Controversy over EU research funding for coal projects that could undermine climate targets – but also funds research into reducing coal emissions

Environmentalists are demanding that the EU close a research fund which they claim offers coal companies tens of millions of pounds of public money in grants.

The European commission’s Research Fund for Coal and Steel (RFCS) has awarded €144m (£107m) to companies such as E.On UK, RWE Npower and UK Coal Production Ltd, according to research by Greenpeace Energydesk.

Most of the the money is spent on mining infrastructure, management and unconventional use of deposits, and on coal preparation and upgrading.

Doug Parr, Greenpeace’s chief scientist, said that the fund made little environmental, economic or scientific sense.

“If big energy companies want to waste money on this kind of research, they should waste their own,” he told the Guardian. “The EU should shut down this slush fund for the coal industry and use this money to foster innovation in the clean and smart technologies that will have to power our 21st-century low-carbon economy.”

A commission spokesperson said that around €13m was given to the RFCS each year, and that the revenues should be considered “EU contributions” rather than public funds. The monies could provide up to 60% of costs for research projects, and half of pilot projects, the spokesperson added.

Industry associations say that the fund is a trust that was mostly raised from its members before the European Coal and Steel Community was wound up in 2002.

“The funding is not ‘public’ [money] because the source of the money was a levy on the coal and steel industries. The commission administers the programme on behalf of member states,” said Brian Ricketts, the secretary-general of Euracoal.

“Given that 28% of electricity in EU comes from coal, it is not unreasonable to try to reduce emissions from that coal use,” he added.

The EU is committed to reducing its carbon emissions 40% by 2030 on 1990 levels and funding for coal projects would seem to undermine this. But almost half of the fund’s projects are for technologies that aim to reduce coal emissions, with 40% of the budget spent on ‘clean coal’ and carbon capture and storage technology.

Darek Urbaniak, the energy policy officer for WWF Europe, said: “Clean coal is an oxymoron the industry likes to use but it doesn’t actually exist. The technology has never been implemented on an industrial scale. The Advertising Standards Authority (ASA) was quite clear in its ruling last year that it was misleading for coal firms to use the phrase.”

The UK advertising watchdog ruled that ‘clean coal’ was an inaccurate term, because it implied that such coal did not produce CO2, or other emissions.

A leaked statement to be issued by EU heads of state at a summit in June, seen by the Guardian, calls for member countries to encourage clean coal initiatives and technologies such as CCS as a means to completing the internal energy market.

Poland and the UK were prime movers in sculpting the text. In drafts also obtained by the Guardian, the UK successfully proposed that “indigenous resources” – code for shale gas and coal – be recognised as key drivers of energy security, instead of renewables. Britain also pushed for three positive references to “renewable energies” to be deleted from the statement.

The RFCS monies pale in comparison to the €10.1bn of subsidies that European countries gave to the coal industry in 2012 – the same amount as went to onshore wind, according to an Ecofys study for the European commission.

Until this year, the commission had used its annual country-specific recommendations to call on states to reform their fossil fuel subsidies regimes. Such a call was for the first time absent from the ‘streamlined’ recommendations published on 13 May.

Europe is currently the world’s biggest producer of lignite, the world’s dirtiest coal, and the third-largest importer of the fossil fuel.