This working paper analyses the political factors that shape subsidies to coal extraction in Colombia, and explores why and how those subsidies have been promoted.
Colombia is one of the world’s top five exporters of thermal coal, and the coal mining sector is a core pillar of the national government’s economic development policy. In recent years, however, the country has seen increased debate about the real costs and benefits of mining, particularly large-scale coal mining.
As a result, the mining sector – including coal extraction – suffers today from decreasing support from the general public and some local governments who argue they do not receive enough of its economic benefits. This situation has contributed to a redesign of mining policy. Despite this, government support to the mining sector, including to coal mining, is increasingly a controversial subject in Colombia.
This paper synthesizes available information about various kinds of government support benefiting the sector and classifies it according to the subsidies framework of the Global Subsidies Initiative, analyzes how political factors and strategies of incumbent actors shape subsidies to coal extraction and explores why and how these subsidies have been promoted. It illustrates the analysis with three key examples: the Plan Vallejo; a special income tax deduction for investment in real productive fixed assets; and a royalty rebate.
Feature / Investigadores de SEI abordan el concepto de lock-in de carbono y sus efectos en Latinoamérica, donde las economías están ligadas a los combustibles fósiles.
Feature / SEI researchers offer a deep dive into the concept of carbon lock-in and its effects in Latin America, where economies are entwined with fossil fuel production.
Journal article / This article analyses the ways through which incumbent actors of the fossil fuel regime respond to socio-economic pressures and actively resist change.
