Polish government approves renewable energy bill

WARSAW Tue Apr 8, 2014 10:50am EDT

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WARSAW (Reuters) - Poland's government approved a long-awaited draft law on Tuesday that lays out new long-term subsidies for renewable energy, aiming to cut costs to consumers as well as help the coal-reliant country meet EU climate targets.

Under the draft law, which requires final approval by parliament and the president, developers and owners of new renewable installations can sell their energy at auctions for a fixed price that would be guaranteed for 15 years regardless of market prices. The proposal would also set a ceiling on the subsidy.

It would allow renewable power producers that are already in operation to keep their current subsidies or choose to join the auctions.

Poland has been working for almost two years on a new renewables law that would help it meet the European Union's green energy targets at the same time as keeping costs relatively low.

Poland generates around 90 percent of its electricity from coal and must increase renewable energy to at least 15 percent of the total by 2020 to meet EU rules on carbon emissions.

Change has proved difficult, however, as renewable power producers complain that an uncertain legal environment has prevented them from making new investments.

The previous subsidy system did not provide long-term guarantees, and governments across Europe have been progressively cutting subsidies.

The government has calculated that the cost of its current subsidy system would rise to 7.5-11.5 billion zlotys ($2.5-$3.8 billion) a year by 2020. ($1 = 3.0364 Polish Zlotys)

(Reporting by Michael Kahn and Marcin Goettig; editing by Jane Baird)

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