huts on a hill in Romania

Romanian mine closures a further signal of coal’s demise

Two uncompetitive Romanian mines have agreed to close by 2018, with the help of state aid approved by the European Commission. This funding, from the Romanian government, will amount to approximately €99 million.

The EU allows financial aid to support the closure of failing mines which would otherwise struggle to cover clean-up costs and support for employees when they inevitably close. In this case, over half of the funds will be used to compensate and retrain workers upon closure, and to rehabilitate the mining sites. The remainder will be used to phase the mines out in a managed way all the way to closure.

ClientEarth state aid lawyer Sam Bright said: “It is clear that coal is no longer a feasible energy source and we fully support the goal of closing mines as quickly as possible, tackling coal supply at its source.

“These two mines must close by the end of 2018. If these mines do not close on time, state aid law obliges the operators to repay the subsidies to the Romanian government.

“It is also important that the funds are used only for their intended purposes. The Romanian government and civil society, including organisations like ClientEarth, will be monitoring developments to ensure the aid is not used to cross-subsidise the mining companies’ other activities.

“We recognise that coal closures can have significant impacts on local communities. It is right that coal mine closure aid is being used increasingly to secure a just transition, including compensation and re-training for those affected.”

State aid: does the polluter pay?

ClientEarth has argued that coal mining companies should not bank on government handouts to fund their clean-up operations, as that would run counter to the polluter pays principle. However, as an exception to this principle, well-defined and scrutinised aid has a role to play in ensuring a just transition from coal to cleaner energy sources – especially given the greater environmental and health impacts that continued coal burning will cause.

Under EU rules, if the mines do not meet their commitment to close before the end of 2018, all funds must be repaid to the Romanian government.

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Alexandru Babos