Privileged coal: the politics of subsidies for coal production in Colombia

The document examines the political economy of coal subsidies in Colombia, identifying various fiscal incentives and the strategies used by a coalition of government and industry actors to protect them. It highlights how the coal sector benefits from both sector-specific and general mining incentives, often framed as essential for national economic development or the funding of the peace process. The paper analyzes three specific cases: the Plan Vallejo, a special income tax deduction for fixed assets, and a royalties rebate, to illustrate how these subsidies are introduced, maintained, or eventually removed through political and legal processes.

• Colombia is a major global thermal coal exporter, with over 90% of its production coming from large-scale open pit mines in the Cesar and La Guajira departments, though it consumes only 6.5% of its production domestically.
• The Colombian government uses discursive strategies to justify coal subsidies, shifting from framing extraction as a "locomotive of development" to a "peace" frame, where the sector is presented as a key partner in funding the peace process and associated social programmes.
• Coal companies maintain their subsidies through instrumental power, including lobbying via the Colombian Mining Association and establishing close ties with public administration through campaign financing and "revolving-door" employment.
• Institutional factors, such as the state's urgent need for revenue to ensure territorial control and a fragmented political system, have created a governance framework and tax regime that favors the extractive sector.
• The Plan Vallejo, originally designed to promote non-traditional exports in the 1950s, has disproportionately benefited the coal sector, with coal accounting for over one-third of exports under the plan in 2015.
• A special income tax deduction for investment in real productive fixed assets, introduced in 2003, was highly costly and inefficient, with the mining sector representing 36.6% of the measure's COP 3.8 trillion fiscal cost in 2008.
• The royalties rebate, which allowed mining companies to deduct royalties from income taxes, cost the Colombian state more than COP 13 trillion (approximately USD 6.2 billion) between 2006 and 2012 before being cancelled by the State Council in 2017.
• Beyond fiscal incentives, the coal sector receives government-provided security and protection services, with reports of approximately 12,000 army and navy personnel protecting extractive operations in 2011.

APA

Strambo, C., Espinosa, A. C. G., Velasco, A. J. P., & Atteridge, A. (2018). Privileged coal: the politics of subsidies for coal production in Colombia. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2018/03/sei-2018-pubs-coal-subsidies-political-0129-1.pdf

Chicago

Strambo, Claudia, Ana Carolina González Espinosa, Angélica Johanna Puertas Velasco, and Aaron Atteridge. Privileged coal: the politics of subsidies for coal production in Colombia. Stockholm Environment Institute, 2018. https://www.sei.org/wp-content/uploads/2018/03/sei-2018-pubs-coal-subsidies-political-0129-1.pdf.

Wikipedia

{{cite report |last1=Strambo |first1=Claudia |last2=Espinosa |first2=Ana Carolina González |last3=Velasco |first3=Angélica Johanna Puertas |last4=Atteridge |first4=Aaron |title=Privileged coal: the politics of subsidies for coal production in Colombia |publisher=Stockholm Environment Institute |date=January 2018 |url=https://www.sei.org/wp-content/uploads/2018/03/sei-2018-pubs-coal-subsidies-political-0129-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{strambo2018privileged, author = {Strambo, Claudia and Espinosa, Ana Carolina González and Velasco, Angélica Johanna Puertas and Atteridge, Aaron}, title = {{Privileged coal: the politics of subsidies for coal production in Colombia}}, institution = {Stockholm Environment Institute}, year = {2018}, month = jan, url = {https://www.sei.org/wp-content/uploads/2018/03/sei-2018-pubs-coal-subsidies-political-0129-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }