The European Commission (EC) has cleared Poland’s plan to provide zl7.95bn ($1.9bn) of assistance to close uncompetitive coal mines by 2018.
The commission found the support plan would alleviate the social and environmental impact of mine closure, as well as be in accordance with European Union (EU) state aid rules.
It also stated that this support will not affect or distort competition.
After Poland's decision to close uncompetitive coal mining units in September, the country approached the EC to provide public funding of zl7.95bn to ensure appropriate closure procedures.
The decision to operate or close public coal mines rests with member states. The purpose of the aid is to provide financial support to employees who will lose their jobs as a result of these closures.
The fund would be used to provide severance payments, compensatory pensions and social security benefits to workers.
In addition, funding would also be used to decommission mining infrastructure, repair environmental damage from mining and recultivate land after closure. Any remaining aid would cover production losses of the mines until closure.
The Council of the European Union adopted Council Decision 2010/787/EU of December 2010 that facilitates closure of uncompetitive coal mines.
The decision was taken to encourage renewable energy sources and progress towards a sustainable low-carbon economy by replacing coal.
It also states that government support to close coal mines is permitted when it covers production losses and exceptional costs due to the closure.
Any aid must be based on an agreed closure plan and cover operational losses.
The adopted decision taken by the council also stated that any coal mine that receives compensation must cease production by the end of 2018 at the latest.