The European Union reached on Dec. 19 a deal over a proposed reform of the bloc’s electricity market, including stepwise elimination of coal subsidies by 2025.
The deal encompasses a suite of new laws designed to help boost renewable energy share in EU’s power generation to more than 50 percent by 2030.
The agreed reform is broadly intended to establish a more transparent and competitive market as the European Commission, the EU’s executive body, has been taking continuous efforts to open up national energy markets.
Austria, who is during its six-month EU rotating presidency, announced to phase out the coal subsidies in the concluded political agreement that has yet to be formally approved.
Austria said in a statement that member states can distribute state aid to existing coal-fired power plants after strict examination by the European Commission, but only until 2025.
The subsidies are designed for compensating power plants who supply back-up power during times of peak demand, but had stirred debate over the role of coal in the EU.
The reforms set up new rules that only power plants emitting below 550 grams of CO2 per kilowatt hour are eligible to receive state subsidies from 2025, a limit which substantially stops any cash going to coal-fired power plants.
But to pacify Poland, who has still over 80 percent of its power supplies sourced from coal, the commission made a concession, agreeing to a special clause that allows electricity producers with contracts signed before December 31, 2019 to be exempt from the new emissions limit.
“Our ambition is to get away from heavy state subsidies and instead let the market do the job of supplying industries and households with affordable and secure energy inside the EU,” Krisjanis Karins, the MEP who pushed for the new regulation, said in a statement.
It has been generally believed that the reform will contribute to lower electricity prices, more diversified sources of power supplies, and quick development and wide use of new technologies.
Miguel Arias Canete, the Spanish European Commissioner for Climate Action and Energy, said the deal puts the “EU in the lead in terms of rules to accelerate and facilitate the clean energy transition.”
The reform follows other EU efforts to promote cleaner energy this week and comes after international talks in Poland aimed at moving the 2015 Paris Climate Accord forward.
The deal, which is overall a good deal for consumers, still have to be finally approved by the European Parliament and all the member states.