Europe is not fighting hard enough to keep out coal subsidies

To prevent coal subsidies, the European Commission proposed a CO2 threshold for power plants to receive public subsidies. However, due to last minute edits from current EU President, Estonia, the door will be open for existing high-carbon power plants to receive public money to stay online, writes Kathrin Gutmann.

Kathrin Gutmann is Campaign Director in Berlin for the Europe Beyond Coal campaign.

Last December, the Aberthaw coal power plant got its fourth cheque in four years from the British people. The cheque to its operator, RWE, was for £33 million (€38 million) for keeping the plant open for 12 months from October 2020. The cash injection means it will celebrate its 50th birthday in 2021 doing what it’s been doing day-in, day-out for half a century: burning coal.

£33 million is roughly the fixed costs of running the plant, which explains why Aberthaw and the UK’s other six remaining coal plants are not closing. Why would you get rid of your old clunker when keeping it means free money?

To prevent coal subsidies causing chaos in other EU countries, the European Commission proposed a CO2 threshold of 550 grams per KWh of electricity to be eligible for receiving capacity payments (public money to remain online). However, thanks to last minute edits from current EU President, Estonia, deleting this vital CO2 threshold clause, the door will be wide open for existing high-carbon power plants to receive public money to stay online, and even extend their lifespans.

The UK capacity mechanism has already paid out €500m to its coal plants in just four years. One does not have to go out on a limb to suggest that EU plant operators will be lining up their coal wagons to cart away subsidies to keep their clunkers running as long as possible, and the burden on the public purse will undoubtedly be in the billions.

The Estonian Presidency generously proposes that as of 2025 new coal plants do not receive capacity payments. However, considering that even Poland has said it will not build more new coal plants, this is laughably tokenistic.

The good news in the case of the UK is that it could have been a lot worse: Aberthaw, like all UK coal power plants, doesn’t run that much because it has to pay a CO2 price of €30 per tonne. Also, coal power plants must close by 2025 in the UK, meaning these subsidies are not being used to invest into life-extensions.

The bad news is that the situation in many other EU countries is very different. The EU CO2 price is struggling to stay above €7 per tonne, and most EU countries do not have an extra CO2 price instrument in place, so coal plants will likely run a lot. And because most countries don’t have an end date for coal, some of that money is likely to be invested to refurbish old coal plants.

A Eurelectric-commissioned report inadvertently demonstrated that capacity payments would fund a fifth of all European coal plants to have their lifetimes extended from 40 to 50 or even 60 years, which otherwise would have shut. This would be a monumentally wasteful backwards step at a time when Europe is already struggling to live up to its commitments under the Paris Agreement.

The Estonian presidency is concerned about the legacy that it leaves. If the 550 proposal fails to pass, and the Estonian and pro-coal governments get their way, then the Estonian legacy will be one of severe, continuing health impacts from coal power pollution, and a staggering waste of public money.

Germany, Italy, France, Portugal, Denmark, Austria and other members of the recently launched Powering Past Coal Alliance have shown that they understand the direction Europe must take. It is up to all Member States and in particular the supporters of the Powering Past Coal Alliance to demonstrate they truly mean to respect EU commitments to the Paris UN Climate Agreement, and not keep coal on life support.

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Europe Beyond Coal is an alliance of civil society groups working to catalyse the closures of coal mines and power plants, prevent the building of any new coal projects, and hasten the just transition to clean, renewable energy and energy efficiency. Please see www.beyond-coal.eu for details of the impacts of coal plants in your country.