EC to Probe Spanish Coal Subsidy Scheme
The European Commission (EC) said November 27 it has begun an in-depth probe into whether more than €440mn of subsidies paid out by Spain to coal-fired power plants conform with EU state aid rules.
It has concerns that money was spent to meet EU environmental standards that were in any case mandatory.
Spain in 2007 introduced a new government subsidy to tackle sulphur oxide emissions by installing special filters at coal power plants that were below a certain emission limit. As part of this ‘environmental incentive’ coal power plants were entitled to receive public support depending on their size for ten years (€8750/MWh/yr). The scheme has involved more than €440mn of public support being paid to 14 coal-fired plants since 2007, and it is set to continue until 2020.
The EC’s main concern is that this government scheme did not have an actual environmental incentive effect.
“We currently believe that this Spanish scheme did not incentivise coal power plants to reduce harmful sulphur oxide emissions – they were already under an obligation to do so under EU environmental law. Therefore, we are concerned that the support gave these coal power plants an unfair competitive advantage”, said EU commissioner in charge of competition policy, Margrethe Vestager in a statement.
EU state aid rule rules also forbid member states from subsidising companies to meet binding environmental EU standards, as “this would go against the "polluter pays" principle and give the relevant coal power plants an unfair competitive advantage towards other forms of power generation and towards coal power plants in other EU countries subject to the same EU legislation,” said the commission.
Spain’s government is reluctant to phase out coal rapidly, as it still has an important role in the country’s energy mix. According to data from Spain’s electricity grid operator, Red Electrica de Espana, in first half 2017, coal still accounted for 16.5% of the total electricity generation, while natural gas accounted for 21.4%.
“Coal technology has brought price stability in Spain so I don’t understand why eliminating coal is the only way in the short-term to achieve our climate goals”, said Spain’s state secretary of energy Daniel Navia earlier this year at a conference in Madrid, adding that coal gives supply security to Spain as the country still mainly depends on Algeria for its gas.