Twenty five years ago, there were more than 50,000 coal miners at work in Spain. Today, there are fewer than 8,000. It is predicted that by 2014 the last pit will have closed. On July 20, EU competition commissioner Joaquín Almunia a former Spanish employment minister, said that he wanted the 27 member bloc to end state aid to the coal industry eight years earlier than initially sought and for uncompetitive mines to close by October 2014.
Spain currently pumps EUR 320 million in direct subsidies into the coal mining sector each year, but that figure will have to be cut by a third every 15 months over the next four years. There are 15 coal mining companies in Spain, with half of all miners employed in the country’s traditional coal heartland of Asturias and the remainder working in Castilla y León, Teruel, Ciudad Real and Córdoba.
Mr Almunia in July said that “Companies need to be viable without subsidies. This is a question of fairness vis à vis competitors that operate without state aid. This is also in the interests of taxpayers and of government finances.”
The situation is further complicated by the Spanish government’s plans to force electricity producers to burn domestic coal rather than relying on cheap coal imports. A government decree published on February 27 will make it legally binding for power plants supplying the wholesale power market, to step aside for electricity offered by plants burning domestic coal. Spain has to import about 80% of its energy needs and the government says European Union rules allow up to 15% of primary energy used in power generation to be home produced. The energy watchdog CNE estimates the plan will mean burning up stockpiles of unused domestic coal currently 11.4 million tonnes as well as 10 million tonne to be mined by 2012.
Coal exporters and traders said that the European market for thermal coal has been shrinking and will continue to do so in the coming years as aging coalfired power plants are replaced by gas plants. In the meantime, the government has told state coal company Hunosa to buy large amounts of coal from private producers so that they can keep on operating.
In a bid to further pressure the government, some private companies say that they can no longer cover operating costs and have stopped paying their workforce. In turn, this has prompted action by unions, such as road blocks and lock ins. The government does not want to add to a dole queue of 4.2 million and a benefits bill that has swollen a budget deficit and roiled financial markets. But environmental groups argue that supporting coal runs counter to government pledges to cut greenhouse-gas emissions and promote a greener economy, which it says can also create much-needed jobs.
Mr Almunia said that “Renewable, clean energy is the way to go, but we cannot ignore the dire regional economic and social consequences that would follow a sudden closure of the loss-making mines at this time of low or no growth and high unemployment.”
Spain estimates its emissions in the key 2008-12 period will be almost 20% above the upper limit it was set under the terms of the Kyoto Protocol.
(Sourced from The Leader)
