Billions of euros to support EU coal regions achieve little for energy transition

EU support for coal regions has achieved little for the climate transition, according to the European Court of Auditors (ECA), which analyzed the effects of an aid fund amounting to around EUR 12.5 billion in 2014-2020. The billions of euros allocated to coal regions in the EU have almost failed to make any progress and ensure a more efficient climate transition.

The European Court of Auditors (ECA) concluded that the EU financial assistance granted to coal regions had a limited impact on the energy transition and jobs in the coal-producing regions. The audit refers to the effects that the funds of about EUR 12.5 billion in 2014-2020 have had on seven coal regions in Germany, Poland, Romania, the Czech Republic, and Spain.

The EU financial assistance granted to the coal regions had a limited impact on the energy transition

The auditors ruled that the support had limited focus and impact on job creation and the energy transition. The audit also showed that despite the general reduction in coal use, this fossil energy product remains a significant source of GHG emissions in the Member States that received support for the energy transition.

During the period covered by the audit, funds ranged from health to transport infrastructure and for projects to improve the quality of life. But they gave a small incentive for the transition of the coal region to renewable energy sources.

In the coal regions, EU funds have not significantly impacted increasing the capacity of renewable energy sources

In most of the regions covered by the audit, the funded projects had no significant impact on energy savings or renewable energy production capacity. The Court noted that EU taxpayers’ money did not bring the expected changes, so the audit is also a reminder for planning other budget expenditures intended for the energy transition.

The EU Green Deal identified the phasing out of coal in energy production as essential in achieving the 2030 climate targets and for climate neutrality by the middle of the century. Although production has been significantly reduced in EU countries since the beginning of the century, according to data from 2019, coal combustion was still responsible for 15% of GHG emissions in the EU.

Weak employment in coal regions

Laid-off workers have encountered a “generally positive situation on the labor market” in most coal regions in the audit scope. Workers had training courses supported by the European Social Fund but lacked data on their participation.

The number of jobs created in these regions through investments from the European Regional Development Fund was relatively low, especially compared to the total number of unemployed in these regions.

Reminder for the new support fund

In 2020, the EU established the Just Transition Fund (JTF), which provides an additional EUR 19.3 billion to support the transition to climate neutrality.

To draw lessons for the implementation of the new fund, the auditors assessed how much EU support in the period 2014-2020 effectively contributed to the socio-economic and energy transition in the EU regions, where the coal industry was predominant.

The audit states there is a risk that Just Transition Fund can be spent without the transition taking place

The audit states that there is a risk that funding could be spent without the transition taking place. The EU has set up a new fund but has not assessed the extent of funding needs. The JTF has been negotiated with other EU members by coal-relying countries, such as Poland, and is one of the conditions for achieving climate neutrality by 2050.

The energy crisis is a challenge in the coal phase-out

The limited timeframe of the program amplifies this risk that funds intended to mitigate socio-economic and environmental costs of energy transition may be spent without effect occurring.

The auditors stated that the cuts in the Russian gas distribution to Europe led some countries to increase the use of coal again to ensure energy supply.

However, the ECA notes that even before the war in Ukraine, countries such as Poland and Germany partially replaced the use of domestic coal with imported or other fossil fuels such as natural gas, which led to GHG emissions not being reduced as expected.

Recommendations for the European Commission

The ECA recommends that the European Commission verify that the JTF is effectively used to mitigate the socio-economic impacts of the transition on climate neutrality in regions whose economies depend on coal production. The auditors also recommended sharing experiences and identifying good practices for measuring and managing methane emissions from closed or abandoned coal mines.

In response to the audit results, the European Commission accepted these recommendations.

As an independent EU external auditor, the Luxembourg-based European Court of Auditors looks after the interests of EU taxpayers. This court does not have legal powers but works to improve the European Commission’s management of the EU budget and reports on EU finances.