Whitehall deadlock as coal faces the end

The fate of Britain's coal mining industry and 15,000 jobs is hanging in the balance this weekend as two government departments are at loggerheads over how to introduce controversial new European laws.

The Department of Trade and Industry (DTI) and the Department for Environment, Food and Rural Affairs (Defra) must agree this week on how to reduce the country's sulphur dioxide emissions.

They have two choices: force coal-fired power stations to fit filters or buy low-sulphur coal from South Africa, Russia and Columbia.

After months of debate, the departments have yet to agree on the best way forward and now have just five days to present Downing Street and the Treasury with a paper on their final decision. The Government must tell the European Commission how it intends to reduce sulphur dioxide emissions - the main cause of acid rain - by 27 November.

One source close to the talks said: "Both sides are way apart on this. It's going to be a long weekend - and a long week."

It is understood that the DTI favours the filter option, as it would allow power stations to continue to buy British coal, which has a higher sulphur content than some foreign imports.

But the DTI is also worried about the effect this would have on Britain's beleaguered steel industry. Therefore, it has proposed a so-called "hybrid solution" to Defra. This would force power stations to fit filters but allow steel producers to buy foreign coal.

However, a source close to the talks revealed that the idea had been dismissed by Defra as "unworkable". Defra was "leaning" towards forcing generators to buy low-sulphur coal, the source added.

A spokesman for UK Coal, Britain's largest coal producer, said: "If the Government goes for [buying low-sulphur coal] then it will be lights out for a large part of the coal industry. It is a colossal decision: once the lines are closed then they will stay closed. Closing down the pits will cost in the order of £700m."

The DTI and Defra refused to comment.