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ClientEarth Communications

11th April 2018

State Aid
Fossil fuels
Clean energy

Coal plants must pay back €400 million in unlawful subsidies from Spanish government, environmental lawyers insist

Environmental lawyers are supporting the European Commission's investigation into coal operators in Spain to decide whether they have to pay back millions in subsidies to the Spanish government. The payouts, made over the last ten years, were against EU law. If the Commission agrees, the operators would have to pay back a total of €440 million.

Spain's coal subsidies – ultimately paid for by energy customers – have been under investigation since November 2017. The Commission is deciding whether they comply with EU State aid rules. Lawyers from IIDMA and ClientEarth are now submitting arguments to help the Commission reach its decision.

Under EU law, governments have to get approval from the Commission if they want to grant subsidies – which Spain failed to do. The subsidies also give an unfair advantage to coal plants, because plant operators are required to comply with pollution laws with no extra funding from the state.

ClientEarth energy lawyer Sam Bright said: “Under EU law, operators of polluting coal plants should pay to prevent their own pollution – those costs should not be passed on to the customer.

“Coal operators across Europe pay from their own pockets to make sure their plants meet pollution limits. Spanish operators are subject to the same rules and should be treated no differently. These subsidies must be paid back, and an example set."

IIDMA lawyer Carlota Ruiz-Bautista said: “These subsidies violate EU law. The Spanish government knows that these so-called environmental incentives do not comply with EU State aid rules. The Commission must order operators to pay back the money they received from the Spanish government.

“Supporting coal makes a mockery of international commitments to protect people’s health and the environment. Spain is lagging behind: it needs to get on board with the coal phase-out.”

In 2014, emissions of nitrogen oxides, sulphur dioxide and dust from Spanish coal plants were responsible for more than 700 early deaths and the health costs are estimated at up to €1.7bn.

Beyond the human health impacts, the plants are significant contributors to climate change and environmental damage.

This article has been edited to reflect the fact that the investigation was initiated by the European Commission.