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13 Energy Giants Call on EU to Cap State Subsidies for Major Polluters

A coalition of 13 major energy industry firms, including Siemens, Shell, Statoil, Solar Power Europe and Total have launched a new initiative to limit the amount of state aid subsidies that are sent to highly polluting power plants across the European Union.

By Sustainable Brands | Published 7 years ago | About a 2 minute read

A coalition of 13 major energy industry firms, including Siemens, Shell, Statoil, Solar Power Europe and Total have launched a new initiative to limit the amount of state aid subsidies that are sent to highly polluting power plants across the European Union.

The Make Power Clean initiative comes as a response to the European Commission’s proposal to create a carbon eligibility criteria which requires companies receiving state aid for power generation to limit their CO2 emissions.

Interestingly, the news comes just a month after Denmark announced plans to begin phasing out subsidies for the renewables sector by 2030, which has thrived against a backdrop of favorable regulatory frameworks and considerable government investment. The announcement also comes on the heels of an ad campaign launched by the Climate Leadership Council — a group of major corporations, including oil giants ExxonMobil, BP and Shell — to bolster support for a $40 per ton carbon tax on emissions.

“Our electricity bills should not support the operation of the most polluting power plants, given that cleaner supply options are available. This would clearly contradict EU climate and energy policy objectives and would go against the best interest of European consumers,” Make Power Clean members said in a joint letter to the Commission and MEPs.

The group is proposing a cap of 550g of CO2/kwh for generators receiving capacity mechanism subsidies. It is also calling for a transparent carbon criterion that aligns with the European Investment Bank’s investment rules.

According to Make Power Clean’s members, the proposal would also be technology neutral — plants with higher CO2 emissions will still be able to operate in the market, covering their emissions under the EU Emission Trading Scheme (ETS).

The letter points to the ongoing ETS reform as being critical to deliver a meaningful carbon price signal to drive the switch towards lower carbon power generation. The proposed carbon criterion would complement the ETS: The ETS puts a price on carbon, while the criterion prevents capacity mechanisms from rewarding the highest emitting plants.