Two billion euros burnt in coal subsidies by Energy Community Contracting Parties in 2015-2019

Electricity
1 December 2020

The Energy Community Contracting Parties channelled more than EUR 900 million in direct subsidies to electricity generation from coal and lignite during 2018 and 2019, as revealed by a study published by the Secretariat today. Subsidies were the highest in Ukraine, Serbia and Bosnia and Herzegovina.

The study sheds light on the scale of direct subsidies to coal and lignite electricity production in the six Contracting Parties that own and utilize this type of energy source - Bosnia and Herzegovina, Kosovo*1, Montenegro, North Macedonia, Serbia and Ukraine, during 2018 and 2019.

Comparing these results with the study covering the 2015–2017 period published by the Secretariat last year, the report concludes that there were no substantial changes to government policies towards the subsidisation of coal and lignite. In the five-year period 2015-2019, total subsidies to coal mines and coal fired power plants exceeded 2 billion EUR.

 Director Kopač said: “The sheer scale of the subsidies wasted on the most polluting source of energy is alarming. While the European Union is moving firmly towards a carbon neutral energy system, the report shows that the Contracting Parties continue to be stuck in the past.”

The report shows that significant support was provided in the form of state loan guarantees, which pose an imminent risk to governments that guarantee these loans. The amount of state guaranteed loans reached 2 billion EUR in 2019 alone. In many instances, coal subsidies are likely to amount to State aid as prohibited by the Energy Community Treaty. The Secretariat earlier this year forwarded the information in its possession to the State aid authorities of the Contracting Parties and the European Commission for follow-up in line with their respective national procedures and bilateral agreements. So far, this seems not to have triggered enforcement action.

In Scope:

  • Bosnia and Herzegovina Bosnia and Herzegovina
  • North Macedonia North Macedonia
  • Kosovo Kosovo
  • Montenegro Montenegro
  • Serbia Serbia
  • Ukraine Ukraine