Collision course

The German government agreed on Wednesday to extend coal mining subsidies until the year 2018, cementing Germany's opposition to European Union plans to phase out subsidies and close all loss-making mines by 2014.

German Economics Minister Rainer Bruederle said Wednesday's cabinet decision meant that subsidies for coal-mining would be "irreversibly" ended in 2018, which represented "good news for the German taxpayer."

The government said it was scrapping a planned review of the closure of its remaining mines.

Crash course

The move, however, puts Berlin on a collision course with the EU's executive in Brussels. This summer, the European Commission proposed that all subsidies to unprofitable coal mines be scrapped by 2014, arguing that the payments were bad for the environment and contravened EU competition regulations.

In response, Chancellor Angela Merkel's cabinet argued that an existing accord between the industry and the German government - foreseeing the 2018 closure - should be respected.

Germany was left lobbying for support from other EU states to overturn the proposal, which will be discussed by EU officials at a meeting in Brussels on December 10.

Sources close to Merkel's government indicate that 23 other EU member states are in agreement with the German stance, with only Sweden, Denmark and the Netherlands in favor of the Commission's plans.

The German coal industry employs around 25,000 people, mostly at mines in the country's former industrial heartland in the west and southwest of the country.

Without subsidies, expensive extraction methods make it impossible for German coal to compete on the international market.

Author: Gabriel Borrud (AP, dpa)
Editor: Rob Turner