Europe’s major carbon emitters hand out €6.3bn in coal subsidies each year – new report

8 May 2017

Ten European countries responsible for 84% of the continent’s emissions hand €6.3 billion in subsidies to coal each year, despite repeatedly promising to phase-out coal and transition to clean energy, new research by the Overseas Development Institute has found.

The report, ‘Cutting Europe’s lifelines to coal: tracking subsidies in 10 countries’, has for the first time gathered detailed information on how much money each country has provided to support the coal industry since 2005.

Researchers found six of the countries have even introduced new subsidies, worth €875 million per year, to support the coal sector since 2015, the year of the Paris climate agreement.

This comes despite the EU call for member countries to end environmentally harmful subsidies, including those to fossil fuels, by 2020.

The report also found that an additional €1 billion per year in subsidies intended to support the transition to low-carbon energy were in fact being diverted back to coal.

Author Shelagh Whitley, Head of the Climate and Energy Programme at ODI, 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.

‘However as our research shows, governments are continuing to provide lifelines to coal by handing over new subsidies without which the coal industry would not be economically viable.

‘Governments in Europe must stick to their promise to shift to low-carbon and efficient energy systems and focus any remaining subsidies on supporting workers and communities to move away from fossil fuels.’

The report finds a total of €6.3bn was given annually by the ten European countries looked at - Czech Republic, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain and the UK.

Researchers looked at a total of 65 subsidies across the ten countries and uncovered a range of findings, including:

  • Germany accounted for almost half of the total amount looked at, including handing over €2bn in subsidies to coal mining, but had committed to ending these by 2018
  • Four of the countries – Italy, Netherlands, France and Greece – had between just two and four subsidies, meaning there is significant potential for them to be coal subsidy-free
  • Others, including the UK, scored poorly on transparency of coal subsidy reporting, and all the countries looked at are still providing subsidies to coal-fired power

The authors of the report also found that only 14 per cent of the annual subsidies (€859 million per year) was being used to support the transition for workers and communities.

With just three years left to meet the EU commitment to end harmful subsidies by 2020, including those to coal, the report recommends that:

  1. European countries must end their support for coal under the EU’s Emissions Trading Scheme, capacity mechanisms, and in subsidies to biomass power generation.
  2. Countries should ensure that any remaining subsidies are focused on supporting the transition to low-carbon and efficient energy, and support for worker and communities. 
  3. All countries should commit to greater transparency and accountability by undertaking consistent annual reporting of subsidies to coal and other fossil fuels.

ENDS

Notes to editors

  • The report, ‘Cutting Europe’s lifeline to coal: tracking subsidies in ten countries’ estimates the value of budgetary support and tax breaks to coal across ten European countries - Czech Republic, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain, and the United Kingdom
  • Based on the CAIT Climate Data Explorer (http://cait.wri.org/) the ten European countries reviewed were responsible for 84% of Europe’s energy related greenhouse gas emissions in 2012
  • Germany holds the G20 Presidency in 2017 and is due to host the leaders’ summit in Hamburg on July 7-8
  • Italy holds the G7 Presidency in 2017 and is due to host the Heads of State and of Government summit in Taormina on May 26-27
  • Several subsidies with the stated objective of supporting the transition to low-carbon energy (via the EU Emissions Trading Scheme, capacity mechanisms and support to biomass power), worth €1 billion per year are going to coal

For more information or to arrange an interview with Shelagh Whitley, contact James Rush on [email protected] or 07808 791265