid wages.
Under a decree passed by the Spanish government, 10 power generators will have to burn some domestic coal instead of cheaper imports.
Mr Joaquin Almunia commissioner of European Competition said that "I am satisfied that the planned compensation will not exceed what is necessary to allow electricity generators to fulfill their public service obligation and will not unduly delay the painful but necessary closure of loss making mines."
But the country's own competition watchdog, the National Competition Commission, has already said the decree would distort investment signals by leaving companies uncertain about how much power will come from coal in the future. The Spanish government has defended the plan, citing EU laws that allow member countries to prioritize domestic energy sources for generating up to 15% of national power supplies to ensure energy security.
EC said that the volumes of electricity involved in the Spanish decree would not exceed 23.4 terawatt hours per year in 2011-2014 or around 9% of national consumption and well below the 15% limit.
Environmentalists said, however, that Spain has been generating so much power that it has been able to export some to neighboring countries for the past six years. By supporting highly polluting coal when it is no longer economical, Spain is undermining the EU's pledge to shift to cleaner, low carbon energy sources such as gas and renewable.
The Spanish decree has nothing to do with energy security and is unlawful, said activist lawyers group ClientEarth, which complained to the Commission in July.
Mr Marta Ballesteros of ClientEarth said that "The Spanish government should not be allowed to undermine the progressive environmental objectives set by the EU and the Commission should not set this troubling precedent."
Like many countries, Spain gives government aid to domestic coal mining, which struggles to compete with cheaper and higher quality imports.
But having missed the opportunity to remove support during the past economic boom, the government would struggle to remove it during the current bust. Poland was encouraged by Spain's success and said it would try to secure a similar deal for its own coal sector. Spanish miners began their second 48 hour strike in a week on Wednesday, burning tires on the road in the northern region of Asturias. Those demonstrations come amid a wave of protests across Europe. The labor unrest has heaped pressure on a government struggling with unemployment at around 20 percent. It has also made life difficult for Mr Almunia, Spain's man in the European Commission and the official in charge of ensuring a level playing field for European industry.
(Sourced from www.reuters.com)
