A draft White Paper is understood to aim at expanding the market by 12 million tonnes a year with a combination of subsidies to slow down imports, blocks on the import of orimulsion, the bitumen-based fuel, cuts in output from opencast mines and a slower rundown of coal stocks.
The proposals are not expected to go to today's Cabinet meeting, suggesting agreement is some way off. But British Coal has warned that productivity improvements mean that the yardstick of one pit producing a million tons a year and 1,000 jobs no longer applies.
Saving 12 to 14 pits is the minimum likely to be needed to stave off a rerun of last autumn's revolt by Tory MPs. Some have threatened a fresh rebellion if at least half the mines are not reprieved.
The committee's report implied that more than half the threatened mines could be saved.
But the Heseltine draft steers clear of some of the committee's more controversial proposals: curbing imports of cheap nuclear- generated electricity from France; using part of the pounds 1.2bn domestic nuclear levy to subsidise coal production; and postponing the free market in coal purchase. All those measures would need legislation.
The new plan would depend on National Power and PowerGen, the two main electricity generators for England and Wales, signing new five-year contracts for coal purchases over and above the tentative agreement to buy 40 million tonnes next year and 30 million in the subsequent four years.
Winston Churchill, Conservative MP for Davyhulme and chairman of the Coal Group of MPs, warned last night that Mr Heseltine would have to do 'a great deal better' than saving 10 to 12 pits if he was to avoid a second Commons rebellion.
Mr Churchill said Mr Heseltine would have to address the issue of imports of French electricity - equivalent of 6 million tonnes of coal - through the underwater Interconnector Link. Mr Heseltine should also accept the committee's suggestion that gas- fired power stations should only generate electrity on a top-up not a 'baseload' basis.
A likely publication date for the White Paper is 26 February.
British Coal has been forced back to court next Wednesday by miners' unions over the future of the 10 most threatened pits. The unions alleged it had ignored a High Court ruling that the decision to close the mines was unlawful, and was closing them 'by stealth'.