A late proposal to extend coal plant subsidies has derailed EU countries‘ intentions to ratify a power market reform on Monday to move the electrical grid toward cleaner energy.
On Monday, EU energy ministers meet in Luxembourg to agree on new power market rules to boost low-carbon generation and avert last year’s energy crisis, when record-high gas prices drove up energy bills.
Putting new state-backed renewables and low-carbon nuclear facilities on fixed-price “contracts for difference” would stabilize power costs. Ministers must decide how to use subsidy revenues.
A late suggestion by Sweden, which holds the EU’s rotating presidency, to allow countries to prolong capacity mechanism subsidies for coal power plants, which are paid to keep adequate power generating capacity on standby to avoid blackouts, has complicated the talks.
Last Monday, Poland announced the initiative received majority support.
EU diplomats said some states had resisted the proposal over environmental concerns, endangering a power reform pact.
“We think this is a potential dealbreaker,” one EU nation diplomat said.
Coal emits the most CO2. Scientists warn that its use must drop this decade to avert the worst repercussions of climate change.
Some EU countries want more freedom to phase out coal and encourage new sectors in coal-dependent towns. Coal powers 70% of Poland.
A senior EU official said the coal loophole would only be allowed “under very specific conditions.” The official expected ministers to approve the electricity market reforms but was unsure if the coal carve-out would be included.
The proposal, seen by Reuters, stated capacity mechanisms in place before July 2019 might temporarily circumvent a CO2 restriction the EU generally imposes on these programs, allowing coal plants to participating if they fail to attract enough lower-carbon generators.
After EU countries agree, they must negotiate the final power market upgrade with EU Parliament to enact the bill before the EU Parliament elections next year.
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