Coal industry’s bid for tax breaks under fire

from The National, 08 September 2015

An industry bid to win carbon tax breaks for opencast coal mines in Scotland has run into fierce opposition from environmentalists in the run-up to a debate by MPs at Westminster.

The Durham-based coal company, Hargreaves Services, is lobbying for exemptions to carbon taxes so that it can mine new coal and use some of the profits to restore derelict opencast sites. But critics say the tax breaks could just end up subsidising mines that damage the environment and fail to restore some of the worst sites.

Instead they are proposing using carbon taxes to build up a £100 million restoration fund. This could ensure that restoration is properly targeted, sustainable and of real benefit to communities and the environment, they argue.

After two coal companies went bust in 2013, Scotland was left with a massive £200 million hole in the funds needed to clean up the mess made by 32 opencast coal mines in East Ayrshire, Lanarkshire, Dumfries and Galloway, Fife and Midlothian.

Ministers and industry have since been struggling with how to ensure that the promises made to local communities to repair their scarred landscapes are kept. Hargreaves, which now operates seven opencast mines and looks after another seven defunct mines in Scotland, warned in December that falling coal prices would lead to a big drop in profits this year.

The company has now suggested that some opencast mines could be made exempt from paying tax under the Carbon Price Support mechanism. This would enable money to be saved and diverted into paying for old mines to be restored, it said.

But in a briefing to MPs in advance of a debate on “orphaned” opencast coal sites in Westminster Hall on Wednesday, the Royal Society for the Protection of Birds (RSPB) in Scotland has sounded the alarm about the proposed tax breaks.

“There are serious risks that this mechanism would fail to target priority areas, create pressure for coaling at inappropriate sites, and encourage extraction at economically marginal sites in the face of declining prices, risking further industry collapse,” it warned. 

It was unclear how the tax breaks would help sites where no new mining was possible, RSPB Scotland argued. “At other sites, funds generated by an exemption would either far exceed or fall short of the needs at that site, necessitating complex oversight to ensure funds are channelled to areas of need, are used for restoration and do not just subsidise coaling.”

RSPB Scotland’s head of conservation policy, Lloyd Austin, accused the industry of “shamefully” failing to pay to clean up its pollution. “Communities and wildlife in Scotland are still suffering, two years on, from the collapse of the open cast industry,” he told The National.

“We need a responsible approach to repairing these areas, which both supports jobs and uses funds to secure lasting benefits for communities and for wildlife.”

In its briefing, RSPB Scotland argued for a new fund to be financed from taxes paid under the Carbon Price Support (CPS) mechanism. “Establishing a £100 million restoration investment fund would require less than one per cent of CPS revenue over five years,” it suggested.

According to Friends of the Earth Scotland, handing out new tax breaks to the dirtiest fossil fuel industry would send a “terrible signal” about cutting climate pollution. “We should be getting on with putting this dirty industry behind us, supporting and retraining coal workers to find new employment and cleaning up its toxic legacy,” said the group’s director, Dr Richard Dixon.

The leader of the Scottish Liberal Democrats, Willie Rennie MSP, argued that there were “huge question marks” over the proposal from Hargreaves. “Government action and support is required for the clean up and it is imperative that any scheme includes a commitment to wind down the industry as a whole,” he said.

Hargreaves said that it could not comment on the proposed fund suggested by RSPB Scotland as it had not seen specifics. “Our goal is to see widespread restoration and be able to support the jobs necessary to deliver that restoration,” said the company’s financial director, Iain Cockburn.

“Opposition to our solution in isolation of investing the time and effort to develop a workable and broadly supported alternative, may inadvertently result in a situation where no solution gets delivered. In these austere times, the Treasury does not need much excuse or encouragement to do nothing.”

He added: “I am already concerned that valuable time has been lost for all and that a crucial degree of momentum has been lost since the election took place. We have already had to reduce the size of our workforce and communities have had to endure another year of living with these unrestored sites."

Hargreaves was backed by Scottish ministers. “Representatives of the Scottish Coal Taskforce and key industry representatives have discussed the Carbon Price Support exemption proposal with the UK Government," said a Scottish Government spokeswoman.

"Without such a measure, the low international price of coal is likely to further threaten the jobs sustained by opencast mining. With it, the industry will be sustained and enabled to carry out full restoration work.”

Comments

[Alastair Lings]

I don't think Hargreaves are looking for a "handout". They have no obligation to mine coal or to restore any opencasts.

If there is a carbon tax exemption for mining at orphaned sites this will improve the viability of mining and allow restoration work to proceed, at no direct cost to taxpayers. Obviously the mining and restoration plans needs to be agreed.

If no exemption is given, there may be no mining, and all restoration will have to be funded by taxpayers.

I would have thought the decision was very simple. Unfortunately the UK Government has been appallingly slow in reaching a decision on the proposed exemption, the coal price has dropped, and the mining/restoration proposals may not now be viable.

There will be no increase in carbon emissions as a result of the proposed exemption, as power stations will have the opportunity to burn UK coal rather than coal from Russia, Columbia or the USA.

[Greta Roberts]

How can a failing industry be sustained sustainably if Hargreaves was to be allowed to dig yet more holes, when there are 2000 hectares of total dereliction yet to be restored, just in East Ayrshire.
The figures cannot add up when markets for coal are declining in the UK and restoration costs make extraction of coal uneconomic as coal's selling price would have to be doubled.
The Scottish Government Ministers & officials are still putting their heads in the sand...(perhaps flooded o/c voids would be more appropriate) as regards to climate change & carbon emissions.
Coal is no longer King, though there is clearly strong lobbying for a handout.