Many European governments continue to support and subsidise coal mining through a number of different mechanisms. They include subsidies for capacity mechanisms that are meant to guarantee security of energy supply when needed, in return for additional payments to (coal) power providers – for instance in France, Germany, Italy, Turkey, and the United Kingdom.
Other mechanisms include the allocation of free allowances under the EU Emissions Trading Scheme, research and development (R&D) support for coal-fired power generation with carbon capture and storage, and for co-firing of biomass with coal.
Some governments further pay for the rehabilitation of mining sites, and government bodies sometimes support coal mining abroad, for instance by providing financial security to the coal industry. If a new coal-fired power plant is built in South Africa, for instance, numerous international suppliers are involved. Their exports are financed by bank consortia via export credits. State-owned development banks, like the German KfW IPEX Bank, have often been involved in these export credits in the past. It was not until 2019 that KfW-Bank – of which IPEX-Bank is a member – excluded financing for the coal sector. Much too late! The loans for a power plant still under construction in Greece continue until today.
Through export credit guarantees, some governments continue to support the coal industry abroad. The German export credit agency Euler Hermes, for instance, provides financial protection for the foreign business of European companies and banks against economic and political risks. In 2019 they covered a loan to the Siberian Coal Energy Company (SUEK), facilitating coal mining and ecological and social destruction in Russia.
Some globally active European companies such as RWE also have direct stakes in coalfired power plants abroad. The German energy company Uniper, active worldwide, operates and finances coal-fired power plants in European countries and Russia under the name Unipro.
