Hidden subsidies for major polluters, while public forced to pay

Auf Deutsch | W języku polskim

11 December 2020, Brussels – Officials are shielding the coal industry from tens of millions of euros in mandatory water bills while making the public pay, an investigation has revealed.

The hidden subsidies are distorting the market and supporting a major polluter of the climate, air and water just as governments agree further action against climate heating, warned the European Environmental Bureau (EEB).

The NGO spent months analysing opaque data on water use for a report published today called Mind The Gap, Mapping hidden subsidies for the coal and lignite industry. The report focuses on Germany, Poland and the Czech Republic, Europe’s top three producers of lignite, a particularly harmful form of coal. It found that governments are failing to impose annual fees worth an estimated €54 million per year, as required under the EU Water Framework Directive. The figure is based on comparable fees paid in the minority of territories that do require industry to pay. The total amount is higher when the coal sector beyond lignite is included.

The directive required governments by 2010 to put in place water pricing policies that ensure an “adequate contribution” by both individuals and companies in order to conserve water and cut pollution. Throughout Europe, pricing has been applied for private citizens, who pay on average €5.50 (Germany), €3.42 (Czech Republic), €2.75 (Poland) per cubic metre to water companies, which add a premium for services like treatment and delivery. But pricing is either exceptionally low or entirely missing for lignite companies. This despite the fact that other industrial sectors are forced to pay, and that just nine lignite mines pump a billion cubic metres of water per year, nearly five times more water than is used by the residents of Berlin. 

Following pressure by environmental groups, one German federal state forced lignite companies to pay for all the water they drain – North Rhine-Westphalia. But coal firms there pay 100 times less per cubic metre than the equivalent amount of tap water for private citizens.

EEB industrial production policy officer and report author Sara Johansson said:

“While households pay a high price for their water bills, climate villains are pumping tens of millions of cubic metres a year for free. It is a scandal. The polluter should pay. That rule is plain and simple and it is written into the EU directive. But the governments of Germany, Poland and the Czech Republic have looked the other way for a decade, subsidising their lignite industry and creating market distortion. The European Commission should take action against these countries to protect its reputation and the environment.”

Groundwater extraction price per cubic metre

*Base rate applies to drained water that is subsequently used.
**Depending on plant type
**Drained water can be used free of charge. Mines often exist next to power plants, a heavy water user. This is the basis for the €2m CZ savings calculation.

Coal is a major contributor to climate change and air pollution from coal plants causes 20,000 Europeans to die prematurely each year. Coal plants are also the biggest man-made source of mercury pollution. Plants in the three countries emitted 9.5 tonnes of the powerful neurotoxin in 2017. Mercury is the most common cause of the 60% of Europe’s lakes and rivers that fail clean water standards set by the same directive. Even after a mine is closed, water drainage and pollution can continue for decades or in perpetuity.

Data on industrial water use in the three countries is hard to access, making it difficult to identify users and polluters of water bodies and apply the Polluter Pays Principle, a legal aspect of the directive. The EEB is calling for improvements. 

The NGO GRÜNE LIGA has been highlighting the problem of water use by coal companies for over a decade. 

GRÜNE LIGA water expert Michael Bender said:

“There is an urgent need for more transparency on the amount of ground and surface water abstracted by coal and other industries. Water management authorities know the extent of the coal industry’s impact, yet they are not doing their homework to compile data and make polluters pay. Economic instruments, such as water fees and taxes, should be applied throughout Europe and provide necessary funding to improve the ecological health of rivers, lakes and groundwater.”

Image credit: thanks Dominik!