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Late push for coal subsidies upsets EU deal on electricity market reform

(EurActiv, 19 Jun 2023) A late proposal to extend subsidies for coal plants has upset European Union plans to agree a reform of the bloc’s power market, which was designed to shift the electricity system towards cleaner energy sources.

Energy ministers from the 27 EU countries meet in Luxembourg on Monday (19 June) to agree a joint stance on new EU power market rules, aimed at expanding low-carbon power and avoiding a repeat of last year’s energy crisis, when record-high gas prices left consumers with soaring energy bills.

The proposed reform aims to make power prices more stable, by putting new state-backed renewables and low-carbon nuclear plants under so-called “contracts for difference” where the state guarantees a minimum revenue to investors.

Ministers need to iron out details like how to spend any revenues raised by these subsidy schemes.

But the talks have been complicated by a late proposal by Sweden, which holds the EU’s rotating presidency, allowing countries to prolong capacity mechanism for coal power plants. Capacity mechanisms are subsidies paid to electricity producers to ensure enough generating capacity is kept on standby to avoid blackouts.

‘Dealbreaker’

Poland – which could prolong its support scheme for coal plants beyond 2025 under the proposal – said last week the idea had majority support.

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EurActiv, 19 Jun 2023: Late push for coal subsidies upsets EU deal on electricity market reform