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State aid: Commission clears RON 447.8 million Romanian support for closing coal mines
According to a press release issued în Brussels, 24 November 2016, the European Commission has found Romania's plans to provide RON 447.8 million of support to alleviate the social and environmental impact of closing two uncompetitive coal mines by 2018 to be in line with EU state aid rules. The Commission concluded the support would not unduly distort competition.
Following the decision taken by Romania to close two uncompetitive coal mining units, in November 2016, Romania notified to the Commission plans to provide public funding of RON 447.8 million (approximately €99 million) to ensure their orderly closure.
Responsibility for decisions on whether or not to close public coal mines rests with Member States. EU state aid rules, in particular Council Decision 2010/787/EU, allow Member States to support the closure of uncompetitive coal mines in order to alleviate the social and environmental impact.
The Commission's assessment has found that, in line with the Council Decision, the aid aims to ease the closure process by providing financial support totalling RON 233.7 million (approximately €52 million) to those workers who will lose their jobs due to the closures. In particular, the state support will fund compensation salaries for the laid-off personnel and programmes to retrain former employees to work in alternative professions and other social security benefits for these workers. Furthermore, this support will be used to undertake necessary underground safety measures related to the closure, to rehabilitate the mining sites and to re-cultivate land after the mine closures. The remainder of the aid totalling RON 214.1 million (approximately €47 million) will cover production losses of the mines until closure.
Background
In December 2010, the Council of the European Union adopted Council Decision 2010/787/EU on state aid to facilitate the closure of uncompetitive coal mines. Under the Decision, state support to the coal industry is only allowed to facilitate the closure of a mine by covering production losses and exceptional costs resulting from the closure. The Decision was adopted against the backdrop of EU policy to encourage renewable energy sources and a sustainable and safe low-carbon economy, and the diminishing role of indigenous coal in the overall energy mix of EU Member States.
Closure aid can cover operational losses subject to certain limits and must be based on an agreed closure plan. The Council Decision requires that a mine receiving closure aid must cease mining activities by the end of 2018 at the latest.
Aid to cover exceptional costs resulting from activities related to the closures, notably to mitigate social costs such as the costs of social welfare benefits or early retirement, costs incurred in safety or site rehabilitation for the production units subject to closure, as well as the pumping and cleaning of water from decommissioned mines can be paid out after the closures until 2027 and must also be based on an agreed closure plan.