The European Commission has backed the UK government’s plan for a $160 million subsidy for the British coal industry. The package is designed to save mining jobs and was announced earlier in the year as part of a reorganisation of the energy market, linked to the lifting of controls on the use of natural gas for power generation.

The gas controls have now been removed, and the Trade and Industry Secretary has approved six gas-fired power projects with a cost of around $3 billion.

The subsidy, which is described as transitional, will run until July 2002 while the energy industry completes its restructuring. It is intended to enable commercially viable mines to compete effectively after that period. However the government expects the coal industry to compete after that date without further subsidy.