The Commission, on 21 May 2007, released a report concluding that the Coal Regulation, which sets out rules for the provision of state aid for the coal industry until 2010, is functioning well and does not need to be adjusted.
According to the report, "distortion of the market within the EU", due to state aids to the coal industry "seems to be limited by the fact that most subsidised coal covered by the Coal Regulation is consumed in the national market".
NGOs have argued that coal subsidies have an impact on the supply options for the EU electricity market, and thus prevent the growth of renewables. The report refutes this assertion. It cites a study conducted by think-tank Europe Economics, which concludes that, with respect to electricity generation, state aid to local coal production does not affect the overall fuel mix, only the choice between imported and domestic coal. This point was also highlighted by European electricity industry body Eurelectric during the stakeholder consultation.
The report does indicate, however, that guaranteed state support of coal could have an impact on any decision to invest in a new coal-fired plant.
