Capacity mechanisms must not become a lifeline to unprofitable coal
- Category: Press Releases
- Published: 24 September 2018
Polish utility Enea gave today the green light to build the new coal power plant ‘Ostrołęka C’, despite the unprofitability of the project and protests of environmental groups. Poland plans to use capacity mechanisms to make up for the projected economic loss, a stunning example of why reformed EU capacity mechanisms must stop benefiting dirty and costly forms of energy.
The construction of the 1GW ‘Ostrołęka C’ is the fruit of a joint venture between the Polish state-controlled utilities Energa and Enea. According to experts, this power plant will be permanently unprofitable and, without capacity payments, Ostrołęka C will generate 1.7 billion euro losses over its lifetime.
Diana Maciąga from the polish NGO Workshop for All Beings said: “Ostrołęka C is a politically driven project that will be funded with taxpayers money and health. The construction of this deeply unviable power plant means serious health and environmental impacts. Coal-fired power stations belong to the past. Poland needs to start investing in its low carbon future instead of holding on to an outdated and harmful technology.”
Energa and Enea count on a generous long-term contract with the Polish government that will secure capacity payments until 2038, clearly showing how current capacity mechanisms remain a lifeline for coal in the EU.
Joanna Flisowska, Coal Policy Coordinator at Climate Action Network (CAN) Europe said: "Coal in Europe is on its way out and building new coal plants is unprofitable from the start, but coal subsidies are distorting this reality. Ostroleka C can only be realised thanks to the generous availability of state subsidies. This is a clear example of why the EU needs to immediately exempt coal plants from all capacity payments."
The European Parliament, the European Commission and the European Council are expected to reach an agreement on the Electricity Market Design files, including the new rules governing capacity mechanisms, by the end of this year. Among the key issues is the 550 gCO2/kWh rule, that would exclude most CO2 polluting plants - coal in particular - from being subsidised through capacity payments. The current Council position would substantially delay the application of this emissions standard and pave the way for coal subsidies for more decades, while the European Parliament and Commission call for a more ambitious timeline.
Flisowska added: “To be in line with the Paris Agreement objectives, EU governments must step up and ensure that capacity mechanisms exclude support to the most polluting power plants, coal in particular. Investing public money in toxic and unprofitable coal is environmentally harmful and a financial waste.”
Climate Action Network (CAN) Europe is Europe's leading NGO coalition fighting dangerous climate change. With over 150 member organisations from 35 European countries, representing over 1.700 NGOs and more than 40 million citizens, CAN Europe promotes sustainable climate, energy and development policies throughout Europe.