State aid and competitiveness of the hard coal mining industry in the European Union

Izabela Jonek-Kowalska

doi:10.12775/equil.2015.004

Abstract

The hard coal mining industry in the European Union (EU) is in decline, mostly due to a lack of price competitiveness. It is maintained, to a great extent, by state aid; the key objective of the industry’s existence is to provide energy security and guarantee employment in the mining regions. In Poland, the hard coal mining industry is currently undergoing a serious crisis that threatens the two largest mining enterprises with bankruptcy. In addition, due to the European Union’s restrictions concerning the circumstances of granting state aid, these enterprises cannot count on the financial support for the repair restructuring that they used on a large scale until 2011. Therefore, in this article, the main objective is to determine the influence of state aid on the competitiveness of the hard coal mining industry in 12 countries of the EU, including Poland in specific. In order to achieve the stated objective, the article is divided into three parts. The first part consists of a literature review, and legal regulations that are related to state aid for the hard coal mining industry in the EU are presented. The second part identifies the amount of state aid for the mining industry in the examined countries. Next, the economic effects of state aid for hard coal mining in the European Union are examined. The third assesses the financial results of 24 Polish hard coal mines.

Highlights

The role of the state in the theory of economy may be analyzed and evaluated within the frames of two main research trends that differ in their approach to the effectiveness of influence of the state on real values in economy
The first part consists of a literature review, and legal regulations that are related to state aid for the hard coal mining industry in the European Union (EU) are presented
In the first part of the summary, there is a reference to the first research problem discussed in this article, which is formed by the following question: Which countries, from 2000–2012, granted the highest amounts of state aid to the hard coal mining industry and has this found its reflection in the economic and quality results of the examined industries? From an absolute perspective, the greatest state aid was received by Germany, Spain and Poland

Summary

Introduction

The role of the state in the theory of economy may be analyzed and evaluated within the frames of two main research trends that differ in their approach to the effectiveness of influence of the state on real values in economy. An attempt is made to conduct an effectiveness assessment of state intervention in the industrial restructuring of hard coal mining in the EU. In the period analyzed in the article, which encompasses the years 20002012, the hard coal mining industry in the EU was systematically subsidized within the frames of the EU Council Regulation no. According to the regulation, retaining domestic energy security justified state aid granting for unprofitable hard coal mines Financial support for the mining industry concerned a wide subject range, which included aid for the closure of unprofitable mines, operating aid, investment aid Support for initial investment and state aid without time limits were dropped, which hinders the domestic initiatives concerning the improvement of sector’s competitiveness Support for initial investment and state aid without time limits were dropped, which hinders the domestic initiatives concerning the improvement of sector’s competitiveness (Białas, 2011, pp. 7-28; Gorczyńska & Szwajca, 2012, pp. 23-29 )

Methodology of the Research

Method of measurement

Findings

Conclusions