EU energy ministers came together to agree an overhaul of EU energy markets, thus opposing Poland’s efforts to extend subsidies for coal-fired power plants until 2028.
Sweden, which currently holds the EU presidency, has allowed exemptions to be added to EU energy market reforms at the request of Warsaw. The exemption would allow coal plants to receive state support to provide a steady flow of energy when other forms of energy are unavailable – a move that was immediately criticized by several ministers.
Luxembourg’s energy minister, Claude Turmes, described the proposal as “very egregious” and amounted to “a weakening of our climate policy”.
Teresa Ribera, Spain’s minister for the ecological transition, said some “comfort” must be given to Poland, which relies on coal for about 70 percent of its energy mix, but policymakers should not send “contradictory signals” to the market.
German Deputy Chancellor and Energy Minister Robert Habeck told reporters that the exemption “is wrong (and) does not meet the EU’s climate protection goals”.
“It’s not that coal plants shouldn’t be running . . . that’s important for Germany too, but giving them an additional subsidy system would be going too far,” he told fellow ministers at the opening of the European Union’s Energy Council.
Coal provides about a quarter of Germany’s energy.
The exemption requested by Poland would expand EU member state subsidies to subsidize fossil fuel power plants that emit more than the currently set limit of 550 grams of carbon dioxide per kilowatt of energy produced until 2028. The subsidies, known as capacity mechanisms, are designed to ensure countries have a steady supply of energy at all times.
The state aid package is seen as important for the clean energy transition in the short term, while developing more stable renewable energy storage that relies on intermittent solar and wind power.
But power executives have warned that paying for carbon-emitting plants would dampen incentives to roll out energy storage or other climate-friendly measures.
The proposed exemption should apply only to fossil fuel generators operating before July 2019, and the emission limits should not exceed one year.
Anna Moskwa, Poland’s climate minister, said, “It’s about understanding each other’s needs. If one of us is safe, we are all safe. . . capacity market.”
The European Commission has proposed an overhaul of the bloc’s electricity market, paving the way for more renewable energy in the bloc and reducing the risk of prices rising again after Russia’s full-scale invasion of Ukraine last year.
The regulations revolve around the use of state-backed contracts, ensuring power producers only charge a fixed price and return additional profits.
Many countries, including Belgium, Germany and Denmark, worry that their use in existing and new energy plants, as France has been pushing, could distort the EU’s internal market and unfairly benefit certain companies .
Belgian Energy Minister Tinne Van der Straeten said: “Without state aid oversight, electricity market design cannot be a rubber stamp.”
Ministers are due to agree a position on the reforms on Monday so that member states can negotiate the final form of the regulation with the European Parliament in the autumn. The changes should come into effect in 2024.