Czech government to look at speedier coal exit than 2038 target

PRAGUE, May 24 (Reuters) - The Czech government has sent back a recommendation to phase out coal by 2038 to a state commission to examine an earlier exit, the Industry Ministry said on Monday, after a split over the target in the ruling coalition.

The central European country uses coal for just under half its electricity production but is seeking to cut that sharply in coming decades as part of a decarbonisation drive.

Last week, the country’s largest utility, majority state-owned CEZ, announced a plan to shut most of its coal-fired power plants by 2030, cutting the proportion of coal in its production mix to 12.5% from 36% in 2020.

A state commission on the future of coal recommended a 2038 end date in December, picking the middle date of three options. However, the junior ruling party Social Democrats have said a 2033 exit would be most appropriate, agreeing with environmental groups.

The ministry said on Monday that in light of soaring emission allowance prices, the commission should look at alternatives for an earlier exit than the recommended 2038 date and assess the impact on the domestic energy market.

“It is a balanced compromise,” Industry Minister Karel Havlicek, appointed by the main ruling party, ANO, said.

The 2038 target date - which has been awaiting government approval - is one of the later ones in Europe but still on par with neighbouring Germany.

The Czech Republic’s coal plants are owned by CEZ and private groups Sev.en Energy and Sokolovska Uhelna.

Prime Minister Andrej Babis said in a commentary in daily Mlada Fronta Dnes on Saturday that ditching fossil fuels “recklessly” without proper consideration could be a risk to the economy and jobs.

Reporting by Robert Muller and Jason Hovet; Editing by Kirsten Donovan