On 14.03.2023, the European Commission proposed to reform the structure of the EU electricity market to accelerate the uptake of renewables and the phasing out of gas, to reduce consumers’ reliance on volatile fossil fuel prices, to better protect consumers from future price spikes and potential market manipulation, and to make European industry cleaner and more competitive.
Plans by European Union countries to approve on 19.06.2023 a reform of the energy market in the bloc that would shift the electricity system towards cleaner energy may fail. The reason is a late proposal to extend subsidies to coal plants.
EU energy ministers meet in Luxembourg on Monday to agree a joint position on new energy market rules. They are aimed at expanding low-carbon energy and avoiding a repeat of last year’s energy crisis, when record high gas prices pushed up consumer bills.
The proposed reform aims to make electricity prices more stable and predictable by adding new state-backed renewables and low-carbon nuclear to fixed-price “contracts for difference”. Ministers need to iron out the details, such as how to spend any revenue raised from these subsidy schemes.
But negotiations were complicated by a late proposal by Sweden, which holds the EU’s rotating presidency, to allow countries to extend capacity mechanism subsidies for coal-fired power plants. Under the scheme, they are paid to keep enough power-generating capacity on standby to avoid outages.
Poland, which could extend its coal plant support scheme beyond 2025 under the proposal, said last week the idea had strong support. Bulgaria has so far given no official position.
Coal is the fossil fuel emitting the most CO2. Scientists say their use must fall sharply this decade if the world is to avoid the worst impacts of climate change.
Some EU countries say they need more flexibility on how quickly to limit use of this type of fuel and how to support new industries in communities that have long relied on coal jobs. Poland produces around 70% of its energy from coal.
A senior EU official said the coal loophole would only be allowed “under very specific conditions.” Ministers are expected to approve energy market reforms, but it is unclear whether the coal carve-out will make it into the final deal.
Once EU countries agree their position, they must negotiate the final electricity market upgrade with the European Parliament, aiming to pass the law before next year’s European Parliament elections.
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