EU lawmakers back CO2 limits to power reserve subsidies

BRUSSELS (Reuters) - EU lawmakers on Wednesday backed attaching emissions limits to subsidies paid to utilities for backup power capacity to avert blackouts.

In a vote on draft reforms to the power market from 2020, the European Parliament’s industry committee took a stronger stance than member states on regulating so-called capacity mechanisms that would limit payments to coal-fired and less efficient gas-fired plants.

Wednesday’s vote forms the parliament’s position, unless challenged in next month’s plenary, for negotiations with EU member states to hammer out the final reforms.

States such as Poland, which are heavily dependent on coal, have fiercely opposed the new restrictions of 550 grams of carbon dioxide per kilowatt-hour, indicating tough talks ahead.

Capacity mechanisms are used in countries including Britain and France to fund electricity generation that may not be cost-effective or as clean as renewable power but is needed to guarantee supply during periods of peak demand.

EU lawmakers also supported maintaining rules prioritizing renewables as the first source of power drawn into the grid, known as priority dispatch, for existing solar and wind plants.

New rules from 2020 ensuring renewables be curtailed last and compensated for at times of peak production would take their place as priority dispatch is phased out for new plants.

The committee endorsed measures to make it easier for small-scale, household energy producers to sell excess power to the grid, to better allow consumers to switch suppliers and simplify energy bills.

As part of the Paris Agreement to limit global warming to no more than 2 degrees, the bloc has pledged to reduce greenhouse gas emissions by at least 40 percent below 1990 levels by 2030.

(This story corrects to clarify no need for plenary vote in paragraph 3)

Reporting by Alissa de Carbonnel @AdeCar, editing by David Evans