2ND German coalition agrees to end coal subsidies by 2018


dpa German Press Agency
Published: Monday January 29, 2007

Berlin- The leaders of Germany's ruling coalition agreed early Tuesday to end 3.2-billion-dollars of government subsidies to the coal industry by 2018, officials said. Economy Minister Michael Glos (Christian Social Union) and Social Democrat Party head Kurt Beck announced the agreement after a meeting of the coalition committee that coordinates policy between the Christian Democrats and Social Democrats.

The decision appeared to be a break-through on a controversial issue that has been brewing in Germany for years. Germany has been under European Union pressure to cut state state support for the country's remaining eight mines, in keeping with Europe-wide trends.

The agreement opens the way for the planned stock market listing by German mining group RAG AG in the fall. The Essen-based company is in favour of ending coal as an energy source and says it has earmarked the 5.5 billion euros (7.1 billion dollars) which it expects raise by its stock market debut for renewing areas damaged by coal mining.

Beck said a subsidy phase-out scenario had been hammered out that would cut off funds by 2018. But the coalition agreed that the decision would be reexamined again in 2012 by the Bundestag and the government as well as the provinces most affected - North-Rhine Westphalia and the Saar.

Monday's agreement among coalition leaders calls for guaranteeing the mining subsidies to 2018.

Beck reassured the country's 33,000 miners that they would not be laid off under German laws that allow layoffs due to restructuring, a provision that eases job elimination. It was not clear if the workforce would be allowed to dwindle through attrition.

"The miners are in any case guaranteed of security," Beck said. The labour-friendly SPD has fought an end to subsidies for years.

Glos, who said he was pleased that agreement had been reached, said final details would be nailed down at a coalition meeting on Wednesday to prepare the draft law for Germany's parliament.

The federal and provincial governments currently pay the subsidies to the coal industry.

The way was paved for the agreement on Sunday, when federal officials and Saar and North-Rhine Westphalia officials endorsed a draft paper that called for the subsidies to be ended with a view to social justice for the miners. The miner's union IGBCE and RAG had accepted the guidelines.

The negotiations only moved forward once the SPD had dropped its objections to ending the subsidies, but the labour-friendly party insisted on the 2012 review as a backstop.

According to the joint draft paper, the German parliament will review the end to subsidies based on a common report from the federal government and the two mining-belt provinces as to whether it makes sense for Germany to close its coal mines based on the "economis of the industry, the country's energy security issues and the country's overall energy policies."

The report must be submitted by June 30, 2012, the draft agreement said.

© 2006 dpa German Press Agency