The Government currently have no plans to subsidise the UK coal industry beyond the expiry of the European Coal and Steel Community Treaty in July 2002. However, we are prepared to accept that continued State aid be permitted by the new European regime after this date, provided that it is in the context of appropriate limiting conditions and provided it does nothing to undermine greater liberalisation of energy markets. In particular we would like to see a cap on aid payments, degressivity in aid payments, and rules to prevent subsidies reducing domestic prices of delivered coal below international prices.
Given the geopolitical diversity of coal sources, we are not convinced by the security of supply justification for subsidies as detailed in the current Commission proposals. We would instead like to keep open the possibility of member states paying operating or investment aid to make further progress towards economic viability.