EU countries fail to agree energy reforms after coal subsidy clash

LUXEMBOURG – European Union countries failed on Monday to agree on planned new rules for the bloc’s power market, having clashed over a proposal to extend subsidies for coal plants as part of the reform intended to increase the use of low-carbon power.

EU energy ministers meeting in Luxembourg ended talks without a joint stance on the 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.

Swedish Energy Minister Ebba Busch, who chaired the meeting, said work would continue among EU countries’ ambassadors to attempt to reach a deal.

Countries including Austria, Belgium, Germany and Luxembourg had objected to the proposal on coal subsidies, saying it would undermine Europe’s goals to fight climate change.

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, and if the European Commission approved the exemption.

It said some countries needed this 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 earlier in the meeting on Monday.

Poland, which gets around 70 per cent 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 – adding that although coal plants would continue to operate in countries including Germany, boosting subsidies for them would be a step too far.

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 had said a country must also assess the impact on its climate change goals.