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MADRID, Dec 18 (Reuters) - Spain's Industry Ministry is in talks with the European Union over its plans to encourage utilities to burn domestic rather than imported coal, an official said on Friday.
"We have explained to them what our plans consist of and it is up to them to decide whether our proposal may be understood as state aid, or not," the official said.
Seeking approval from Brussels will delay passage of a government draft decree, which Spanish coal mining firms had hoped would come into effect in January.
Spain's competition watchdog said earlier this month that the decree would lead to a "significant distortion" in the energy market, because imported coal is less expensive than domestically mined coal.
The Spanish CNE energy regulator estimates the plan is designed to burn up 10 million tonnes of stockpiled coal, in addition to another 10 million due to be mined in Spain by 2012.
The CNE predicted the plans would cost producers and distributors more than 800 million euros ($1.15 billion), and utilities have queried the government's proposals.
Suppliers have said Spanish government plans, if implemented, will cut coal imports substantially.
A major supplier to Endesa, the utility which operates most of Spain's coal-fired plants, estimates it will ship 4 million tonnes next year, down from 12 million.
The predicted drop will be due to low demand for power and cheap gas, as well as government plans.
Coal's share of Spain's energy mix has fallen sharply over the past 12 years and made way for plants that emit less greenhouse gases, such as natural gas-fired plants and booming renewable energy sources. (Additional reporting by Jackie Cowhig in London) (Reporting by Martin Roberts; Editing by Anthony Barker)