Energy firms back EU plan for CO2 cap on power subsidies

The sun rises behind the billowing chimneys of a power station in Berlin, November 27, 2013. REUTERS/Thomas Peter

BRUSSELS (Reuters) - A group of energy firms has backed a disputed plan by EU regulators to attach emissions limits to subsidies for providing back-up power capacity to avert blackouts.

The proposal by the European Commission, which would set a cap of 550 grams of carbon dioxide per kilowatt-hour for new power stations, ruling out less-efficient coal and gas-fired plants, has been fiercely contested by Poland and some other EU member states.

It is part of a draft reform of Europe’s electricity market that calls for stricter rules on capacity mechanisms used in countries such as Britain and France to fund power generation that may not be cost-effective or as clean as renewable energy but is needed to guarantee supply during periods of peak demand.

In an open letter to the bloc’s environment ministers on Tuesday, the proposal was backed by 22 signatories from energy majors, renewable energy groups and utilities including Eni, Shell, Siemens, Iberdrola, Statoil and Wintershall [WINT.UL].

“Our electricity bills should not support the operation of the most polluting power plants, given that cleaner and more flexible options are available,” the letter said.

“This would clearly contradict EU climate and energy policy objectives and would go against the best interest of European consumers.”

The bloc’s 28 environment and energy ministers are currently debating the reform for Europe’s power grid after 2020 that aims to help meet its pledge under the Paris climate accord to cut emissions by at least 40 percent by 2030 from 1990 levels.

Reporting by Alissa de Carbonnel; Editing by Robert-Jan Bartunek and Mark Potter