By Kate Abnett
LUXEMBOURG (Reuters) -European Union countries on Monday haggled over a proposal allowing them to extend subsidies for coal plants as part of broader reforms to the bloc’s power market that are meant to increase the use of low-carbon power.
EU energy ministers were meeting in Luxembourg to agree a joint stance on the new rules that also seek to avoid a repeat of last year’s energy crisis, when record-high gas prices left consumers with soaring energy bills.
The talks were complicated by a late proposal by Sweden, which holds the EU’s rotating presidency, to allow countries to prolong capacity mechanism subsidies for coal power plants that pay generators to keep enough capacity on standby to avoid blackouts.
Countries including Austria, Belgium, Germany and Luxembourg objected to the proposal, saying it would undermine Europe’s goals to fight climate change.
A revised plan, put forward on Monday, said the European Commission would need to approve each individual request to make use of the capacity mechanism loophole, potentially making it tougher to justify.
The draft proposal, seen by Reuters, would allow existing capacity mechanisms to temporarily waive a CO2 emissions limit – enabling coal plants to participate – if they fail to attract enough lower-carbon generators.
It said some countries needed the option because the disruption to Europe’s gas supply following Russia’s invasion of Ukraine had placed extra strain on power generation capacity.
“For some of us, security means capacity markets,” Polish Climate Minister Anna Moskwa said on Monday.
Poland, which gets around 70% of its power from coal, could prolong its support scheme for coal plants beyond 2025 under the proposal.
“It is not compatible with the EU’s and national climate protection targets,” German Economy and Climate Minister Robert Habeck said of the original proposal.
Coal is the most CO2-emitting fossil fuel. Scientists say its use must plummet this decade if the world is to avoid the most severe impacts of climate change.
The latest version of the proposal said a country must also assess the impact on its climate change goals.
STABLE PRICES
The proposed EU power market reform aims to make power prices more stable and predictable, by putting new state-backed renewables and low-carbon nuclear plants onto fixed-price contracts for difference.
Ministers were negotiating details such as how to spend any revenues raised by these subsidy schemes, and conditions sought by countries, including Austria and Germany, to limit countries from widely imposing these fixed-price contracts on existing power plants.
The latest draft proposal would also let countries introduce national schemes, until mid-2024, to recoup windfall revenues from some power plants if power prices spike – a move backed by countries including Greece and Spain, but opposed by energy industry groups.
Once EU countries agree their stance, they must negotiate the final power market upgrade with the EU Parliament, with the aim to pass the law before EU parliamentary elections next year.
(Reporting by Kate Abnett; additional reporting by Tassilo Hummel; Editing by Giles Elgood, Emelia Sithole-Matarise and Barbara Lewis)