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Where is my coal renaissance?

by DoDo Wed Sep 23rd, 2009 at 04:30:59 AM EST

Two and a half years ago, the media was abuzz with German plans for 26, even 40 new coal plants (especially in the context of the planned nuclear phase-out). Back then, I judged this as a campaign of wishful thinking on the part of existing large energy companies: meant to pave the way for the few plants they will actually be able to realise, in the struggle to maintain market share they would otherwise be destined to lose to renewables developers.

Seeing how some of the plans foundered already by then, I saw confirmation a year ago. This year, it was projects much closer to realisation that ran into trouble:

  • the owner of an in-construction plant in Hamburg is suing against conditions imposed by the environment minister that makes the plant unprofitable;
  • the certainty that whatever government will be formed in the state of Saarland after the elections in early September, the Greens will have to be part of it, spells the end of plans there;
  • last week's part-annulment of the building permit for another large in-construction plant in the Ruhr area appears poised to kill that project, too.

The last example is a victory for anti-coal activism, which is less glamorous than anti-nuclear or anti-GMO activism, nevertheless, companies (and the politicians and media dogs supporting them) are already alarmed. The battle lines are drawn.



Hamburg-Moorburg

The 1.6GW coal-fired power plant in Hamburg's Moorburg neighbourhood is built by Vattenfall. It can't be justified with shortage to supply local demand: neighbouring Schleswig-Holstein an Lower Saxony states are full of still expanding on-shore wind power, and off-shore wind farms will also be close by. On the other hand, within Vattenfall's portfolio, the Moorburg plant will (would?) be an obvious replacement for the scandal-ridden (see "Not a reliable operator") and ageing Brunsbüttel and Krümmel nuclear plants.

However, the fate of the Moorburg plant has a lot to do with politics.

Until the local elections in February 2008, Hamburg was run by the Christian Democrats (CDU). And the CDU was very much in favour of Vattenfall's plans. So much so that they proposed a doubling of capacity in the planning stage (at least according to a later indignant Vattenfall).

After the elections, the CDU formed a coalition with the Greens. The Greens were against the Moorburg plant, but the CDU engineered a situation in which the fresh environment minister had no legal basis to refuse the building permit. So he gave the permit -- but added conditions.

the company was instructed that it needed to release "less hot water" into the river. Likewise, the company was also told that it would have to use the most up-to-date technology available for separating, capturing and safely storing the carbon dioxide emitted from the coal the power plant would burn. However, carbon capture and storage (CCS) technology is still in the pioneer phase and is seen by energy corporations as an additional cost burden that reduces the efficiency of power plants.

(If you want to read this story in more detail, read the above quoted SPIEGEL article and the Salon thread discussing it from July.)

These conditions mean (1) generation at less than full capacity, (2) greatly increased initial investment costs -- that is, there goes profitability. For a while, Vattenfall thought that these conditions won't be taken seriously, and went ahead with construction -- but even asking Merkel didn't help. So last April, Vattenfall sued against the conditions at the World Bank's arbitration court.

The outcome of the arbitration will be most interesting. But there is more: the CDU-abandoned Vattenfall could not just lose hundreds of millions of Euros on a plant built on sand, but there are considerations to re-communalise the local electricity distribution system (now in Vattenfall's hands).


Saarland

Saarland is small state next to France and Luxembourg with a long tradition of coal and steel. It is also a state with a somewhat special political landscape: it is made up of the same five parties as the federal parliament, but recently the Left Party is not a small but a third big party; and the CDU and FDP on one hand and the Social Democrats (SPD) and Left Party on the other hand hate each others' guts, placing a Grand Coalition out of question.

And now, after the regional elections last month (see German regional elections open thread), neither block has a majority --making the Greens the kingmakers.

The Saarland Greens, like their Hamburg comrades 1½ years earlier, made a rejection of new coal plants a centerpiece of their campaign. (RWE has a project in Ensdorf put on hold.) But they are now in a much better position to enforce it than their Hamburg counterparts. In fact, the very first coalition offers from both the CDU and the SPD contained the shelving of new coal plant plans.


Datteln (Ruhr Area)

In Datteln, on the Northern edge of another traditional coal-and-steel industrial area, the Ruhr Area, German energy giant E.on was building a 1.05 GW coal-fired power plant.

As in Hamburg and Saarland, the regional government is led by the CDU after preceding long years of SPD rule. However, in the conflict over this plant, the political sides are blaming each other for actions of the same bureaucrats, and real action is taken by non-politicians.

Having failed to prevent the project, resistance went to the courtrooms. As SPIEGEL reports, two weeks ago the regional court already nixed the land-use plan, because certain zoning and environmental laws weren't heeded. But the big strike was prepared by German environmental activist umbrella organisation BUND: a lawsuit against three of the building permits themselves.

The lawsuit capitalises on sloppy work by the above mentioned bureaucrats: in theory, the lots of procedural omissions and mistakes could be corrected, but they would cost money --and time, time during which BUND can bring in more lawsuits.

In addition, BUND requested from the local government that they immediately withdraw the permits, so that finished facts won't preempt the court ruling -- and last week, the request was granted for one of the permits.

The end of this road could be very costly for E.on: if BUND wins the case at court, they will not just abandon but will have to completely dismantle the already finished superstructure.


Elsewhere

BUND & co were emboldened by the success in Datteln.

  • The currently CDU-led Schleswig-Holstein government wants to push through a 0.8 GW project of GdF Suez in Brunsbüttel (yes, near the nuclear plant). The Datteln example of attacking the land-use plan could work there: residential areas are even closer. What's more, a local utility partnering with GdF Suez is to stand down due to pressure. And regional elections will be held simultaneously with the federal ones.

  • 21,000 opponents of a plant planned by E.on in Staudinger, in Hessen state, signed a petition for a regional planning procedure.

  • In Lubmin, on the Baltic sea, Danish company Dong Energy wants to build a 1.6GW plant. The project awaits permission from the Grand Coalition-governed Mecklenburg-Vorpommern state -- opponents staged a protest on Monday.

  • The potential weak point of two more planned coal plants in the Ruhr Area, at Lünen and Krefeld (both planned by local company Trianel) is the local effect of their emissions.

Currently, apart from the troubled projects mentioned above, five more coal-burning and two lignite-burning power plants are in construction and about a dozen more are planned.

Display:
What amazes me is the vehemence of the support for coal-fired power plant projects coming from local CDU politicians - worse than the Wolfgang Clement school within the old SPD.

As another example, there is the Mecklenburg-Vorpommern economy minister, who tried to push the Grand Coalition partner in the regional government to go along in approving the Lubmin plant: shamelessly arguing that the SPD should welcome a company willing to invest billions and create jobs in crisis times.

Unfortunately, the jobs argument is adopted by Germany's big union association DGB, too, which regretted the Datteln decision. A local functionary even raised the false argument that coal-fired power plants would be needed as bridge technology.

It would be good if unions in onetime coal and steel regions would be less a hostage of their roots and would notice the job creation in the renewables sector.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Sep 23rd, 2009 at 04:31:31 AM EST
I can understand coal miners being miffed. But doesn't the wind industry create demand for steel and thus jobs for steelworkers?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Sep 23rd, 2009 at 04:49:33 AM EST
[ Parent ]
It's not like German coal mining is even profitable, it's heavily subsidised by the government and will be that for like another decade. Stupid, stupid. If these guys want to distort the market to promote local jobs they'd be much better off increasing wind subsidies.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Sep 23rd, 2009 at 06:01:35 PM EST
[ Parent ]
At least the Greens managed to get the SPD to agreee to that slow phase-out of subsidies in the Schröder era.

The German coal lobby has one halfway decent argument there: they say that if the alternative is firing the existing power stations with coal imported from overseas, that means even more CO2 emissions. Indeed a sensible policy is not merely to phase out mining subsidies, but the plants, too.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Sep 24th, 2009 at 12:42:30 AM EST
[ Parent ]
Sounds like BS to me. Shipping uses very little energy and German (or at least east German/Polish) coal is lignite. They could well import anthracite instead and lower the emissions.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Sep 24th, 2009 at 12:53:22 AM EST
[ Parent ]
Nope. Germany has both lignite ("Braunkohle") and anthracite ("Steinkohle"), and both are used in different power plants. Most of the planned new plants are for anthracite (see end of diary). The much-discussed subventions, too, are for anthracite only ("Steinkohlesubvention"); though there are separate forms of subvention and/or preferential treatment for the lignite mines and associated power plants.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Sep 24th, 2009 at 10:15:09 AM EST
[ Parent ]
I note that one of the plants mentioned in the diary as attacked on the emissions front, Krefeld, was attacked with relation to shipping. They plan to bring the coal by ship on the Rhine, with reloading in a port. Now the fine particle load in that port is already too high, and the unprotected coal reloading would add to it.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Sep 24th, 2009 at 10:18:28 AM EST
[ Parent ]
In Spain the electric utilities have stopped buying Spanish coal, which is too expensive. As a result, coal has started to pile up in the pits, where it is still being extracted.

Zapatero has decided to intervene by attempting to force or subsidize the utilities to buy spanish coal for their power plants. They also intend to revise the EU's energy policy to make it more friendly to Spanish coal.

The utilities are up in arms, claiming that this will result in a more expensive electricity bill for consumers. The leader of the opposition, Rajoy, hasn't actually mentioned this but is advocating renewables and nuclear. Meanwhile, the PP local party in one of the mining areas is asking for incentives to coal production to be restored (they were eliminated in 2002 when the European Coal and Steel Community treaty expired).

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 05:16:20 AM EST
[ Parent ]
Eh? No one buys Spanish coal, but the mines are still extracting?

Are coal mines in Spain sponsored/owned by the government?

by Nomad on Wed Sep 23rd, 2009 at 05:25:48 AM EST
[ Parent ]
From Mbendi, emphasis mine:

Coal is Spain's most plentiful indigenous energy source. Production has fallen in recent years, and the decline is expected to continue as Spain works to meet environmental standards. Spain is the European Union's largest coal producer. Spain's coal reserves are abundant but difficult to mine. Consequently, the cost of production is higher, making Spanish coal less competitive than that of many other countries. As a result, coal production could eventually be phased out. All of the major coal companies are state-owned. The leading producer of soft coal is Huelleras del Norte S.A. (Hunosa), and the leading producer of lignite is Empresa Nacional de Electricidad S.A. (Endesa).

According to the 2008 BP Statistical Energy Survey, Spain had end 2007 coal reserves of 530 million tonnes. Spain produced 18.2 million tonnes of coal in 2007 and consumed 20.1 million tonnes oil equivalent. Thermal coal is imported, primarily for power generation and the steel industry.

Terrific. Another government proving how mining shouldn't be run. It's really easy: if costs > income = shut the mine.

by Nomad on Wed Sep 23rd, 2009 at 06:08:20 AM EST
[ Parent ]
Nomad:
It's really easy: if costs > income = shut the mine.
It's not that easy:
Postponing the inevitable closing of the coal mines is only part of the solution. An alternative needs to be provided to the maybe 100,000 people that would have to relocate were the mines to be closed overnight. What can we done with €600 million per year to ease the transition to the unavoidable future when the mines will be no longer in operation, and the mining comarcas deserted?
(see my parallel comment)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:10:57 AM EST
[ Parent ]
600 million for 100.000 people per year = 500 euros per month per person. Is Spain's unemployment stipend more than 500 euros per month?

Have any plans been decided, or are there any plans in the work that you're aware of, that have already started transition and phase out of coal production or will this continue until total and dramatic collapse becomes inevitable?

by Nomad on Wed Sep 23rd, 2009 at 06:28:53 AM EST
[ Parent ]
Nomad:
Is Spain's unemployment stipend more than 500 euros per month?
Zapatero has introduced a €420/mo stipend for people whose unemployment entitlement has run out. Minimum wage is €624/mo.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:30:44 AM EST
[ Parent ]
You will note that 100,000 people is an estimate of the wider impact (miners' families and the economy supporting them). The actual number of miners was about 14,000 in 2004, and the average subsidy came to about €43,000 per miner (going to the industry, not to the miners directly in the form of salaries). And this was half of the cost of production.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:34:05 AM EST
[ Parent ]
Based on the above numbers, let's close, hypothetically, half the mines. 7000 miners are sent home, and receive unemployment benefits henceforth. The governments also cuts 50% of the subsidies, meaning 300 million.

300 million spread over 7000 people would give an unemployment benefit a little shy of 3600 euro per month.

I'd wager to guess that's unusual for an unemployment benefit.

Let's make it twice the minimum wage = 1250 per month. Then, costs for the state would be €105 million. Left: €195 million to spent on transition and other affairs.

Last year, the platinum companies in South Africa cut some 30.000+ people. The gold industry cut another 20.000+. Which is truly horrendous, because there is hardly any social safety net in SA. But the point is: firing up to 10.000 people is nothing unusual in mining industry. For Spain, there doesn't need to be any drama, as far as I can see. And shutting down the mines would be for the benefit of everyone, including the environment.

Am I missing something?

by Nomad on Wed Sep 23rd, 2009 at 07:39:46 AM EST
[ Parent ]
Nomad:
Let's make it twice the minimum wage = 1250 per month.
Reportedly the mean wage in Spain in 2007 was about €20k, but the median wage was €14,500, below €1250 per month. It would probably be politically difficult to justify such a subsidy. However, I don't know how that compares to a miner's typical salary.
Am I missing something?
Not that I can see, except that possibly
€195 million to [be] spent on transition and other affairs.
probably wouldn't eliminate the need for people to move away from the areas in question since there isn't enough of a local economy to replace coal export income.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:23:28 AM EST
[ Parent ]
is not enough to realise attractive subsidies for relocation? There aren't any unsold houses in Spain any more?

By not undertaking action, I will rate Zapatero's government as incompetent as the previous 25+ years of post-Franco government that kept on stimulating unprofitable mining.

by Nomad on Wed Sep 23rd, 2009 at 09:39:34 AM EST
[ Parent ]
You will notice that this coal mining issue blew up in ZP's face in the first month of his first term in office, back in 2004. 5 years later, here we are.

Just like his finance minister Solbes saying in January 2006 that the real-estate development economic model was unsustainable and the boom years needed to be used to lay the groundwork for a change in model. 3 years later he left the government and the change of economic model is beginning to be talked about.

The same level of incompetence as Blair's government which came to power in 1997 and was caught by surprise when Scotland's North-sea gas production peaked. You would have thought 5-year projections should be the bread and butter of government. And you would be wrong.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:49:45 AM EST
[ Parent ]
Migeru:
came to power in 1997 and was caught by surprise when Scotland's North-sea gas production peaked
in 2002, that is.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:59:13 AM EST
[ Parent ]
Well, you can develop the local economy around new economic sectors. Bilbao was quite successful in regenerating the city's economy after the closure of the blast furnaces (Altos Hornos de Viscaya).

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Sep 23rd, 2009 at 09:45:04 AM EST
[ Parent ]
There are four things you can do in inland Asturias: cows, coal, tourism and wind farms.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:55:28 AM EST
[ Parent ]
So remove coal and combine the three others:
cow winds farms
cow tourism
tourists winds farms
...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Sep 23rd, 2009 at 10:06:25 AM EST
[ Parent ]
The inland wind turbine test site in Grevenbroich is built on a ridge of tailings from one of Germany's largest open mines.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 23rd, 2009 at 10:24:20 AM EST
[ Parent ]
Life really can make one giggle.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Wed Sep 23rd, 2009 at 02:48:04 PM EST
[ Parent ]
Nomad:
will this continue until total and dramatic collapse
To judge by the experience of the last 5 years, yes.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:06:00 AM EST
[ Parent ]
Coal is Spain's most plentiful indigenous energy source.

Solar not being indigenous as it comes from the sun, and wind because it from somewhere abroad? Seriously, is there a way to define "indigenous" that is not automatically biased against renewable energy?

by gk (gk (gk quattro due due sette @gmail.com)) on Wed Sep 23rd, 2009 at 06:16:24 AM EST
[ Parent ]
What a crock of humanure!

Nomad quotes Mbendi:

...

Production has fallen in recent years, and the decline is expected to continue as Spain works to meet environmental standards.

No, peak coal doesn't exist. It's all the fault of those pesky environmental standards.
Spain is the European Union's largest coal producer.
Because it doggedly refuses to downsize its mining sector
Spain's coal reserves are abundant but difficult to mine.
They are also or very poor quality: mostly lignite as all the anthracite is gone and there is mostly bituminous coal (the hulla in Hulleras del Norte (HUNOSA)) and lignite.
Consequently, the cost of production is higher, making Spanish coal less competitive than that of many other countries.
Yes, it's like insisting on producing heavy, sour crude when other countries are still producing enough of the light, sweet variety to keep the price low.
As a result, coal production could eventually be phased out.
And that would be a good thing were it not for the social impact on the local economies around the pits.
All of the major coal companies are state-owned.
Having been bailed out in the 1960's when they became unprofitable
The leading producer of soft coal is HuellerasHulleras del Norte S.A. (Hunosa), and the leading producer of lignite is Empresa Nacional de Electricidad S.A. (Endesa).
See? No Anthracite (or "clean coal" - that is, low in impurities. Given global climate change, burning anthracite would be criminal even if it didn't contribute to acid rain or smog).

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:29:20 AM EST
[ Parent ]
Spain is the European Union's largest coal producer.

Nope, by far. In 2006, Spain produced 20 million tons of coal, whereas Poland produced 171 million tons...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Wed Sep 23rd, 2009 at 08:23:54 AM EST
[ Parent ]
Are they referring to the EU15, maybe?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:02:55 AM EST
[ Parent ]
and wouldn't care what Mbendi means.

Mbendi is useful as a cursory introduction to mining. At best.

by Nomad on Wed Sep 23rd, 2009 at 09:09:13 AM EST
[ Parent ]
Can't be. Germany produced 220 million tons in 2006, and Greece 72 million tons. By the way, I was surprised to find that the UK still produces around 19 million tons a year.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Sep 23rd, 2009 at 09:31:54 AM EST
[ Parent ]
...and Germany 220.55 million...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Sep 23rd, 2009 at 09:27:53 AM EST
[ Parent ]
Yes. I din't think they were still producing so mush coal.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Sep 23rd, 2009 at 09:47:30 AM EST
[ Parent ]
Yes, and yes.

Comisión de seguimiento de Plan Carbón se reúne mañana con la crisis de fondo - InvertiaThe "Plan Carbón" oversight committee will meet tomorrow with the crisis as backdrop - Invertia
......
Endesa y Unión Fenosa han dejado de hacer pedidos de carbón nacional en algunas de sus centrales, entre las que destacan Compostilla y La Robla, bajo el argumento de que no pueden recibir más pedidos porque sus almacenes están llenos y por la caída de la demanda eléctrica.Endesa and Unión Fenosa have stopped ordering [Spanish] coal for some of their power plants, among them Compostilla and La Robla, under the argument that they cannot take delivery of more batches because their storage is full, and because of the drop in electricity demand.
El pasado 31 de julio, el Gobierno aprobó la creación de un almacenamiento estratégico temporal de carbón autóctono a la espera de que las condiciones del mercado eléctrico permitan su consumo en la generación de electricidad, cuya gestión fue encomendada a Hulleras del Norte (HUNOSA).Last July 31, the Government approved the creation of a temporary strategic storage for domestic coal, with management entrusted to Hulleras del Norte (HUNOSA), waiting for conditions in the electricity market to allow it to be consumed in electricity production.
No obstante, sobre el sector de la minería del carbón nacional, más caro y de peor calidad que el de otros países, sobrevuela desde hace tiempo la necesidad de plantearse su viabilidad, ya que ahora subsiste básicamente por el apoyo público.However, the need to consider the viability of the domestic mining industry, whose coal is more expensive and lower-grade than that from other countries, has been looming for some time, since currently it subsists basically because of state support.

In 2004 I wrote the following:

Coal-dark future: the EU subsidies to Spanish mining (May 15, 2004)

On may 14, 2004, it became known that the Spanish government illegally subsidized the coal mining industry in the amount of €600 million, which will now have to be returned by the industry. The shady political dealings behind this need not concern us here but, according to radio station Cadena Ser,
The coal mines produce about 12.5 million tonnes of coal each year, for which electric power companies pay--at the international market price--some €750 million, well below the operating costs of the mines.

It is for this reason that Brussels authorizes public subsidies, in order to make up for the difference between the market price and the cost, and that accounts for the €600 million now in question, which is to say, nearly half of the total revenue of the mines. Hence, having to return these subsidies might lead to a collapse of the industry, with 47 companies employing some 14,000 workers and many of them essential in comarcas practically without employment alternatives for their population.

Since the Spanish Constitution defines Spain as a social state and the Draft European Constitution lists solidarity as one of the values on which the EU is founded, it makes sense that the EU and Spain are willing to spend €600 million a year for the sake of preserving the social fabric of the mining comarcas (counties?). To understand the magnitude of the problem, one could estimate the number of affected people at about 100,000 (assume each miner is in a family of four, and double the result). The question that assails me right now is, if Spain and the EU are willing to spend about €6,000 per person per year to help these people, isn't there a better, more imaginative, way to use the money than to subsidize the industry? We are talking almost €43,000 per year for each of the 14,000 employees of the industry!

The problem with subsidies is that they just make the problem worse for the future. If Spain's coal mines are not productive enough to be profitable, the more is extracted from them the less profitable they become, because each new tonne of coal becomes more expensive to extract. The amount of the subsidies must, therefore, increase each year. Presumably, subsidies started when the mines were just short of breaking even, and so have increased to €600 million from a negligible amount. As far back as I can remember, there was talk of industrial reform of the mining sector, and social and labor conflict in the affected areas. Back then, a small subsidy must have seemed a reasonable price to pay for social peace. The price is no longer reasonable, however, when the subsidy accounts for 4/9 of the cost of producing the coal.

Postponing the inevitable closing of the coal mines is only part of the solution. An alternative needs to be provided to the maybe 100,000 people that would have to relocate were the mines to be closed overnight. What can we done with €600 million per year to ease the transition to the unavoidable future when the mines will be no longer in operation, and the mining comarcas deserted?

The decline and fall of Spanish mining (May 16, 2004)

In Spain, mining and Asturias (a province and Autonomous community on the North of the country) are synonimous. According to this site,
In the 1960's the mining industry of Asturias suffered enormous economic losses, to the point that the owners of the mines asked the government to nationalize them. Thus, HUNOSA (a new holding of which the Spanish govenrment owned 77%) was created on March 9, 1967. Started with an initial capital of 3,380 million pesetas, by 1979 HUNOSA had accumulated 65,000 million pesetas in losses. In 1980 the Government agreed with HUNOSA to carry out plans to reduce the weight on mining in Asturian economy. From 1980 to 1990, the number of miners was reduced from 22.000 to 18.000. Because of the mining crisis, Asturias went from being the sixth region of Spain in per capita income in 1955 to twenty-first in 1985, with an unemployment rate above the national average.
Since the 1920's, successive Spanish governments had already helped mining by imposing the obligation to use Spanish coal on all industries. Then the Francoist oligarchy that owned the mines became public employees through HUNOSA, and it was not until 1979-1980, under the first democratic government after Franco's death in 1975, that something was done. This is consistent with other disastrous economic policies of the 1970's, when Franco's govenrments shielded the Spanish people from the oil crisis at huge costs to the state, which anded up blowing up in the face of all Spaniards around 1980. In 1980, the only possible solution to the problem was already a reduction in the number of miners, but for the following 10 years jobs in the industry were reduced only by 9%, probably due to union resistance. The unions had, apparently, won their first collective bargaining contract as late as 1972, when the industry was already on its deathbed. The story contunues:
By 1991, France and Belgium had closed all their pits and Germany only kept open the most productive. Meanwhile in Spain, agreements are signed until 2002, imposing a severe reduction of jobs in the industry, and the closure of the least profitable pits. In 3 years, the number of employees in the industry dropped from 18.000 to 12.000 thanks to early retirement. Even though, at the beginning of the 1990's mining was employing 21,6% of Asturias' workforce.
From 1986, Spain received EEC subsidies due to end in 2002, when all unprofitable mining in the EU must be shut down.
What actually happened is that the European Coal and Steel Community treaty expired in mid-2002, and the EU's general rules on competition came into effect. As a result, subsidies not necessary to counter the effects of dumping by third parties are considered illegal. The
European Commission explains:
This Regulation provides that state aid may be granted for the restructuring of the hard coal industry, taking into account the social and regional aspects of the restructuring as well as the need to maintain, as a precautionary measure, a minimum quantity of indigenous production to guarantee access to reserves.
Apparently, in 2003 Spain continued to subsidize the industry, which now has to return €600 million to the Government. According to Cadena Ser,
It all begins on January 1 2003, when the criteria to award public aid to mining changed. Brussels made the subsidies conditional on prior EU authorization, to enforce the application of the new rules and competition is not distorted. But the People's Party government did not comply with that requirement and awarded the 2003 subsidies without EU approval. In Brussels, nobody moved a finger.
"It all begins"??? What an understatement. The story really begins after WWI, when Spain's mining operations failed to be mechanized like their European counterparts, and in the name of "social peace" 80 years of Spanish governments decided to maintain and subsidize a labour-intensive industry. There were 52,000 miners as late as 1958, a testament to everyone's lack of imagination on the issue of how to employ the people of Asturias.
As for the recently ousted PP government, the fact that Spain was unprepared to justify that the mines qualified for aid under the new rules means that Spanish mines were known not to be profitable enough. The PP government, in power since 1996, and the PSOE regional goverment, had up to 6 years (depending on when the new rules were decided on) to evaluate the likelyhood the Spain's mines would qualify for subsidies, and do something about helping Asturias in case the mines had to be shut down. Nothing was done by either of them.
Again according to Cadena Ser, citing "sources in the industry",
[...] for nearly a year and a half, the EU commisioner for Energy allowed the former Ministry of Economy under Rodrigo Rato, close to commissioner Loyola de Palacio in the PP, not to answer Brussels' demands for an explanation of the rules by which Aznar's government was awarding subsidies to mining operations.
But all changed on March 14. That day the PP lost the elections and, barely two weeks later on March 30, Loyola de Palacio sent the Spanish government an ultimatum and started an investigation of the subsidies, since without authorization they might be illegal, incompatible with the common market, and subject to being returned to the EU.
Apparently, De Palacio gave Spain one month, knowing that the transfer of power would barely be completed by then and, for their part, responsible PP officials did nothing to comply. Apparently it was the unions that told the new government about this situation, already after the ultimatum had expired.


En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:09:10 AM EST
[ Parent ]
European Tribune - Where is my coal renaissance?
committee will meet tomorrow
refers to September 22, 2009. It was a scheduled meeting, not an extraordinary one.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:12:34 AM EST
[ Parent ]
Migeru:
Zapatero has decided to intervene by attempting to force or subsidize the utilities to buy spanish coal for their power plants. They also intend to revise the EU's energy policy to make it more friendly to Spanish coal.
As we know, Spain will hold the rotating EU Council Presidency in the first half of 2010.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 06:19:31 AM EST
[ Parent ]
From Expansion.com:

(with the obligatory mistake of using "kilowatts/hour")

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 04:14:05 PM EST
[ Parent ]
Any comment on the Dutch plans to build coal plants in the Netherlands (there are at least 2 to be built, and of another 2 I heard rumours)?

As far as I understand so far, electricity production in the Netherlands is already larger than national demand, and those 2 (4?) new plants are meant to sell electricity, particularly to Germany. This is seen as "a good thing" - even by political parties such as Labour - because the coal-generated electricity in the Netherlands is supposedly cleaner than coal-generated electricity in Germany.

Any more insights?

by Nomad on Wed Sep 23rd, 2009 at 04:48:01 AM EST
recently that stated that coal-fired plants could be stopped because they could not comply with emissions-reductions policies of the government?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Sep 23rd, 2009 at 05:54:16 AM EST
Yes, that was part of this ruling against the Datteln plant:

As SPIEGEL reports, two weeks ago the regional court already nixed the land-use plan, because certain zoning and environmental laws weren't heeded.

Basically, the court said that Northrhine-Westphalia's emissions reduction plan allows only for the replacement of coal-fired power plant capacity, and the land-use plan did not say anything about what capacity is replaced.

The same argument may be used in future lawsuits against the two other Ruhr Area plants mentioned (Krefeld and Lünen).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Sep 23rd, 2009 at 07:59:43 AM EST
[ Parent ]
in Sunday's Salon:


German judges spurn coal -    Die Tageszeitung/ Presseurop

German justice is going green. For the first time ever, German judges have stopped the construction of a coal-fired power plant in Datteln, in the Ruhr region. Among other things, the Münster court argues, much to the satisfaction of the Tageszeitung, that
the new power plant "would not contribute to reducing greenhouse gas emissions". And this is not just "any old plant or any old ruling", points out the Berlin daily: according to its builder, E.ON AG, one of the world's biggest utilities, the plant was a prototype of a new generation of coal-fired facilities with the highest output in Europe, generating 1,100 megawatts, "almost as much as a nuclear power plant". The only thing is the facility would have given off 0.73% of German CO2 emissions without even replacing a single existing plant. *Consequently, its construction would have run counter to the objective set out in the regional development plan: to cut carbon-dioxide emissions
. "The judges have done well to remind us that actions speak louder than words," concludes the TAZ.

So this is about the Datteln plant mentioned by DoDo above.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Sep 23rd, 2009 at 08:02:00 AM EST
[ Parent ]
Great discussion, thanks all.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 23rd, 2009 at 07:19:13 AM EST
Having forgotten to h/t DoDo directly for the foundation research.  Kudos.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 23rd, 2009 at 07:20:06 AM EST
[ Parent ]
I feel like apologizing for hijacking the thread in Spain's direction...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 23rd, 2009 at 09:23:09 AM EST
[ Parent ]
We're europhiles, and we know the problem of coal is not limited by borders, even if the details differ.  So what the hell.

I'll try to link the topics together now...

We could use Wolfgang Clement as a piñata.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Wed Sep 23rd, 2009 at 10:23:08 AM EST
[ Parent ]
No one expects the Spanish Inquisition!

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Sep 23rd, 2009 at 01:18:17 PM EST
[ Parent ]


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